Andhra Pradesh High Court - Amravati
Chekka Guru Murali Mohan vs The State Of Andhra Pradesh on 19 January, 2021
Bench: Cheekati Manavendranath Roy
*HON'BLE SRI JUSTICE CHEEKATI MANAVENDRANATH ROY
+ Criminal Petition Nos.4819, 4843, 4844, 4867, 4938
and 5384 of 2020
% Dated 19-01-2021
Crl. Petition No.4819 of 2020:
# 1. Chekka Guru Murali Mohan & Anr.
..... Petitioners
Vs.
$ The State of Andhra Pradesh through SHO, CID PS, AP,
Mangalagiri, Guntur District, Rep. by Public Prosecutor,
High Court of Andhra Pradesh & Anr.
..Respondents
! Counsel for the petitioners : Sri Siddardha Luthra,
Learned senior counsel,
Sri Posani Venkateswarlu,
learned senior counsel,
Sri K.S. Murthy,
Sri Ginjupalli Subba Rao,
Ms.S.Pranathi,
Sri A.K. Kishore Reddy and
Sri M.V. Subba Reddy
^ Counsel for the 1st respondent-State : Learned Advocate General
and learned Public
Prosecutor
Counsel for the 2nd respondent
-de facto complainant: Sri O.Kailashnath Reddy
<GIST:
> HEAD NOTE:
? Cases referred
1. AIR1984SC718=(1984)2 SCC 500
2. 1987 (1) BomCR 59 = 1986 MhLJ 1004;
3. 1908 CLJ 342;
4. Judgment in Civil Appeal No. 196 of 2011 dated 02.03.2020
5. (2007) 8 SCC 705;
6. (2013) 1 SCC 353;
7. (1866) 35 Beav 27;
8. (1788) 2 Bro. C.C. 400 = 29 E. R. 224;
9. (1886) 11 App Cas 232, 235;
10. 1817 SCC OnLine US SC 28=15 US 178 (1817) = 4 L.Ed.214 = 2 Wheat. 178
11. 1915 SCC OnLine Sind JC 6 = AIR 1915 Sind 21;
12. (1896) 20 Bom 522;
13. (1905) ILR 27 All 561;
14. (2009) 8 SCC 751;
15. (2004)11 SCC 585;
16. (1980) 2 SCC 665;
17. 2010 (8) Supreme 389;
18. 1992 Supp.(1) SCC 335 = 1992 CriLJ 527;
2
CMR,J.
Crl.P.No.4819 of 2020 & batch
19. (2015) 8 SCC 293;
20. (2000) 1 SCC 210;
21. (2013) 10 SCC 591;
22. (2007) 1 SCC 1;
23. AIR 1964 SC 72;
24. (2012) 2 SCC 688;
25. (1977) 4 SCC 451;
26. (2011) 10 SCC 632;
27. Judgment dated 26.11.2020 in Spl.L.P.(Cri) No.4931 of 2020;
28. (2004) 15 SCC 691; [
29. Crl.P.No.1719 of 2020, dated 21.10.2020.
CMR,J.
Crl.P.No.4819 of 2020 & batch
IN THE HIGH COURT OF THE STATE OF ANDHRA PRADESH
Criminal Petition Nos.4819, 4843, 4844, 4867, 4938
and 5384 of 2020
Crl. Petition No.4819 of 2020:
1. Chekka Guru Murali Mohan & Anr.
..... Petitioners
Vs.
The State of Andhra Pradesh through SHO, CID PS, AP,
Mangalagiri, Guntur District, Rep. by Public Prosecutor,
High Court of Andhra Pradesh & Anr.
..Respondents
ORDER PRONOUNCED ON: 19-01-2021
HON'BLE SRI JUSTICE CHEEKATI MANAVENDRANATH ROY
1. Whether Reporters of Local newspapers --
may be allowed to see the Judgments?
2. Whether the copies of judgment may be -Yes-
marked to Law Reporters/Journals
3. Whether Their Ladyship/Lordship wish to see -Yes-
the fair copy of the Judgment?
JUSTICE CHEEKATI MANAVENDRANATH ROY
CMR,J.
Crl.P.No.4819 of 2020 & batch
HON'BLE SRI JUSTICE CHEEKATI MANAVENDRANATH R0Y
Criminal Petition Nos.4819, 4843, 4844, 4867, 4938
and 5384 of 2020
COMMON ORDER:
This batch of Criminal Petitions, under Section 482
Cr.P.C., are filed, seeking quash of the common F.I.R. in Crime
No.49 of 2020 of C.I.D.P.S., A.P., Amaravati of Mangalagiri,
registered against the petitioners for the offences punishable
under Sections 420, 409, 406 and 120-B of I.P.C.
2) A person by name Sri Salivendra Suresh of Velagapudi
village, who is totally a stranger to the sale transactions in
question, which are sought to be impeached on the ground of
playing fraud and cheating the sellers of the land by the
petitioners, who are purchasers of the lands, lodged a report
with Mangalagiri Police.
3) Synoptic outline of the contents of the report germane
to dispose of these Criminal Petitions may be stated as follows:
(a) It is alleged in the report that the de facto complainant
is a resident of Velagapudi village, which is situated within the
Capital Region Development Authority (hereinafter called as
"C.R.D.A."). He has been following the news being published
and the debates in the Legislative Assembly relating to the
irregularities that took place in respect of the lands situated
within the capital area. There has been no capital for the State
of Andhra Pradesh after the erstwhile common State of Andhra
Pradesh was bifurcated into two States i.e. the State of
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Telangana and the State of Andhra Pradesh. Therefore, as per
the Andhra Pradesh Reorganisation Act, Sivaramakrishna
Committee was constituted to decide as to where the capital for
the residuary State of Andhra Pradesh is to be located. The
then Chief Minister Sri Nara Chandra Babu Naidu brought the
Capital Region Development Authority Act in the month of
December, 2014 and declared that 25 villages which are
adjacent to the Krishna River will be the capital region.
(b) However, even prior to it several people who got
acquaintance with important people in the Government got
information as to where the capital would be located and they
purchased the lands within the said area and adjacent to the
C.R.D.A. region from the farmers of that locality deceptively.
(c) Whileso, after the month of July, 2019 it has been
widely published in the media that persons who got close
acquaintance with the important persons in the erstwhile
government purchased lands in their names and in the name of
their companies on the basis of the prior information got to
them regarding location of the capital city and that the farmers,
who have no information regarding location of capital in their
area, have sold the lands. He also came to know when the Bill
was introduced in the Assembly by the present Government to
abolish the C.R.D.A. enactment, during the debates took place
in the Assembly, that officials who worked in the Government in
high positions and the political leaders who are in power at that
time have purchased lands in their names and in binami names
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by using their black money within the C.R.D.A. region and
adjoining the said C.R.D.A. region for paltry sale consideration
and thereby had monetary gain for them. All this was done as
per the conspiracy hatched up between the officials and the
political leaders and the persons who purchased the said lands.
(d) Therefore, when he verified the sale transactions that
took place in the C.R.D.A. region in the website of the
Registration Department, it came to light that (1) Lalitha Super
Specialty Hospital; (2) Sri Thottempudi Venkateswara Rao,
Cherukuri Tejaswi of North West Holdings Private Limited which
belongs to them; (3) Sri C. D. Murali Mohan and Sri
B.V.R.Sarma to whom Vertex Homes Private Limited belongs; (4)
Gayathri Realtors Limited, Chennai; (5) Smt.Kilaru Srihasa
W/o.Kilaru Rajesh, who is close associate of Sri Nara Chandra
Babu Naidu and Sri Nara Lokesh and (6) Good Life Estates,
Vijayawada, (petitioners herein) have purchased vast extent of
lands in the said capital region area and near to it. It is stated
that as per the information collected by the de facto
complainant, even before officially declaring the area where the
capital is going to be located, the officials of the Government
and political leaders clandestinely divulged the information
relating to area where the capital is going to be located to their
kith and kin and to their men and companies and on the basis
of the said information furnished, the aforesaid persons and
companies have purchased the lands from the farmers of the
said area. Therefore, the farmers who sold the lands have been
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Crl.P.No.4819 of 2020 & batch
cheated and deceived. So, it is alleged by the de facto
complainant in the report that there has been a conspiracy
hatched up between the highly placed government officials and
the political leaders on one hand and the persons who
purchased the lands during the period from June, 2014 to
December, 2014 before officially declaring the location of the
capital area in as much as the official information has been
clandestinely leaked to the persons who purchased the lands
from the farmers. Therefore, he prayed in his report to enquire
into the matter and take necessary legal action in this regard.
4) The said report was lodged on 07.09.2020 at about
13.30 hours by the de facto complainant with the police.
Initially, an entry was made in the General Diary i.e. G.D. by
the police. As per record, as per the instructions of the
Additional Deputy General of Police, C.I.D. A.P., preliminary
enquiry was ordered on the allegations set out in the said
report. Accordingly, Sri R.S. Kishore Kumar, Inspector of Police,
CID, RO, Vijayawada, has conducted a preliminary enquiry
relating to the said allegations. He has submitted his
preliminary enquiry report to the Addl. Dy.G.P., CID,
Mangalagiri, on 16.09.2020 stating that he has enquired one
Marella Nagi Reddy S/o.Rami Reddy of Kaza village and he
stated that in the month of June, 2014 one Chilakapati Srinivas
of Bethampudi village approached him and asked him to sell his
land to Good Life Estates Private Limited and he refused.
Thereafter, he again came to him and pressurized him to sell
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the property for Rs.40.00 Lakhs and accordingly, he sold the
said land to Good Life Estates Private Limited represented by
K.Venkateswarlu and J.Srinivasa Rao, and that few months
thereafter the then Government announced location of capital at
Thulluru area and Bethempudi village is also located in the
capital region and consequently, the value of the land has
increased. It is also stated in the preliminary enquiry report
that the Inspector of Police also examined one Pandi
Hanumantha Rao S/o.Satyanarayana of Nehru Nagar, Guntur,
and he stated that he had land in Namburu village and in the
month of July, 2014 he sold his land to one V.V.R. Varma and
C.V. Murali Mohan, who are the representatives of Vertex
Homes Private Limited and later the capital area was
announced and Namburu village is just abetting the core capital
area and as such value of the said lands is also increased and
when the aforesaid persons who sold the lands questioned the
above purchasers in this regard over phone as to why they
purchased the lands without disclosing the proposal of location
of the capital at the said lands that the purchasers threatened
them with dire-consequences.
5) Based on the said preliminary enquiry report dated
16.09.2020 wherein it is stated that the preliminary enquiry
revealed that the contents of the report lodged by the de facto
complainant disclose commission of a cognizable offence, the
present F.I.R. was registered as per the instructions of the Addl.
Dy.G.P., CID, AP., Mangalagiri, in Crime No.49 of 2020 for the
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offences punishable under Sections 420, 409, 406 and 120-B of
IPC. The said case is now under investigation.
6) The petitioners in this batch of Criminal Petitions, who
are all shown as accused in the aforesaid F.I.R., sought quash
of the said common F.I.R. registered against them on the
ground that the facts of the case even if they are taken to be
true at its face value do not constitute any offence punishable
under Sections 420, 409, 406 and 120-B of IPC and allowing
the proceedings to be continued against them pursuant to the
registration of the aforesaid F.I.R. would amount to abuse of
process of law.
7) Learned Public Prosecutor appearing for the State filed
counter-affidavit and additional counter-affidavit along with
material papers opposing the claim of the petitioners for quash
of the F.I.R. The 2nd respondent who is the de facto
complainant also filed his counter-affidavit opposing the claim
of the petitioners to quash the F.I.R. The counter-affidavit of
the 2nd respondent de facto complainant is nothing but verbatim
reproduction of the contents of the F.I.R. The pleas taken by
the learned Public Prosecutor in his counter-affidavit and
additional counter-affidavit would be dealt with while referring
to the elaborate arguments addressed by the learned Advocate
General on behalf of the State, to avoid repetition of the pleas.
It would be suffice to make a detailed reference of the
submissions made by the learned Advocate General on behalf of
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the State which covers the pleas taken in the counter-affidavit
and additional counter-affidavit filed by the prosecution.
8) When these Criminal Petitions came up for final hearing
before this Court, I have heard Sri Siddardha Luthra, learned
senior counsel, Sri Posani Venkateswarlu, learned senior
counsel, and other learned counsel for the petitioners Sri K.S.
Murthy, Sri Ginjupalli Subba Rao, Ms.S.Pranathi, Sri A.K.
Kishore Reddy and Sri M.V. Subba Reddy, in all these Criminal
Petitions and the learned Advocate General, assisted by the
learned Public Prosecutor for the State at length. Heard Sri
O.Kailashnath Reddy, learned counsel appearing for the de
facto complainant. Also considered the written submissions
filed by learned Public Prosecutor.
RIVAL CONTENTIONS:
9) Learned counsel for the petitioners and learned senior
counsel Sri Siddardha Luthra, vehemently contended that the
facts of the case do not constitute any offences punishable
under Sections 420, 409, 406 and 120-B of IPC for which F.I.R.
was registered against the petitioners. They would submit that
many of the petitioners who are in the field of business have
only purchased the lands in the process of developing their
business activity in the field of real estate and in the
construction field. Therefore, purchasing lands for a valid
consideration under registered sale deeds does not amount to
commission of any offence.
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10) It is contended that the news relating to location of
capital for the newly carved out State of Andhra Pradesh
between the Krishna District and the Guntur District adjacent
to Krishna river and the highway between the Krishna District
and the Guntur District is afloat and has been in speculation
from the time when the Andhra Pradesh Reorganisation Act for
bifurcation of the common State of Andhra Pradesh was passed
in the Parliament in the month of March, 2014. They would
contend that even when the government was formed in the
month of June, 2014, that the then Chief Minister publicly
announced immediately after his swearing in ceremony on
09.06.2014 that the Government is contemplating to locate the
new capital for the State of Andhra Pradesh in between the
Krishna District and the Guntur District by the side of the
Krishna river and the same has been widely published in all
widely circulated newspapers. Even subsequently also the news
relating to the proposal of the Government to locate the capital
between the Krishna District and the Guntur District has been
continuously published in various widely circulated Telugu and
English newspapers. Therefore, the proposal of the Government
to locate the capital between the Krishna District and the
Guntur District adjacent to Krishna river is very much in the
public domain and it is not a non-public information either in
the Government circle or in the public circle. Therefore, they
would contend that if the petitioners who got information
through the news published in the newspapers regarding the
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proposal of the Government to locate the capital in the said area
purchase any lands in the said area which are willingly sold by
the owners of the said lands for a valid sale consideration that it
does not amount to any offence under law and no criminal
liability can be attributed to the petitioners in the given facts
and circumstances of the case.
11) Therefore, they would contend that launching criminal
prosecution against the petitioners on the alleged vague report
lodged by a stranger to the said sale transactions at the
instance of some vested interests who are behind him and on
the basis of the alleged statements said to have been given by
the sellers of the land subsequently after lapse of six long years
of selling away their lands, during the course of investigation
alleging that the fact that the capital is going to be located in
the said area where their lands are situated is not disclosed to
them before purchasing the lands and that there is hike in the
price of lands subsequent to declaration of the capital officially
by the Government, clearly amounts to abuse of process of law.
Therefore, learned counsel for the petitioners prayed to quash
the F.I.R. on the ground that criminal prosecution in the said
facts and circumstances of the case is not legally maintainable
against them.
12) It is finally contended by the learned Counsel for the
petitioners that the de facto complainant, who is a stranger to
the sale transactions and who did not sustain any loss on
account of the said sale transactions, has no locus standi to
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lodge the said report with the police and initiate criminal
prosecution against the petitioners.
13) Per contra, learned Advocate General with the able
assistance of Sri R.Srinivasa Reddy, learned Public Prosecutor
for the State of Andhra Pradesh, vehemently contended that the
contents of the F.I.R. reveal that the petitioners, who have
purchased the lands within and abetting the capital region got
prior information from the top officials working in the
Government and from the political leaders in the Government
with whom they got close acquaintance regarding exact location
of the capital area and the proposed villages which would come
within the purview of the capital area and based on the prior
information unauthorizedly furnished to them that they
purchased lands from the farmers without disclosing to them
that the capital city is going to be located at their villages and
the said concealment of material fact amounts to cheating the
sellers in as much as, as per the explanation appended to
Section 415 IPC makes it clear that a dishonest concealment of
fact is a deception within the meaning of the said Section.
Therefore, he would contend that there has been a conspiracy
between the petitioners who purchased the lands and the top
government officials who are working in the Government at that
time and the political leaders relating to unauthorized
disclosure of the information relating to location of capital and
as such these facts which are supported by the statements
given by some of the vendors of the lands during the course of
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investigation prima facie make out the offences punishable
under Section 420 of IPC and also under Section 120-B of IPC.
So, the learned Advocate General would vehemently contend
that the matter requires deep probe to unearth the said
conspiracy hatched up between the petitioners on one hand and
the top government officials working at that time and the
political leaders.
14) Repelling the contention relating to the locus standi of
the de facto complainant to lodge the report, learned Advocate
General would submit that the concept of locus standi is alien to
criminal law and any person who got information relating to
commission of offence is legally entitled to lodge report to set
the criminal law into motion except only in certain cases which
are carved out in Sections 195 to 199 of Cr.P.C. which require
locus standi and as the present offences are not within the
purview of Sections 195 to 199 Cr.P.C., the contention raised by
the petitioners regarding the locus standi of the de facto
complainant to lodge the report has no merit.
15) He would further contend that as per Section 55(5)(a)
of the Transfer of Property Act, the buyer is bound to disclose to
the seller any facts as to the nature or extent of seller's interest
in the property of which the buyer is aware, but of which he has
reason to believe that the seller is not aware, and which
materially increases the value of such interest. Therefore, the
petitioners being the buyers of the land are under the legal
obligation under Section 55(5)(a) of the T.P. Act to disclose to
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the seller that the capital is going to be located in the said area
and as they did not disclose the said fact before purchasing the
lands and concealed the said fact it would clearly come within
the purview of the explanation appended to Section 415 of IPC
of dishonest concealment of fact which is a deception within the
meaning of the said section. Therefore, he would submit, that a
clear case of Section 420 IPC is made out. So, he contends that
there is no merit in the contention of the petitioners that the
facts of the case do not constitute any offence punishable under
Section 420 IPC and in fact the facts of the case clearly
constitute the offences punishable under Sections 420 and
120-B of IPC.
16) The learned Advocate General then contended that the
employees working in the concerned section in the secretariat,
who are involved in preparing the G.Os. in determining the area
covered by C.R.D.A. gave statements under Section 161 Cr.P.C.
and under Section 164 Cr.P.C. before the police and the learned
Magistrate respectively during the course of investigation that
some irregularities have taken place in preparing the draft
G.Os. without mentioning the names of the villages covered by
the said capital region which are kept under secret and as such
these statements prima facie establish that some illegalities and
irregularities took place in the matter of preparing the said
G.Os. which also establish conspiracy as alleged by the
prosecution.
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17) He would also submit that these facts relatively also
establish that there has been offence of insider trading on
account of the conspiracy hatched up between the higher
officials in the government, political leaders of the then
Government and the petitioners who purchased the aforesaid
lands which requires deep probe during the course of
investigation. Therefore, the learned Advocate General prayed
for dismissal of these Criminal Petitions.
18) In reply to the aforesaid contentions raised by the
learned Advocate General on behalf of the State, learned Senior
Counsel Sri Siddhardh Luthra, would submit that Section
55(5)(a) of the T.P. Act only imposes an obligation on the buyer
to disclose to the seller only a fact relating to the nature and
extent of the seller's interest in the property which may
materially increase the value of such interest and it does not
cover the information relating to the reason for purchase of the
said lands by the buyer or any future benefit that they may
derive in respect of the said lands. Therefore, learned Senior
Counsel would submit that the non disclosure of the fact that
the capital is going to come within the said region to the seller
even if true it does not amount to concealment of material fact
as required under Explanation appended to Section 415 IPC. He
would then contend that the mere fact that there is subsequent
increase in the value of the property on account of location of
capital in the said area cannot afford a ground to prosecute the
petitioners for the offence punishable under Section 420 IPC. It
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is contended that as per Section 55(vi)(a) of the T.P. Act, the
buyer is entitled to the benefit of any improvement in, or
increase in value of, the property, and to the rents and profits
thereof when the ownership of the property has passed to him.
Therefore, when the buyer is legally entitled to the benefit of
increase in the value of the property on account of the
ownership of the property that was passed to him, the sellers
cannot legitimately complain that they were cheated by the
buyers as there is subsequent increase in the value of the
property.
19) The learned Senior Counsel Sri Siddhardh Luthra
further contends that the offence of insider trading is not made
an offence under any of the provisions of the IPC and it relates
only to the fraud played pertaining to sale and purchase of
securities and bonds in the stock market and it is only made an
offence under The Securities and Exchange Board of India Act,
1992 (herein after called as "SEBI Act"). So, he would contend
that invoking the said theory of insider trading even relatively or
contextually to prosecute the petitioners in this case for the
offences punishable under the IPC is legally unsustainable. He
finally contends that the alleged irregularities and illegalities
spoken to by some of the official witnesses in their 164 Cr.P.C.
statements said to have been given before the learned
Magistrate, at best show that there is contravention of the
business rules, and even if it is true, they do not establish
anything incriminating against these petitioners who have
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nothing to do with the said preparation of G.Os. and as such
the said statements do not in any way support the case of the
prosecution against these petitioners.
20) Having regard to the magnitude of the vital issues and
contentions raised by the prosecution and also the petitioners,
as elaborately discussed supra, and particularly as the findings
that may be recorded in this judgment in the given facts and
circumstances of the case, would have far reaching
consequences on all the sale transactions that have already
taken place and that may take place in future, I have given my
earnest, anxious and thoughtful consideration to the
aforementioned rival contentions raised by both the parties.
21) Although arguments have been also addressed by
learned Counsel appearing for some of the petitioners in these
Criminal Petitions that the present Government in order to
wreak vengeance against the petitioners and against some of
the persons who have some acquaintance with the erstwhile
Government, the present prosecution has been illegally and
maliciously launched to harass and humiliate the petitioners by
distorting the facts to drag the petitioners into the alleged
conspiracy with the Government officials by concocting a false
story, this Court is of the considered view that without entering
into any controversy relating to the said motive attributed to the
present Government by the petitioners, that these Criminal
Petitions have to be decided dispassionately irrespective of the
motives that are attributed on either side, strictly adhering to
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question of fact, question of law, and interpretation of the legal
provisions relevant in the context to determine the present
controversy involved in these Criminal Petitions. The Court is
primarily required to see in the given facts and circumstances of
the case, whether the facts of the case emanating from the
record even taken to be true at its face value, constitute any
offences punishable under Sections 420, 409, 406 and 120-B of
IPC for which the F.I.R. is registered. If the facts of the case
prima facie constitute all or any one of the offences for which
the F.I.R. is registered, the Court shall allow the investigation to
go on to find out the truth or otherwise of the said allegations. If
the facts of the case do not constitute any offences for which the
F.I.R. is registered and no offence is made out from the facts of
the case, then it amounts to abuse of process of law to allow the
criminal proceedings initiated pursuant to registration of F.I.R.
to be continued against the petitioners and the F.I.R. registered
against them is liable to be quashed. So, the main focus of the
Court should be on the vital issue of ascertaining whether the
facts of the case constitute any offence or offences for which the
F.I.R. is registered or not.
22) This is a very peculiar and very interesting case and in
fact a case of first of its kind where the prosecution seeks to
criminalize private sale transactions entered into between the
petitioners as buyers of the land and the sellers of the land long
back about six years ago by invoking the concept/theory of
offence of insider trading applying the same relatively to the
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facts of the case, primarily on the ground that the petitioners as
buyers of the land did not disclose to the owners of the land
that the capital city is going to be located in the said area and
thereby concealed the said material fact and cheated the owners
of the land and on the ground that as the location of the capital
was officially declared subsequently that there is a phenomenal
increase in the value of the land and the owners of the land
sustained loss on account of concealment of the said fact.
23) Therefore, when that be the substratum of the
prosecution case, the paramount questions that arise for
determination are whether it is legally permissible to criminalize
private sale transactions willingly entered into by the
owners/sellers of the land with the buyers for a valid sale
consideration, on the sole ground that the buyers did not inform
the sellers of the land that the capital area is going to be located
at their lands or not under Section 420 of IPC? Whether it
amounts to dishonest concealment of fact as per the
Explanation appended to Section 415 of IPC? Even if there is
subsequent increase in the value of the land on account of
official announcement of location of the capital subsequently at
that area, whether any offence under Section 420 of IPC is
constituted or not is also the question to be determined. Then
the other important question for determination is whether the
concept of offence of insider trading is applicable to the present
facts of the case. Finally, it is to be ascertained whether any
element of criminality is involved in the transaction or not.
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LOCUS STANDI OF THE DE FACTO COMPLAINANT TO
LODGE REPORT WITH THE POLICE:-
24) Before adverting to the above vital questions, the
Court is first inclined to decide the cavil raised relating to the
locus standi of the de facto complainant to lodge the report with
the police setting the criminal law into motion. No doubt,
admittedly, the de facto complainant is absolutely a stranger to
the sales transactions that took place between the petitioners
and the vendors in respect of the sale of the lands in question.
The de facto complainant is not the person who sold the lands
to the petitioners or to anyone and he is not the person who
sustained any loss on account of the said sale transactions.
However, it is to be noted that as rightly contended by the
learned Advocate General that it is settled proposition of law
that the concept of locus standi to set criminal law into motion
is alien to criminal law. Any person who got information
regarding commission of a cognizable offence is entitled to bring
the same to the notice of the concerned police to investigate
regarding the truth or otherwise of the said version and set the
criminal law into motion. As per our criminal jurisprudence, the
basic principle is that, eventually, every offence is against the
society. Therefore, any person who got acquaintance with the
facts of the case relating to commission of any cognizable
offence can set the criminal law into motion by lodging a report
to that effect. Only in exceptional cases which are exempted
from this principle, which are set out in Sections 195 to 199
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Cr.P.C. in respect of certain offences, the criminal has to be set
into motion only by a person who is aggrieved. The present
offences for which the petitioners are sought to be prosecuted
do not fall within the purview of the exceptional cases under
Sections 195 to 199 Cr.P.C.
25) Legal position in this regard is not res nova and the
same has been authoritatively very well settled. The
Constitutional Bench of the Supreme Court in the case of A.R.
Antulay v. Ramdas Sriniwas Nayak and Ors.1 had an occasion
to deal with this concept of locus standi of a person to set the
criminal law into motion. The Apex Court at para No.6 of the
Judgment held as follows:
"It is a well recognised principle of criminal
jurisprudence that anyone can set or put the criminal law
into motion except where the statute enacting or creating
an offence indicates to the contrary. The scheme of the
Cr.P.C. envisages two parallel and independent agencies for
taking criminal offences to Court. Even for the most
serious offence of murder, it was not disputed that a private
complaint can, not only be filed but can be entertained and
proceeded with according to law."
Further held as follows:
"Locus standi of the complainant is a concept foreign
to criminal jurisprudence save and except that where the
statue creating an offence provides for the eligibility of the
complainant, by necessary implication the general principle
gets excluded by such statutory provision. .... While
Section 190 Cr.P.C. permits anyone to approach the
Magistrate with a complaint, it does not prescribe any
1 AIR1984SC718=(1984)2 SCC 500
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qualification the complainant is required to fulfil to be
eligible to file a complaint. But where an eligibility criterion
for a complainant is contemplated specific provisions have
been made such as to be found in Sections 195 to 199
Cr.P.C. These specific provisions clearly indicate that in the
absence of any such statutory provision, a locus standi of a
complainant is a concept foreign to criminal jurisprudence.
In other words, the principle that anyone can set or put the
criminal law in motion remains intact unless contra-
indicated by a statutory provision.
26) Also held that the general principle of nearly universal
application is founded on a policy that an offence i. e. an act or
omission made punishable by any law for the time being in
force (See Section 2(n) Cr.P.C.) is not merely an offence
committed in relation to the person who suffers harm but is
also an offence against society. The society for its orderly and
peaceful development is interested in the punishment of the
offender. Therefore, prosecution for serious offences is
undertaken in the name of the State representing the people
which would exclude any element of private vendatta or
vengeance. Punishment of the offender in the interest of the
society being one of the objects behind penal statutes enacted
for larger good of the society, right to initiate proceedings
cannot be whittled down, circumscribed or fettered by putting it
into a straight jacket formula of locus standi unknown to
criminal jurisprudence, save and except specific statutory
exception.
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27) The Bombay High Court of Nagpur Bench in the case
of Shriram Krishnappa Asegaonkar v. State of Maharashtra2
held at para No.12 of the judgment as follows:
"There is, therefore, no doubt that the complaint of
offence of cheating punishable under Section 420 IPC can
be filed by any person to set the law in motion and that it is
not necessary that such a complaint should be filed by only
the person deceived."
28) In arriving at the said conclusion, the Bombay High
Court relied on the judgment of the Division Bench of the
Calcutta High Court in the case of Mahadeolal v. Emperor3
wherein the Calcutta High Court held that the prosecutor in
criminal case is really the Crown and the complainant merely
sets the machinery of the laws in motion, and, in a case of
cheating it has been held therein that it is not necessary that
complainant should have been the person deceived. In that case
a pleader was deceived by writing a letter of cancellation of
contract and the complaint was filed by servant of a firm, who
became aware of the deception. It was held that the prosecution
initiated by the servant of a firm is maintainable.
29) So, in view of the law enunciated in the aforesaid
judgments, the contention of the petitioners that the de facto
complainant has no locus standi to initiate criminal prosecution
by way of lodging a report with the police has no merit and it is
2 1987 (1) BomCR 59 = 1986 MhLJ 1004
3 1908 CLJ 342
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liable to be rejected. The cavil is answered accordingly in favour
of the prosecution.
30) However, though the plea relating to locus standi
raised by the petitioners is not legally sustainable, justification
on the part of the stranger to the alleged sale transactions in
question, who is the de facto complainant, in lodging a report
with the police initiating criminal prosecution against the
petitioners and that too after lapse of six years and its
genuineness is certainly a relevant factor which requires
consideration and the same will be adverted to at the
appropriate time while dealing with the same during the course
of discussion of this judgment.
CONCEPT OF INSIDER TRADING AND ITS APPLICATION TO
THE FACTS OF THE CASE:-
31) Ferreting out the origin and history of the offence of
insider trading reveal that basically the offence of insider
trading relates to trading of a public company's stock or other
securities (such as bonds or stock options) based on material,
nonpublic information about the company. In various
countries, some kinds of trading based on insider information is
illegal, because it is seen as unfair to other investors who do not
have access to the information, as the investor with insider
information could potentially make larger profits than a typical
investor could make. The study on the subject reveals that the
rules governing the offence of insider trading are complex and
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vary significantly from country to country. The extent of
enforcement also varies from one country to another. Trading
by specific insiders, such as employees, is commonly permitted
as long as it does not rely on material information not in the
public domain. Rules prohibiting or criminalizing insider
trading on material nonpublic information exist in most
jurisdictions around the world, but the details and the efforts to
enforce them vary considerably. In the United States, Sections
16(b) and 10(b) of the Securities Exchange Act, 1934 directly
and indirectly address insider trading. The United States
Congress enacted this law after the stock market crashed in
1929.
32) In the European Union and the United Kingdom,
trading on nonpublic information is, under the rubric of market
abuse, subject at a minimum to civil penalties and to possible
criminal penalties as well. United Kingdom's Financial Conduct
Authority has the responsibility to investigate and prosecute
insider dealing, defined by the Criminal Justice Act, 1993.
Japan enacted its first law against insider trading in 1988. The
Australian legislation in this regard arose out of the report of
1989 parliamentary committee report which recommended
removal of the requirement that the trader be 'connected' with
the body corporate.
33) Thus, the history pertaining to the offence of insider
trading clearly reveals that the above laws are brought in this
regard mainly to curb the insider trading in the field of stock
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market. So, it is apparent that the said offence of insider
trading is essentially an offence relating to trading of public
company stocks or other securities such as bonds or stock
options based on material, nonpublic information about the
company. Absolutely, it has nothing to do with the sale and
purchase of land which is an immovable property which are
private sale transactions wholly unrelated to the affairs of stock
market business. As it is found that the insiders in the
company who are associated with the affairs of the company
have been furnishing nonpublic information unauthorisedly to
some investors relating to sale of shares, bonds and other
securities and as it is resulting into loss to other investors
which is found to be unfair, to curb these illegal acts of insider
trading, various countries across the world brought various
enactments.
34) Similarly, India also brought into force the Securities
and Exchange Board of India Act, 1992, to curb the offence of
insider trading in the field of stock market in India.
35) As per the statement of objects and reasons of the said
enactment, originally SEBI was established in 1988 through a
government resolution to promote orderly and healthy growth of
the securities market and for investors' protection. This SEBI
has been monitoring the activities of stock exchanges, mutual
funds, merchant bankers, etc., to achieve these goals. As the
capital market has witnessed tremendous growth, characterised
particularly by the increasing participation of the public, it is
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felt that investors' confidence in the capital market can be
sustained largely by ensuring investors' protection. With this
end in view, Government decided to vest SEBI immediately with
statutory powers required to deal effectively with all matters
relating to capital market. So, the said Act 15 of 1992 was
introduced with the above objective and the SEBI Bill has been
passed by both the Houses of Parliament and received the
assent of the President on 4th April 1992 and it came on to the
Statute Book as the Securities and Exchange Board of India
Act, 1992 with effect from 30-01-1992.
36) Therefore, insider trading in India is an offence
according to Section 12-A and 15-G of the SEBI Act. As per the
provisions of the aforesaid Act, the offence of insider trading is
said to be committed when a person with access to nonpublic,
price sensitive information about the securities of the
company subscribes, buys, sells, or deals, or agrees to do so or
counsels another to do so as principal or agent. Price-sensitive
information is information that materially affects the value of
the securities. Section 12-A of the SEBI Act deals with the
acts which constitute insider trading relating to sale of any
securities listed or proposed to be listed on a recognized stock
exchange and Section 15-G deals with imposing penalty for
committing the said offence of insider trading.
37) Therefore, insider trading is only made an offence in
India under the SEBI Act, 1992 and it essentially deals with the
sale and purchase of securities in the field of stock market
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based on nonpublic material information. It is a special
enactment which specifically and exclusively deals with the
offences relating to sale of securities in stock market. Insider
trading is not made an offence specifically under the Indian
Penal Code. No provisions akin to Section 12-A and 15-G of the
SEBI Act is incorporated in IPC by the Parliament relating to
private sale transactions of purchase or sale of land which is an
immovable property by invoking the said concept/theory of
insider trading. Therefore, the offence of insider trading is
totally alien to our criminal law under IPC. It is a concept or
offence totally unknown to our criminal law under Indian Penal
Code.
38) When the said concept of offence of insider trading is
not made applicable to purchase of any immovable property like
lands of private individuals and when the same is only confined
to purchase of securities and bonds under the SEBI Act, the
same cannot be even contextually or relatively applied or
invoked to criminalize the private sale transactions relating to
purchase of a land which is an immovable property in the guise
of the offence of insider trading. The provisions of Sections 12-
A and 15-G of the SEBI Act or any of its provisions cannot be
read into and imported into the provisions of the IPC much less
into Section 420 of IPC. It is not at all the intention of the
Parliament to attribute any criminal liability to such private sale
transactions of immovable property either under Section 420
IPC or under any provisions in the scheme of I.P.C. Therefore,
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this Court has absolutely no hesitation to hold that the said
concept/theory of the offence of insider trading which is
essentially an offence dealing with illegal sale of securities and
bonds of the company cannot be applied to the private sale
transactions relating to sale and purchase of lands to
criminalize the said transactions under any of the provisions of
the IPC much less under Section 420 of IPC. It is legally
impermissible to prosecute the petitioners for the offences
under Sections 420, 406, 409 and 120-B of IPC by applying the
said concept of insider trading and in the guise of the said
concept of insider trading.
39) Learned Advocate General would contend that the said
concept of the offence of insider trading is to be relatively
applied to the present facts of the case as the present facts of
the case are somewhat akin to the said offence of insider trading
as envisaged under the SEBI Act. By the said argument,
obviously, the idea that is sought to be conveyed by the learned
Advocate General is that as the allegations in the F.I.R. show
that the petitioners obtained prior information from the higher
officials in the Government and political leaders regarding exact
location of the capital and thereby purchased the lands in the
said area based on the said information, that the facts of the
case constitute an offence akin to insider trading in purchasing
the said lands. This Court is unable accede the said contention.
It is elaborately discussed supra, while dealing with the concept
of offence of insider trading and found that the said offence of
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insider trading essentially deals with only sale and purchase of
securities and bonds based on non-public material information
under the special enactment with the object of protecting the
capital market and to instill investors' confidence in the capital
market. Therefore, when it is only confined to the sale and
purchase of securities and bonds in the field of capital market,
as already held supra, the same cannot be read into the
provisions of IPC much less into Section 420 IPC. Parliament
never intended to make private sale transactions relating to
landed property an offence by applying the concept of insider
trading or to bring the same within the purview of the said
concept of insider trading. Therefore, the said contention holds
no water.
RIGHT TO ACQUIRE PROPERTY IS A CONSTITUTIONAL
RIGHT AND A LEGAL RIGHT:
40) Earlier Article 19(1)(f) and Article 31 of the
Constitution of India are part of Chapter III of the Constitution
dealing with fundamental rights of a citizen. Article 19(1)(f)
guaranteed to the Indian citizen a right to acquire, hold and
dispose of property. Article 31 provided that "no person shall be
deprived of his property save by authority of law". Therefore, in
view of Article 19(1)(f) and Article 31 of the Constitution, right to
property was part of fundamental right of a citizen.
Subsequently, by 44th constitutional amendment both Article
19(1)(f) and Article 31 were repealed with effect from
20.06.1979. So, the right to property ceased to be a
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fundamental right. However, the right to acquire property
continues to be a constitutional right, legal right and also a
human right. Provision akin to Article 31 has been
incorporated under Article 300-A in Chapter-IV of the
Constitution under the rubric "right to property".
41) The Supreme Court, in the case of D.B. Basnett v.
The Collector, East District, Gangtok, Sikkim4 held at para
14 of the judgment as follows:
"We may note that even though rights in land are no
more a fundamental right, still it remains a constitutional
right under Article 300A of the Constitution of India."
42) The Apex Court in the case of Chairman, Indore
Vikas Pradhikaran v. Pure Industrial Coke & Chemicals
Ltd.5 held in following terms:
"The right to property is now considered to be not only
a constitutional right but also a human right.
Under Article 17 of the Universal Declaration of
Human Rights, 1948 dated 10-12-1948, adopted in the
United Nations General Assembly Resolution, it is stated
that: (i) Everyone has the right to own property alone as
well as in association with others. (ii) No one shall be
arbitrarily deprived of his property.
Earlier human rights existed to the claim of
individuals right to health, right to livelihood, right to
shelter and employment etc, but now human rights have
started gaining a multifaceted approach. Now property
rights are also incorporated within the definition of human
rights. Even claim of adverse possession has to be read in
consonance with human rights.
4 Judgment in Civil Appeal No. 196 of 2011 dated 02.03.2020
5 (2007) 8 SCC 705
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Also held that, property, while ceasing to be a
fundamental right would, however, be given express
recognition as a legal right, provision being made that no
person shall be deprived of his property save in accordance
with law."
43) In Tuka Ram Kana Joshi v. Maharashtra Industrial
Development Corporation6 the Supreme Court reiterated that
right to property is now considered to be, not only a
constitutional or a statutory right, but also a human right.
Though it is not a basic feature of the constitution or a
fundamental right, the right to property is considered very
much to be part of new dimensions where human rights are
considered to be in realm of individual's rights such as the right
to health, the right to livelihood, the right to shelter and
employment etc., and such rights are gaining an even greater
multifaceted dimension.
44) From the aforesaid exposition of law, it is now
abundantly made clear that a citizen has a legal and
constitutional right to acquire and hold property. The said right
of an individual to hold a property apart from being a legal
right, has also been held to be a human right.
45) Since the prosecution seeks to criminalize the private
sale transactions validly entered into by the petitioners as
buyers with their sellers for a valid sale consideration under
valid registered sale deeds by which they acquired the landed
6 (2013) 1 SCC 353
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property in question, the aforesaid right of the petitioners as
citizens of the country to acquire property as part of their
constitutional right, legal right, and human right assumes
significance in this context. Therefore, for that limited purpose,
the aforesaid legal position has been dealt with in this case.
FACTUAL FINDINGS:-
46) In the background of the aforesaid legal position that
the right to property is a constitutional right and legal right of a
citizen of the country, it is to be now seen whether buying a
land without informing the seller the purpose of buying the said
land or latent advantage which he may derive pertaining to the
sale transaction which is within the knowledge of the buyer
would amount to an offence under Section 420 of IPC and also
under Sections 406 and 409 of IPC or not.
47) Before embarking upon an enquiry on this vital
aspect, to have a comprehensive understanding of the case of
the prosecution, few relevant facts needs a mention to have a
clarity regarding the substratum of the prosecution case.
48) The erstwhile combined State of Andhra Pradesh
which was originally constituted under the States
Reorganization Act, 1956 with effect from 01-01-1956 was
bifurcated into two States i.e., the State of Telangana and the
State of Andhra Pradesh in the year 2014 as per the Andhra
Pradesh Reorganization Act 2014. The said enactment was
passed by the Parliament on 03.03.2014. Both the States i.e.,
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the State of Telangana and the residuary State of the present
Andhra Pradesh were formed with effect from 02-06-2014 which
is the appointed day under the Andhra Pradesh Reorganization
Act. In the General Assembly Elections held in the month of
April, 2014 for the residuary State of Andhra Pradesh, the
Telugu Desam Party came into rule. The Hyderabad city which
was the capital city for the erstwhile combined state of Andhra
Pradesh was made the capital for the State of Telangana. There
is no capital city for the State of Andhra Pradesh. Therefore, as
there is no capital for the State of Andhra Pradesh, the State
Government had to take steps to establish a capital city for the
newly carved out State of Andhra Pradesh. So, the Government
has passed the Capital Region Development Authority
enactment (hereinafter called as "C.R.D.A. Act") to build a
capital city between the Krishna District and the Guntur
District by the side of the Krishna river consisting of 25 villages
in the said C.R.D.A. region. G.O.Ms.No.252 and G.O.Ms.No.254
were issued to that effect notifying the capital region on
30.12.2014. A concept of land pooling was introduced under
the aforesaid enactment to acquire the lands from the owners of
the lands in the said villages for the purpose of establishing the
capital city.
49) Whileso, after the Andhra Pradesh Reorganisation Act
was passed on 03.03.2014 as there was speculation regarding
location of capital between the Krishna District and the Guntur
District, various people have purchased lands in between the
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said Krishna and Guntur Districts and the present petitioners
are also among the said persons who purchased the lands in
the said area. Some of the lands were purchased by them are
within the capital region and most of the lands are beyond the
capital region and also beyond the proposed inner ring road.
The location of these lands purchased by the petitioners is
identified as per the plans submitted by the prosecution along
with the C.D. file.
50) Now, the main case of the prosecution is that the
petitioners who purchased the said lands during the period
from June, 2014 to December, 2014 got prior information
regarding the exact location of the capital city unauthorisedly
from higher officials in the Government and the political leaders
and based on the said information they have purchased the said
lands from the owners of the said lands and at that time they
did not disclose to the owners that the capital city is going to
come within the said area and thereby cheated the sellers of the
land and they derived monetary benefit on account of increase
in the land value subsequently, after location of the capital in
that area is officially announced under the aforesaid G.Os. on
30.12.2014 and this has resulted into loss to the owners of the
land who sold the same oblivious of the fact that the capital city
is going to come in that area. Precisely this is the substratum
of the prosecution case.
51) Therefore, in the light of the aforesaid version of the
prosecution, the crucial question that arises for consideration is
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even if the said version of the prosecution is to be taken as true
at its face value, whether it constitute any offences punishable
under Sections 420, 409, 406 and 120-B of IPC or not.
SECTIONS 420 AND 415 OF I.P.C.
52) For better appreciation, Sections 420 and 415 of IPC
are reproduced hereunder for ready reference:
"S.420. Cheating and dishonestly inducing delivery
of property.--Whoever cheats and thereby dishonestly
induces the person deceived to deliver any property to any
person, or to make, alter or destroy the whole or any part of
a valuable security, or anything which is signed or sealed,
and which is capable of being converted into a valuable
security, shall be punished with imprisonment of either
description for a term which may extend to seven years,
and shall also be liable to fine."
53) While the above Section 420 of IPC deals with the
punishment for the offence of cheating, Section 415 IPC defines
what is cheating, and it reads thus:
"S.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".
Explanation.--A dishonest concealment of facts is a
deception within the meaning of this section.
54) At the outset it is to be noticed that certain
illustrations are given below Section 415 IPC illustrating some
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instances of offence of cheating and the facts of the case are not
coming within the purview of any of the said illustrations.
55) A combined reading of the aforesaid two Sections 415
and 420 IPC makes it manifest that the necessary ingredients
which are to be essentially established to constitute an offence
of cheating under Section 420 of IPC are (i) There must be a
false representation said to have been made by the accused to
the person deceived knowing fully well that the said
representation made by the accused is false at the time of
making it; (ii) the accused must induce the deceived person
fraudulently or dishonestly to deliver any property to him or to
any person based on the said false representation made by the
accused; (iii) and consequently it must result into loss or
damage to the said person, in body, mind or property.
56) So, going by the ingredients contemplated under
Sections 415 and 420 of IPC, it is obvious that deception is the
quintessence of the offence of cheating. So, to hold a person to
be guilty of cheating another person, usually and generally,
there must be an allegation that a false representation was
made by the accused to the person deceived knowing fully well
that the said representation is false to his knowledge at the time
of making it and thereby he must induce the person deceived to
deliver any property to him or to any person and consequently
the person deceived must sustain damage or harm to him either
in body, mind, reputation or to any property. Admittedly, as per
the facts of the prosecution case, it is not their case that the
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petitioners made any false representation to the owners of the
lands at the time of sale of the said lands and induced them to
deliver the said property to them. So, the above basic
ingredients required to constitute an offence of cheating under
Section 420 IPC are conspicuously absent in the facts of the
case.
57) It is also to be noticed that the alleged deception must
be fraudulent and the alleged inducement must be dishonest in
order to attract the offence under Sections 420 r/w. 415 IPC, in
view of the express language employed in the definition of
cheating in Section 415 IPC. Thus, certain negative terms like
dishonest, fraudulent etc. are used to attribute criminal liability
to a person. So, no act can be construed as an offence under
the Section unless they are committed dishonestly and
fraudulently. Considering the cardinal principle of criminal law
that there can be no offence unless it is done with requisite
mens rea i.e. guilty intention, the above qualifying words like
dishonestly and fraudulently are used.
58) Section 24 IPC defines the term "dishonestly" and it
reads as follows:
"S.24. Whoever does anything with the intention of
causing wrongful gain to one person or wrongful loss to
another person, is said to do that thing, "dishonestly"."
59) Wrongful gain and wrongful loss are again defined in
Section 23 IPC and it reads as follows:
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"S.23. "Wrongful gain".- Wrongful gain is the gain by
unlawful means of property to which the person gaining is
not legally entitled.
"Wrongful loss".- Wrongful loss is the loss by unlawful
means of property to which the person losing it is legally
entitled."
"Gaining wrongfully, losing wrongfully" - A person is
said to gain wrongfully when such person retains
wrongfully, as well as when such person acquires
wrongfully. A person is said to lose wrongfully when such
person is wrongfully kept out of any property, as well as
when such person is wrongfully deprived of property."
60) Thus, a comprehensive definition of wrongful gain and
wrongful loss, which are required to be established to prove a
dishonest act under Section 24 IPC is given. The word
"wrongful" means prejudicially affecting a party in some legal
right. For either wrongful loss or gain, the property must be
lost to the owner, or the owner must be wrongfully kept out of
it.
61) Similarly the term "fraudulently" is defined in Section
25 IPC and it reads as follows:
"S.25. Fraudulently.- A person is said to do a thing
fraudulently if he does that thing with intent to defraud but
not otherwise."
62) The literal meaning of the word "defraud" is almost
synonym to 'deception' and 'hoodwink' etc. When the
petitioners have acquired the property lawfully by paying valid
sale consideration to the sellers under registered sale deeds, it
cannot be said that any element of fraud or deception is
involved in the transaction.
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63) Therefore, when the facts of the case are viewed in the
light of the aforesaid definition of "dishonestly" under Section
24 IPC and the wrongful gain and wrongful loss under Section
23 IPC, this Court is at a loss to understand as to what is the
dishonest act that was committed by the petitioners relating to
the said sale transactions and what is the wrongful gain and
wrongful loss that is involved in the transaction and how the
petitioners gained property by unlawful means to which they
are not legally entitled and how the petitioners have deprived
the sellers of the property by unlawful means to cause wrongful
loss to them.
64) In the context, it is very much relevant to note that the
facts of the case show that as per the recitals in the sale deeds
that the sellers have voluntarily offered to sell their lands to the
petitioners to meet their family and legal necessities and the
petitioners have accepted the said offer and purchased the
lands by paying valid sale consideration under registered sale
deeds. Therefore, it is a lawful sale transaction and it cannot be
said that the petitioners had wrongful gain by unlawful means
of property to which they are not legally entitled. Similarly, as
the sellers have sold the lands under registered sale deeds after
receiving valid sale consideration to a tune of lakhs of rupees,
no wrongful loss is also caused to them by unlawful means by
the petitioners. The landed property was acquired lawfully i.e.
by lawful means by the petitioners. So, it cannot be said under
any stretch of reasoning that the petitioners have wrongfully
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Crl.P.No.4819 of 2020 & batch
acquired the property. Therefore, absolutely no act of
dishonesty is involved in the transaction.
65) However, learned Advocate General invoked the
Explanation appended to Section 415 IPC which says that "a
dishonest concealment of fact is a deception within the meaning
of this section" and thereby contended that the petitioners did
not inform the sellers of the land that the capital is going to
come in the said area where the said lands are located and
suppressing the said fact that they have purchased the lands
and if the petitioners informed the sellers that the capital is
going to come within that area that the sellers might not have
agreed to sell the said lands and consequently, as there is
subsequent increase in the value of the land after location of the
capital is notified by a G.O. on 30.12.2014 that the sellers are
put to monetary loss due to the acts of the petitioners in
concealing the said fact in buying the said land and as such
the facts of the case attract the definition of cheating under
Section 415 IPC and the facts of the case constitute an offence
under Section 420 of IPC. Thus, the learned Advocate General
as usual with the ability of adroit eloquence at his command
made his best effort to convince this Court that in the light of
the Explanation appended to Section 415 IPC, that a case under
Section 420 IPC is constituted in the facts and circumstances of
the case.
66) I am unable to persuade myself to countenance the
said contention raised by the learned Advocate General. In this
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Crl.P.No.4819 of 2020 & batch
context, in the first place it has to be seen that is it necessary
on the part of the buyer of the land to disclose the reason of
buying the land or the purpose of purchasing the land or any
latent advantage which he may have in purchasing the land
which is within the knowledge of the buyer to the seller at the
time of entering into the said sale transaction. Even if the
petitioners got any prior knowledge that there is a proposal to
locate the capital city in the said area whether they are legally
bound to disclose or inform the said fact to the seller of the land
and whether its nondisclosure amounts to dishonest
concealment of fact as required under Explanation appended to
Section 415 IPC or not. These are the paramount questions
required to be determined in view of the above vital contention
raised by the learned Advocate General.
67) Before adverting to the same, it is apposite to note that
illustration (i) among the illustrations given below Section 415
of IPC clearly explains as to what amounts to concealment of
fact. It reads thus:
" (i): A sells and conveys an estate to B. A, knowing that in conse-
quence of such sale he has no right to the property, sells or
mortgages the same to Z, without disclosing the fact of the previous
sale and conveyance to B, and receives the purchase or mortgage
money from Z. A cheats."
68) Therefore, it is only concealment of such information
or non-disclosure relating to right in the land that amounts to
dishonest concealment of material fact and not every
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Crl.P.No.4819 of 2020 & batch
extraneous information not relating to a right or interest of the
seller in the land.
69) Further, while answering the said question, it is
relevant to note that a transaction relating to sale of land
between two persons is essentially a contract between the buyer
and the seller. There would be an offer to sell the land and
acceptance of the said offer to purchase the land between the
said two persons. It involves payment of valid sale
consideration as per the terms and conditions adumbrated in
their contract to complete the said sale transaction of selling
and buying of the said land. Therefore, it is essentially a civil
transaction covered by the Indian Contract Act. There are
certain rights and liabilities imposed on both the buyer and the
seller under Section 55 of the Transfer of Property Act.
70) Learned Advocate General invoking Section 55(5)(a) of
the T.P. Act and placing heavy reliance on it, would contend
that the petitioners being the buyers of the land are bound to
disclose the sellers that there is a proposal to locate the capital
city in that area and that there is likelihood of increase in the
value of the said land in future and as the same is not disclosed
to the seller that it amounts to dishonest concealment of
material fact as contemplated under the Explanation appended
to Section 415 IPC. In order to appreciate the said contention of
the learned Advocate General, it is expedient to extract Section
55(5)(a) of the T.P. Act, which reads thus:
"Section 55(5) the buyer is bound -
CMR,J.
Crl.P.No.4819 of 2020 & batch
(a) to disclose to the seller any fact as to the nature or
extent of the seller's interest in the property of which the
buyer is aware, but of which he has reason to believe that
the seller is not aware, and which materially increases the
value of such interest."
71) A bare reading of the aforesaid provision makes it
manifest that there is only a liability on the buyer to disclose to
the seller any fact regarding the nature or extent of the
seller's interest in the property of which buyer is aware and
which he has reason to believe that the seller is not aware
which may materially increases the value of such interest.
Therefore, the underlying words that are to be noticed in the
aforesaid provision are nature or extent of seller's interest in
the property. Therefore, the crucial question that needs to be
considered in this regard is whether the said expression "nature
or extent of the seller's interest in the property" comprehends
within it the information relating to proposed location of capital
in the said land or not and also information relating to latent
advantage that the buyer may derive in future upon happening
of an event which is certain or uncertain. It is also to be seen
whether the buyer got duty to disclose that there is a possibility
of increase in the value of the land in the future or not.
Certainly, that is not the intendment of the Parliament under
Section 55(5)(a) of the T.P.Act. In the considered view of this
Court it does not cover the disclosure of information relating to
latent advantage in respect of the land as per settled law in this
regard.
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Crl.P.No.4819 of 2020 & batch
72) The nature of the duty of the buyer to disclose the
facts within his knowledge relating to the interest of the seller in
the property, as contemplated under Section 55(5)(a) of T.P. Act
has been succinctly explained by famous jurist and author
Mulla in the commentaries on Transfer of Property Act in its
Ninth Edition at page No.534 as follows:
"The rule matters only title of the seller in respect of
the property. Although the seller's title is ordinarily a
matter exclusively within his knowledge yet there may be
cases where the buyer has information which the seller
lacks. In such a case, he must not make an unfair use of
it. He must give the information to the seller. .... An
English illustration in this regard is the case of Summers
v. Griffiths7 where an old woman sold property at an
undervalue believing that she could not make out a good
title to it while the purchaser knew that she could. The
purchaser was held to have committed a suppressio veri
and the sale was set aside as fraudulent."
73) The same case is also cited as an illustration to
explain the nature of the duty of the buyer under Section
55(5)(a) of the Transfer of Property Act in the commentaries on
the Law of Transfer of Property Act authored by Sri G.C.V.
Subbarao, in its Fourth Edition at page No.1197.
74) Therefore, the legal position is now made abundantly
clear that the nature of the duty that is imposed on the buyer
under Section 55(5)(a) of the T.P. Act is only relating to the
interest of the seller in his property which the buyer is aware
7 (1866) 35 Beav 27.
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Crl.P.No.4819 of 2020 & batch
and the seller is not aware which is required to be disclosed by
the buyer.
75) This duty imposed on the buyer under Section
55(5)(a), the Act also does not embrace within itself any
information pertaining to the latent advantages in respect of the
land which the buyer is aware and the seller is not aware and it
does not cover such situation, in view of the law enunciated in
various cases discussed infra and as per the opinion expressed
by various jurists and authors based on the decided case law on
the point.
76) In the commentaries on the Law of Transfer of
Property Act authored by a renowned jurist Sri G.C.V.
Subbarao, in its Fourth Edition at page No.1197, under the
caption "Buyer's liabilities before completion of sale" while
dealing with the requirement of disclosure of facts materially
increasing the value under Section 55(5)(a) of the T.P. Act, it is
stated as under:
"Latent advantages need not be disclosed: A buyer
is not bound to disclose latent advantages or communicate
to his vendor facts which may influence his own judgment
in purchasing the property. In Fox vs. Mackreth ((1788) 2
Bro. C.C. 400 = 29 E. R. 224), A knowing that there was a
coal-mine in the estate of B of which he knew B was
ignorant entered into a contract to purchase the estate of B
for the price of the estate, without considering the mine. It
was held that the contract could not be set aside on the
ground of fraud since B, as the buyer, was not obliged from
the nature of the contract, to apprise the seller of the
existence of the mine."
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Crl.P.No.4819 of 2020 & batch
77) This judgment in Fox vs. Mackreth8 provides a
complete answer to the vital contention raised by the learned
Advocate General that the petitioners as buyers are bound to
disclose to the sellers that the capital city is going to come in
the said area while purchasing the said land and non-disclosure
of the same amounts to dishonest concealment of fact as
contemplated under Explanation appended to Section 415 IPC.
78) In the case of Fox vs. Mackreth8, the relevant
observations made in the said judgment are very apt to consider
to drive home the point involved in this case. It is observed as
follows:
"The doubt I have is, whether this case affords facts
from which principles arise to set aside this transaction,
which will not, by necessary application, draw other cases
into hazard. And without insisting upon technical morality,
I don't agree with those who say that where an advantage
has been taken in a contract, which a man of delicacy
would not have taken, it must be set aside; suppose for
instance, that A, knowing there to be a mine in the estate of
B, of which he knew B, was ignorant, should enter into a
contract to purchase the estate of B, for the price of the
estate, without considering the mine, could the court set it
aside? Why not, since B, was not apprised of the mine, and
A. was? Because B, as the buyer, was not obliged, from the
nature of the contract, to make the discovery. It is
therefore essentially necessary, in order to set aside the
transaction, not only that a great advantage should be
taken, but it must arise from some obligation in the party
to make the discovery. The Court will not correct a
contract, merely because a man of nice honour would not
have entered into it; it must fall within some definition of
8 (1788) 2 Bro. C.C. 400 = 29 E. R. 224
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Crl.P.No.4819 of 2020 & batch
fraud; the rule must be drawn so as not to affect the
general transactions of mankind."
79) As per the above illustration given in the judgment
that even if a buyer is aware of the fact that there is coal mine
in the land of the seller, and he buys the land without apprising
the seller of the said fact, for a valid price, it does not amount to
fraud as buyer has no legal obligation to inform the said fact to
the seller. When that be the clear legal position, the present
case absolutely stands on a better footing when compared to the
above illustration, where the petitioners also have no legal
obligation to inform the sellers that there is a proposal to locate
the capital city in their area.
80) Even in the commentaries on the Transfer of Property
Act authored by another eminent jurist Mulla in the Ninth
Edition at page No.534 while dealing with the buyer's duty of
disclosure under Section 55(5)(a) of the T.P.Act stated that there
is no doubt that the buyer is under no duty to disclose latent
advantages and this is also the law in England as stated in the
judgment of Lord Selborne in Coaks v. Boswell9.
81) In Coaks v. Boswell9 it is held as hereunder:
"Every such purchaser is bound to observe good faith
in all that he says or does, with a view to the contract, and
(of course) to abstain from all deceit, whether by
suppression of truth or by suggestion of falsehood. But
inasmuch as a purchaser is (generally speaking) under
no antecedent obligation to communicate to his vendor
9 (1886) 11 App Cas 232, 235
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Crl.P.No.4819 of 2020 & batch
facts which may influence his own conduct or judgment
when bargaining for his own interest, no deceit can be
implied from his mere silence as to such facts, unless
he undertakes or professes to communicate them.
This, however, he may be held to do, if he makes some
other communication which, without the addition of
those facts, would be necessarily or naturally and
probably misleading."
82) While expressing the above opinion, Jurist Mulla also
referred the judgment in Fox v. Mackrett8, which is already
cited supra, in which it is held that the buyer need not disclose
the existence of a coal mine of which the seller is unaware.
83) The Supreme Court of United States in the case of
Laidlaw et al. v. Organ10, speaking through the Hon'ble Chief
Justice Marshall delivered the opinion of the Court on the
similar issue in the said case as follows:
"The question in this case is, whether the intelligence
of extrinsic circumstances, which might influence the price
of the commodity, and which was exclusively within the
knowledge of the vendee, ought to have been communicated
by him to the vendor? The court is of opinion that he
was not bound to communicate it. It would be difficult to
circumscribe the contrary doctrine within proper limits,
where the means of intelligence are equally accessible to
both parties."
84) Therefore, considering the analogy in the aforesaid
judgments of English cases and American case, the legal
position is manifestly clear that the information which is in the
knowledge of the petitioners relating to proposal of location of
10 1817 SCC OnLine US SC 28 = 15 US 178 (1817) = 4 L.Ed.214 = 2 Wheat. 178
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Crl.P.No.4819 of 2020 & batch
the capital in the area where the lands in question are
purchased, even if it is true, need not be informed to the sellers
and they have no legal obligation to disclose or inform the same
to the sellers of the land at the time of purchasing the said
lands. So, it does not amount to dishonest concealment of fact
as contemplated under Explanation appended to Section 415
IPC. In this context, as already noticed, it is also significant to
note that it is not a mere concealment of fact that is made an
act of deception under the said Explanation and it is only a
dishonest concealment of fact that is made an act of deception
under the said Explanation. When there is no legal obligation
to disclose the fact, as discussed supra, non-disclosure of the
same does not amount to dishonest concealment of the fact. In
the case of Karachi Municipality v. Bhojraj11 the Court of
Judicial Commissioner, Sind dealt with this Explanation to
Section 415 IPC. In the said case, the accused was charged for
heating the Karachi Municipality. He executed a sale deed in
favour of Karachi Municipality in respect of certain land, and
received the price. It was subsequently discovered that the land
was mortgaged by the accused and the other members of his
family were interested in it. Alleging that the fact that the land
was mortgaged was suppressed at the time of execution of sale
deed, he was sought to be prosecuted and in the said process
Explanation appended to Section 415 IPC as has been done in
11 1915 SCC OnLine Sind JC 6 = AIR 1915 Sind 21
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this case, was invoked. It was argued that the accused
dishonestly concealed the fact of mortgage and that there was a
member of the joint family. The Court rejecting the said
contention held as follows:
"No concealment of fact is dishonest unless there is a
legal obligation to disclose. A defect in title has been held
to be a material defect in the property under Section
55(1)(a) of the T.P. Act as per the ratio laid down in Haji
Essa v. Dayabai12. There is no duty on the seller to
disclose these unless the buyer could not with ordinary
care discover them. The Municipality could easily have
ascertained the existence of a prior mortgage and knew that
the seller was a Hindu.
Further held as follows:
"The cheating must refer to some false representation
which induced the Municipality to agree to buy the land."
Also held that the law on this point has been correctly stated in
the case of Emperor v. Bishen Das13.
85) In Emperor v. Bishen Das13, it is held while dealing
with Section 415 IPC that sale of immovable property without
mentioning encumbrances does not amount to cheating and the
accused cannot be convicted on the ground that he omits to
mention that there is an encumbrance on the property at the
time of its sale. It is held that unless it is shown that he was
asked by the vendee whether the property was encumbered and
he said that it was not, or that he sold the property on the
12 (1896) 20 Bom 522
13 (1905) ILR 27 All 561
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Crl.P.No.4819 of 2020 & batch
representation that it was unencumbered, he cannot be held
responsible for offence of cheating.
86) In this context, it is apt to refer relevant observations
made by the Court in the said judgment which will have direct
impact on the present case. It is held as follows:
"It is true that the explanation appended to Section 415
lays down that a dishonest concealment of facts is a
deception within the meaning of the section. If we turn to
the definition of the word "dishonestly" to be found in
Section 24 of the Code we find that a dishonest act is an act
done with the intention of causing wrongful gain to one
person or wrongful loss to another. Section 23 defines
"wrongful gain" as a gain by unlawful means of property to
which the person gaining is not legally entitled. Similarly,
"wrongful loss" is defined as the loss by unlawful means of
property to which the person losing it is legally entitled.
The unlawfulness of the means used is a necessary element
in criminal dishonesty. Now in the present instance I
cannot find anything unlawful in the means used by the
applicant. There was no obligation cast on him by law
(vide Section 55 of the Transfer of Property Act) to
disclose to his vendee the existence of the mortgage, in
as much as the mortgage had been effected by a
registered instrument and the vendee could with
ordinary care have ascertained its existence. He might
also have ascertained its existence by questioning his
vendor. Had he done so, and had the vendor falsely
represented the property to be unencumbered, the case
would have been very different, as there would have been
an actual misrepresentation by the vendor sufficient to
constitute the offence of cheating."
Further held as follows:
"I have no hesitation in holding that the dishonest
concealment of facts referred to in the explanation to
Section 415 is a dishonest concealment of facts which it is
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Crl.P.No.4819 of 2020 & batch
the duty of the person concealing them to disclose to the
person with whom he is dealing."
Finally, it is held as follows:
"The same is the law in England. In the case of
Horsfall v. Thomas (1862) 31 L.J., 322 Bramwell, B, says:-
"The fraud must be committed by the affirmance of
something not true within the knowledge of the affirmer or
by the suppression of something which is true and which it
was his duty to make known. Where there is a concealment
of a fact I am of opinion that there is neither fraud nor
dishonesty within the meaning of the Criminal Law unless
there is a duty imposed by law as between the accused and
the person with whom he is dealing to make that fact
known. For the above reasons, I quash the conviction of
the applicant Bishan Das under Section 417 of the Indian
Penal Code."
87) Thus, from the conspectus of the law as expounded
and enunciated in all the above Indian cases and U.K. and U.S.
cases with reference to the Explanation appended to Section
415 IPC and the legal obligations and liabilities under Section
55 of the T.P. Act, the legal position is manifestly clear as
cloudless sky that when there is absolutely no legal obligation
on the part of the buyer to disclose the said fact to the seller at
the time of sale of the land that it does not amount to dishonest
concealment of fact as contemplated under Explanation
appended to Section 415 IPC.
88) The mere fact that there is a possibility of increase in
the value of the land subsequent to the sale also cannot afford a
ground to prosecute the buyer for the offence of cheating.
CMR,J.
Crl.P.No.4819 of 2020 & batch
89) In the context, the contention of the learned Senior
Counsel Sri Siddhardh Luthra, appearing for one of the
petitioners, merits consideration. He would contend that
Section 55(6) of the T.P. Act envisages that the buyer is entitled
to the benefit of any improvement in, or increase in value of, the
property, and to the rents and profits thereof, where the
ownership of the property was passed to him. Therefore, when
the petitioners lawfully became owners of the said lands, on
account of transfer of ownership of the said lands to them, the
petitioners as buyers are legally entitled to the subsequent
benefit of any improvement or increase in the value of the
property. Therefore, in the facts and circumstances of the case,
the alleged omission to disclose the fact cannot said to be a
fraudulent one as stated in the last part of Section 55 of the T.P.
Act also which was invoked by the learned Advocate General.
90) Further, illustration (d) to Section 17 of the Indian
Contract Act which defines 'fraud' under the said Act can also
profitably be used to drive home the point involved in this case
and it reads thus:
"(d) A and B, being traders, enter upon a contract. A
has private information of a change in prices which would
affect B's willingness to proceed with the contract. A is not
bound to inform B."
91) Now, the Explanation appended to Section 17 of the
Indian Contract Act is also relevant in the context to drive home
the point, and it reads thus:
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Crl.P.No.4819 of 2020 & batch
"Explanation.--Mere silence as to facts likely to affect
the willingness of a person to enter into a contract is not
fraud, unless the circumstance of the case are such that,
regard being had to them, it is the duty of the person
keeping silence to speak, or unless his silence, is, in itself,
equivalent to speech."
92) Thus, in the light of the above legal position, viewed
from any angle, even if the petitioners really got any information
regarding location of the capital in the said area where the lands
are purchased, the mere non-disclosure of the said information
to the sellers at the time of purchasing the said lands cannot be
construed as a dishonest concealment of fact for the purpose of
fastening criminal liability to the petitioners for the offence
under Section 420 IPC.
93) Another significant fact needs to be noticed is that the
sale transactions relate to sale of land that took place long back
about six years ago in the year 2014. The owners of the land,
who sold their lands, had absolutely no demur whatsoever from
any quarter for all this length of time in respect of sale of the
said lands. They never expressed any grievance at any point of
time earlier that they have been cheated by the petitioners by
suppressing the fact that the capital city is going to be located
in their area at the time of selling the lands. They did never
raise their finger in this regard for all this length of time even
after notifying the location of the capital city. Now, abruptly
when some stranger lodged a report with the police who had
nothing to do with the sale transactions, the sellers allegedly
came up with the above said version before the police that they
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Crl.P.No.4819 of 2020 & batch
have been cheated by the petitioners by not informing them that
the capital is going to come in their area at the time of selling
their lands. So, in the said circumstances, the credibility and
authenticity of the said belated version now introduced is really
at stake. Therefore, the prosecution version now introduced by
way of the said statements of the sellers would certainly be
incredulous. If really they got grievance in this regard, they
would have initiated both civil and criminal action in this regard
long back when location of the capital city was notified on
30.12.2014 itself about six years back. They did not initiate
any civil action to declare the sale as void on the ground of
fraud or deception or on the ground of suppression of material
fact. They also did not launch any criminal prosecution based
on the above grounds. Therefore, the above belated version now
introduced by the prosecution by way of alleged statements of
sellers is far from truth. In view of the said reasons, it throws
any amount of doubt on the justification of the de facto
complainant who is a stranger to the said sale transactions in
lodging the present report. Therefore, in the said
circumstances, the contention of the petitioners that there are
vested interests behind the de facto complainant who
engineered the preparation of the said report lodged by him with
a concocted story to illegally prosecute the petitioners cannot be
completely ruled out.
CMR,J.
Crl.P.No.4819 of 2020 & batch
94) In this context, it is relevant to consider the judgment
of the Apex Court in Mohd. Ibrahim v. State of Bihar14
wherein it is held at para No.7 as follows:
"7. 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. ..."
It is also held at para No.15 as follows:
"15........ If a person sells a property knowing that it
does not belong to him, and thereby defrauds the person
who purchased the property, the person defrauded, that is
the purchaser, may complain that the vendor committed
the fraudulent act of cheating. But a third party who is not
the purchaser under the deed may not be able to make
such complaint. ..........."
RECITALS OF THE SALE DEED BELIE THE VERSION OF
THE SELLERS:
95) While the facts of the prosecution case as projected
and the submissions made on behalf of the prosecution as
discussed supra do not find favour to attract any offence under
Section 420 IPC, in the light of the above discussion, even the
factual aspects emanating from the record also do not support
the case of the prosecution. A meticulous perusal of the
recitals of the registered sale deeds executed by the sellers in
14 (2009) 8 SCC 751
CMR,J.
Crl.P.No.4819 of 2020 & batch
favour of the petitioners selling their lands to them clearly
proves that it is not the petitioners as buyers who have
approached the sellers to sell the property to them. The recitals
of the sale deed show that it is the sellers who offered to sell
their lands to the petitioners to meet their legal necessities.
96) The contents of the sale deeds show that as lands are
not found to be profitable to the vendors and as they are in dire
necessity of money either for the purpose of meeting their family
expenses or to discharge their debts that the owners have
decided to sell away their lands and thereby offered to sell the
lands to the petitioners and the petitioners have accepted their
offer and sale consideration to a tune of lakhs of rupees was
arrived at by consensus between both of them and on receipt of
the said sale consideration that the sale deeds have been
registered by the owners of the lands in favour of the
petitioners. Therefore, it is now evident that the petitioners did
not approach the owners of the land with a request to sell the
lands to them so as to believe or say that the petitioners have
induced them to sell the lands by suppressing the fact that the
capital is going to be located in the said area. Therefore, the
recitals in the sale deeds completely belies the version of the
prosecution that the petitioners induced the sellers to sell the
land by offering high value of sale price and by suppressing the
fact that the capital is going to be located in that area.
Recitals of the sale deeds clinchingly establishes that the offer
to sell the lands was made by the owners/sellers of the land
CMR,J.
Crl.P.No.4819 of 2020 & batch
and the petitioners accepted the said offer and purchased the
said lands. When that be the case, the question of informing
the owners of the lands by the petitioners that the capital is
going to be located in the said area completely loses its
significance and the same does not arise at all. So, the evidence
in the form of recitals of the sale deeds completely negate the
contention of the prosecution. There is absolutely no dispute
regarding the fact that the sale deeds contain the said recitals
that the owners have offered to sell the lands to the petitioners
to meet their legal necessities. In fact, in the last column of the
table appended to the written submissions made by the learned
Public Prosecutor, the prosecution itself elicited the said recitals
in the sale deeds showing that for the purpose of meeting the
family necessities of the owners of the said lands, they have sold
the same to the petitioners, both in Telugu and in the translated
version in English. So, these recitals absolutely clinch the
issue and prove that there is no truth in the version of the
prosecution that the petitioners approached the owners of the
lands with a request to sell the lands by suppressing the said
material fact.
97) The submission of the learned Advocate General that
recitals in all the sale deeds are stereo type recitals and they are
usual recitals which find mention in the sale deeds and as such
they cannot be considered to disbelieve the present version of
the sellers is devoid of any merit and the same cannot be
countenanced. Accepting the said contention amounts to
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Crl.P.No.4819 of 2020 & batch
distortion of true facts borne out by record and would also
result into travesty of truth. It would also be taking an
erroneous view contrary to express recitals of the sale deeds
which is not permissible under law.
98) No doubt, during the course of investigation it is
shown that some of the owners of the lands, who sold their
lands to the petitioners i.e. L.Ws.3 to 11 and 13 to 16 stated in
their statements before the police given under Section 161
Cr.P.C. that one Srinivas, who is the broker/mediator,
approached him on behalf of the petitioners to sell the lands
and when they initially rejected his request to sell the lands,
that subsequently, he convinced them by offering high sale
price and that the owners have sold their lands after accepting
the said sale price and that at that time the owners do not know
that the capital is going to be located in the said area and
subsequently they came to know that the Government notified
their area as the capital region and that the petitioners without
disclosing the said fact to them have purchased their lands and
on account of increase in the value of the lands, thereafter, that
they are put to loss and they are and they have been
accordingly cheated. The recitals of the sale deeds completely
belie the said version given by L.Ws.3 to 11 and 13 to 16 in
their 161 Cr.P.C. statements. As already discussed supra, their
own unequivocal declaration made in the sale deeds show that
they voluntarily offered to sell their lands to the petitioners to
meet their legal necessities and family necessities. Therefore,
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they are now estopped from contending contrary to their own
declaration made in the form of recitals in the registered sale
deeds which are admittedly signed by them before the
competent registering authority. So, there cannot be any truth
in the subsequent version given by them before the police that
some real estate broker approached them on behalf of the
petitioners and requested them to sell their lands and that there
is suppression of material fact in the said process.
INFORMATION RELATING TO LOCATION OF CAPITAL IS
VERY MUCH IN PUBLIC DOMAIN:-
99) Be that as it may, even the version of the prosecution
that the proposal of the Government to locate capital city in the
area between the Krishna District and the Guntur District by
the side of the Krishna river and adjacent to the highway is not
known to the sellers of the land and the petitioners
clandestinely obtained the said information from the top
officials and the political leaders in the then government
unauthorisedly and thereby purchased the lands on the basis of
the said information without disclosing the said fact to the
owners of the land is far from truth. The material placed before
this Court by the petitioners in the form of paper publications
completely belies the said version. It is noticed supra that the
appointed day for formation of the residuary State of Andhra
Pradesh under the A.P. Reorganisation Act, 2014, is
02.06.2014. The new Government for the said State was
formed after General Assembly Elections on 09.06.2014. The
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Chief Minister sworn in on 09.06.2014. These facts are
incontrovertible facts. Immediately after the swearing-in-
ceremony, the then Chief Minister declared publicly that the
capital city is going to come within the Krishna District and the
Guntur District by the side of the Krishna river. This news has
been widely published in all the widely circulated Telugu and
English newspapers. On 10.06.2014 it was published in
English newspaper with the headlines "AP capital near Guntur,
Naidu says he wants capital between Guntur and Vijayawada".
The news reads as under:
"It is official. The new capital of Andhra Pradesh will
come up between Vijayawada and Guntur. Andhra Pradesh
Chief Minister N. Chandrababu Naidu announced this on
Monday (i.e. on 09.06.2014).
Speaking to the media at his residence, Mr.Naidu said
that if the capital comes up between Vijayawada and
Guntur it will develop like Hyderabad city."
100) In Andhra Jyothi, Telugu daily newspaper, it was
published on 10.06.2014 that the new capital will be between
Vijayawada and Guntur as it is geographically in centre. It is
stated in the news that it was clarified by the Chief Minister of
newly formed Andhra Pradesh Nara Chandrababu Naidu that
the new capital will be between Vijayawada and Guntur as they
are geographically centrally located in Seemandhra. So,
inclined to form capital at that place.
101) In Eenadu, Telugu daily newspaper, which is another
widely circulated local news paper, it was published on
02.07.2014 that the Andhra Pradesh Government is
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contemplating to establish the new capital for the State would
be established by the side of Krishna river, making Amaravati
as main centre and that the Government is also contemplating
to construct big flyover bridges connecting all the areas in the
capital region. It has been stated in the said news that the
capital is to be developed on both sides of river Krishna to be
linked with heavy bridges and the State Government is working
out on the collection of details of Government lands in the said
area. In Times of India, English newspaper, also it was
published on 02.07.20214 with the headline "AP capital in
Amaravati? "Low land prices swing it in favour of ancient
Satavahana Town". The news published in the said newspaper
reads as follows:
"The new capital city of Andhra Pradesh will be built
around the ancient town of Amaravti."
102) Again on 23.07.2014 a news was published in
Sakshi, Telugu daily newspaper, which is another widely
circulated newspaper in the State, with the caption "Capital will
be in between Krishna and Guntur and it is the suitable place
for building capital city said by Chairman of Advisory
Committee Narayana. It has been published in the said news
that the Advisory Committee Chairman and the Minister for
Municipal Administration Dr.P.Narayana, informed that they
met Sri Sivaramakrishnan in Delhi and apprised him that the
area between Krishna and Guntur Districts would be suitable
for building new capital city in the State as it would be in equal
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distance to North Coastal Districts and Rayalaseema Districts
apart from having water sources, airport, rail and road facilities
etc. The photograph showing the Advisory Committee
Chairman and Kambhampati Rammohan Rao talking to Sri
Sivaramakrishnan was also published.
103) Again in Eenadu, Telugu daily newspaper, a news
was published on 24.09.2014 stating that the capital city would
be on ring road and it may be anywhere throughout the length
of 184 K.Ms as the farmers are now coming forward and that
30,000 acres are necessary and the aerial photograph of
Putrajaya Nagara was also published in the newspaper. On
05.09.2014 it was published in Economic Times, which is a
English daily newspaper, with the caption "Andhra Pradesh's
new capital will be in Vijayawada region announces CM
N.Chandrababu Naidu". The news reads that putting an end to
months of speculation over the issue even as some ambiguity
remained on the exact location, Chief Minister N. Chandrababu
Naidu announced in the State Assembly on Thursday that the
new capital of Andhra Pradesh will be located in Vijaywada
region. On 26.10.2014 it was published in Andhra Jyothi,
Telugu daily newspaper, that the capital city will be located
within the purview of Tulluru Mandal and 14 villages in the said
Mandal are identified and in the first spell 30,000 acres of land
is going to be acquired from the farmers under Land Pooling
Scheme. On 30.10.2014 The Economic Times published the
news that the Andhra Pradesh will have a "riverfront" capital on
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the south side of river Krishna as the State Government ended
months of suspense and speculation today by announcing that
17 villages in the existing Guntur District would be developed
as new capital city. It is also stated that it is for the first time
that the Telugu Desam Party lead government had come out
with a clear location of the new capital as it had so far been
saying it would come within Vijayawada region. Most
importantly it is to be noted that the names of the proposed
villages that would form part of the new capital area are
published in the above news paper stating that Neerukonda,
Kurugallu and Nidamarru in Mangalagiri Mandal; Borupalem,
Tulluru, Nelapadu, Nekkallu, Sakhamuru, Mandadam,
Malkapuram, Velagapudi, Mudalingayapalem,
Uddandarayapalem, Lingayapalem, Rayapudi, Apparajupalem
and Dondapadu in Tulluru Mandal would form part of capital
area.
104) In Deccan Chronicle, English daily newspaper, it was
published on 31.10.2014, stating that in tune with the dream of
Chief Minister N. Chandrababu Naidu of building a "riverfront
capital", the Cabinet sub-committee, on land pooling, met here
on Thursday, identified 17 villages - 14 in Tulluru Mandal and
three in Mangalagiri of Guntur District and most of the villages
that will be formed part of the A.P. capital on the banks of the
river Krishna. Learned counsel for the petitioners submit that
same news has been widely announced in T.V. channels also.
But, they did not produce evidence to that effect.
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105) The prosecution did not deny publication of the
above news relating to the proposal of the Government to locate
the capital city by the side of Krishna river between the Krishna
District and the Guntur District in newspapers. So, publication
of the aforesaid news is again an incontrovertible fact.
Therefore, the above news which was widely published both in
Telugu and English widely circulated newspapers in the State of
Andhra Pradesh, clearly establishes that the information
relating to the proposal of the Government to locate the capital
in the said area is very much in the public domain right from
June, 2014 when the present State of Andhra Pradesh was
formed with effect from 02.06.2014. The above news also bears
ample testimony of the fact that there is wide spread
speculation and anticipation among the people in the public
circle that the capital city is going to be located between the
Krishna and Guntur Districts by the side of Krishna river and
by the side of the highway. When that be the fact, it cannot be
said that the said information is only within the exclusive
knowledge of the concerned top government officials and
political leaders and it is a non-public information as has been
contended by the learned Advocate General. In fact, the said
information relating to location of the capital area at a
particular region is very much in the public domain as it was
announced by no less than a responsible authority like the very
Chief Minister of the State immediately on the date of his
swearing-in-ceremony itself i.e. on 09.06.2014 which was
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published in the newspapers on 10.06.2014. Therefore, it
cannot be said that the petitioners have secured the information
unauthorisedly from the top government officials and political
leaders regarding the area where the capital would be located. It
cannot also be said that the sellers are not aware of the said
fact or information. In fact, it is an information known to the
whole world on account of wide publicity given to the said news
in the newspapers. So, not only the petitioners, even the
owners of the land are aware of the said information relating to
the proposal of the government to locate the capital city in the
said area. Therefore, the sellers of the land cannot now plead
ignorance of the said information that the capital is going to be
located in their area and contend that the said information was
suppressed and not disclosed to them at the time of selling the
lands and as such they sustained loss. At the cost of repetition
it is to be held that the said information is very much in the
public domain and the whole world knows about the same. The
evidence in the form of the aforesaid wide publication in the
newspapers bespeaks to that effect.
106) As per the submissions made by the learned
Advocate General, the Cabinet took decision regarding location
of capital on 01.09.2014 and it was announced in the
Legislative Assembly on 02.09.2014. Therefore, on account of
announcement of the said information relating to the area
where the capital would be located in the Legislative Assembly,
the said news is again in public domain.
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107) So, when the said information is very much in the
public domain and when even the sellers are aware of the same,
it cannot be legitimately contended that there has been
concealment of material fact dishonestly as required under
Explanation appended to Section 415 IPC to attribute any
criminal liability of deception to the petitioners. In fact the plan
submitted by the Investigating Officer along with the C.D. file
show that not only the petitioners, but there are several other
people who have purchased lands in and around the proposed
capital region. Probably on account of the information that is
available to them in the public domain, which is published in
newspapers, all of them have purchased lands in the said area.
As the right to acquire and own property is a constitutional
right, legal right and human right, none can find fault with the
said buyers in purchasing the lands as any citizen is entitled to
acquire lands in exercise of their constitutional and legal right.
So, no criminal liability can be fastened to the petitioners or any
persons who purchased lands in the proposed capital region to
prosecute them for any offence under criminal law. Therefore,
no offence under Section 420 IPC is made out or constituted
from the facts of the case.
APPLICABILITY OF SECTIONS 406 AND 409 OF IPC TO THE
FACTS OF THE CASE:
108) Section 406 IPC deals with punishment for criminal
breach of trust. It says that whoever commits criminal breach
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of trust shall be punished with imprisonment of either
description for a term which may extend to three years, or with
fine, or with both. Criminal breach of trust is defined in
Section 405 IPC.
109) A reading of Section 405 IPC makes it manifest that
when a person is entrusted with the property, or with any
dominion over property, and if he 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, is
said to have committed the offence of criminal breach of trust.
So, there must be an allegation of entrustment of property to
the petitioners and consequent breach of trust. There is
absolutely no allegation that any property was entrusted to the
petitioners by any one or the petitioners had any domain over
the property that was entrusted to them and that they have
dishonestly misappropriated or converted the same to their own
use or dishonestly disposed of the said property in violation of
any direction of law prescribing the mode in which such trust is
to be discharged. Therefore, on the face of the allegations and
the contents of the F.I.R., absolutely no offence whatsoever is
made out or constituted against the petitioners for the said
offence punishable under Section 406 IPC relating to criminal
breach of trust. Explanations 1 and 2 appended to Section 405
IPC make the position very clear that only when there is an
entrustment of some property to the accused and when they
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dishonestly misappropriates the said property or converts to
their own use or disposes of any such property, then only the
said section attracts and not otherwise. The illustrations (a) to
(f) given under Section 405 IPC also make the said position very
clear. The word 'entrusted' used in the section is very
important to note and unless there is entrustment, there can be
no offence of criminal breach of trust under Section 406 IPC.
So, Section 406 IPC is wholly inapplicable to the facts of the
case.
110) As regards the offence under Section 409 IPC, it
relates to criminal breach of trust by public servant, banker,
merchant or agent. It reads thus:
"409. Criminal breach of trust by public servant,
or by banker, merchant or agent.--Whoever, being in any
manner entrusted with property, or with any dominion over
property in his capacity of a public servant or in the way of
his business as a banker, merchant, factor, broker,
attorney or agent, commits criminal breach of trust in
respect of that property, shall be punished with
imprisonment for life, or with imprisonment of either
description for a term which may extend to ten years, and
shall also be liable to fine."
111) So, the predominant requirement which is essential
to attract the offence under Section 409 IPC is that the accused
must be a public servant or a banker or a merchant or an agent
and the property is to be entrusted to him in any one of the
above capacities and while holding domain over the said
property in his capacity as a public servant, banker, merchant
or agent, broker or attorney, if he commits any criminal breach
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of trust in respect of the said property, it is said that an offence
under Section 409 IPC is committed. Therefore, the prosecution
has to necessarily establish that the accused is a public servant
or a banker or an agent and that the property was entrusted to
him in the said capacity and he has committed any criminal
breach of trust in respect of the said property. Admittedly, it is
not at all the case of the prosecution that the petitioners are
public servants or bankers or merchants or agents and that any
property was entrusted to them in any such capacity and that
they have committed any criminal breach of trust in respect of
the said property. Therefore, the necessary ingredients
contemplated under law which are required to establish the said
offence under Section 409 IPC are totally lacking in this case.
Therefore, no offence whatsoever is constituted against the
petitioners from the contents of the F.I.R. or from the material
collected during the course of investigation against the
petitioners under Section 409 IPC. Ergo, Section 409 of IPC is
also wholly inapplicable to the facts of the case.
OFFENCE UNDER SECTION 120-B OF IPC:
112) There remains Section 120-B of IPC to be dealt with.
While Section 120-B of IPC deals with punishment for criminal
conspiracy, Section 120-A of IPC defines what is criminal
conspiracy. It reads thus:
"120A. Definition of criminal conspiracy.--When
two or more persons agree to do, or cause to be done,--
(1) an illegal act, or
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(2) an act which is not illegal by illegal means, such an
agreement is designated a criminal conspiracy:
Provided that no agreement except an agreement to
commit an offence shall amount to a criminal conspiracy
unless some act besides the agreement is done by one or
more parties to such agreement in pursuance thereof.
Explanation.--It is immaterial whether the illegal act is
the ultimate object of such agreement, or is merely
incidental to that object."
113) A plain reading of the aforesaid Section shows that
there must be an agreement between two or more persons to do
or cause to be done (1) an illegal act, or (2) an act which is not
illegal by illegal means. Therefore, an agreement between two
persons to do an illegal act or to do an act which is not illegal by
illegal means is designated as an offence of criminal conspiracy.
It is significant to note that the proviso to Section 120-A of IPC
makes it clear that no agreement except an agreement to
commit an offence shall amount to a criminal conspiracy unless
some act besides the agreement is done by one or more parties
to such agreement in pursuance thereof. Therefore, the essence
of criminal conspiracy is an agreement to do an illegal act. So,
the emphasis is on the expression "illegal act" used in the
Section. Now, it is relevant to note that what is an illegal act is
defined under Section 43 of IPC. For better appreciation, it is
extracted hereunder and it reads thus:
"43. "Illegal", "Legally bound to do".--The word
"illegal" is applicable to everything which is an offence or
which is prohibited by law, or which furnishes ground for a
civil action; and a person is said to be "legally bound to do"
whatever it is illegal in him to omit."
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114) A reading of the aforesaid definition of illegal act
makes it manifest that it is applicable to a fact or situation
which is an offence or which is prohibited by law. As per the
findings recorded by this Court supra, after undertaking
elaborate discussion relating to the question of fact and
question of law based on the facts and circumstances of the
case, it is held in no uncertain terms that no offence whatsoever
was committed by the petitioners under Sections 420, 406, and
409 IPC and that the facts of the case do not constitute any
offences under Sections 420, 406 and 409 of IPC. Therefore, as
a corollary it is to be held that there was no attempt made by
the petitioners in agreement with any other person to do an
illegal act or an offence or even to do an act which is not illegal
by illegal means. Since, the petitioners have purchased the
lands in question which are willingly sold by the owners with
their own volition for a valid consideration under registered sale
deeds and lawfully became owners of the same, no act
whatsoever which is not illegal, but by illegal means was
committed. By adopting a legal process, the petitioners have
purchased the lands and legally became owners of the same.
115) The circumstances in a case, when taken together,
on their face value, should indicate meeting of minds between
the conspirators for the intended object of committing an illegal
act or committing an act which is not illegal, by illegal means.
A few bits here and a few bits there on which prosecution relies
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cannot be held to be adequate for connecting the accused with
the commission of the crime of criminal conspiracy. It has to be
shown that all means adopted and illegal acts done were in
furtherance of the object of conspiracy hatched. In Esher
Singh v. State of Andhra Pradesh15 at the end of para No.38
with reference to the earlier judgment in V.C.Shukla v. State
(Delhi Admn.)16 held as above. The same view was again
expressed following the judgment in Esher Singh's15 case,
stating that a few bits here and a few bits there on which the
prosecution relies cannot be held to be adequate for connecting
the accused with the commission of the crime of criminal
conspiracy, at the end of para.56 in John Pandian v. State17.
116) The above view taken by the Apex Court squarely
applies to the present facts of the case. In the present case, the
facts of the case show that the prosecution is making an
attempt to pick up sporadic instances here and there
hypothetically and knit the same to concoct a story of
conspiracy to somehow bring the same within the scope of
Section 120-B of IPC. Therefore, no offence under Section 120-
B of IPC is also made out and constituted from the facts of the
case.
117) The learned Advocate General would contend that
some of the employees working in the concerned Section in the
Secretariat, whose duty is to prepare draft G.Os. gave
15 (2004)11 SCC 585
16 (1980) 2 SCC 665
17 2010 (8) Supreme 389
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statements under Section 161 and Section 164 Cr.P.C. before
the investigating officer and the learned Magistrate stating that
at the time of drafting the G.O.Ms.No.252 and 254 dated
30.12.2014 notifying the capital region area, that the
established procedure is not followed and that there are
irregularities committed in drafting the said G.Os. as the names
of the villages falling in the capital region are not disclosed in
the draft G.O. and as such, it indicates that there has been a
conspiracy in bringing out the said G.O. relating to the location
of the capital area and the villages covered by the said capital
area. Therefore, he would contend that the matter requires
investigation to find out the conspiracy angle in this regard.
The said contention is also devoid of any merit. If at all any
business rules are contravened in drafting the said G.Os. or
preparing the draft G.Os. in this regard and even if there are
any illegalities and irregularities in drafting the said G.Os., the
petitioners, who are totally strangers to the said Government
Department have nothing to do with the said drafting of G.Os.
There is also nothing incriminating against these petitioners in
the said 164 Cr.P.C. statement and other statements under
Section 161 Cr.P.C. given by the employees of the Secretariat.
So, these statements, even if true, do not establish commission
of any offence punishable under Sections 420, 406, 409 and
120-B of IPC against the petitioners herein.
118) Thus, after considering entire gamut of the
prosecution case and all the allegations and factual aspects
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emanating from the record, as projected by the prosecution,
meticulously and minutely in legal parlance, even stretching the
reasoning to the extent of straining it, the facts of the case
absolutely do not admit commission of any offence whatsoever
much less the offence punishable under Sections 420, 406, 409
and 120-B of IPC, which are registered against the petitioners.
No criminal liability can be attributed to them on the simple
ground which is untenable that they did not inform the sellers
that the capital city is going to come in their area and as such,
the sellers have sustained monetary loss in view of subsequent
increase in the value of the lands. It is really beyond the
comprehension of this Court as to how the said private sale
transactions can be criminalised on the said flimsy grounds and
criminal liability can be attributed to the buyers of the lands to
prosecute them under criminal law. In fact it would be beyond
the comprehension of any reasonable and prudent man as to
how the buyers of the land can be prosecuted under criminal
law in the given facts and circumstances of the case.
119) In fact, criminalizing any such private sale
transactions and prosecuting the buyers of the land in the given
facts and circumstances of the case on the premise of
concealment of a fact even if true and on the ground that there
has been loss to the sellers of the land in view of the subsequent
increase in the value of the lands would create a very dangerous
trend in the field of criminal law and it would open the flood
gates of the criminal prosecution, as every vendor/seller of
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lands, who sold away their lands may subsequently make an
attempt to prosecute every buyer of the land whenever there is
phenomenal increase in the value of the lands subsequently.
Law does not permit such criminal prosecution of the buyer of
the land on the said ground. Undoubtedly, it is a sort of
speculative criminal prosecution that was launched by the State
against the petitioners in this case, which is not permissible
under law. Therefore, it is undoubtedly an attempt by the
prosecution to fire a blind shot in a dark room to prosecute
these petitioners in the above facts and circumstances of the
case.
120) In view of the above factual findings based on the
prevailing legal position recorded by this Court, the entire
prosecution case bristles with several fatal legal infirmities and
the same strikes at the very bottom of the substratum of the
prosecution case and it cuts the case of the prosecution at its
roots. Therefore, as the facts of the case do not constitute any
offences punishable under Sections 420, 406, 409 and 120-B of
IPC, the prosecution against the petitioners amounts to sheer
abuse of process of law. The contents of the F.I.R. also do not
disclose commission of any cognizable offences. So, the F.I.R.
registered against them is liable to be quashed.
121) The grounds on which the F.I.R. is liable to be
quashed under Section 482 Cr.P.C. and under Article 226 of the
Constitution of India are enumerated by the Supreme Court in
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the case of State of Haryana v. Bhajan Lal18. At para No.102 of
the judgment, the Apex Court held as follows:
"In the backdrop of the interpretation of various
relevant provisions of the Code under Chapter XIV and of
the principles of law enunciated by this Court in a series of
decisions relating to the exercise of the extraordinary power
under Article 226 or the inherent powers under Section 482
of the Code which we have extracted and reproduced above,
we give the following categories of cases by way of
illustration wherein such power could be exercised either to
prevent abuse of the process of any court or otherwise to
secure the ends of justice, though it may not be possible to
lay down any precise, clearly defined and sufficiently
channelized and inflexible guidelines or rigid formulae and
to give an exhaustive list of myriad kinds of cases wherein
such power should be exercised.
(1) Where the allegations made in the first information
report or the 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.
(2) Where the allegations in the first information report and
other materials, if any, accompanying the FIR do not
disclose a cognizable offence, justifying an investigation by
police officers under Section 156(1) of the Code except
under an order of a Magistrate within the purview of
Section 155(2) of the Code.
(3) Where the uncontroverted allegations made in the FIR or
complaint and the evidence collected in support of the same
do not disclose the commission of any offence and make out
a case against the accused.
(4) Where the allegations in the FIR do not constitute a
cognizable offence but constitute only a non-cognizable
offence, no investigation is permitted by a police officer
without an order of a Magistrate as contemplated under
Section 155(2) of the Code.
18 1992 Supp.(1) SCC 335 = 1992 CriLJ 527
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(5) 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.
(6) Where there is an express legal bar engrafted in any of
the provisions of the Code or the concerned Act (under
which a criminal proceeding is instituted) to the institution
and continuance of the proceedings and/or where there is a
specific provision in the Code or the concerned Act,
providing efficacious redress for the grievance of the
aggrieved party.
(7) Where a criminal proceeding is manifestly attended with
mala fide and/or where the proceeding is maliciously
instituted with an ulterior motive for wreaking vengeance
on the accused and with a view to spite him due to private
and personal grudge."
122) Thus, as per the law enunciated by the Apex Court
above, grounds No.1 to 3 and 5 are clearly applicable to the
present facts of the case. As this Court found from the contents
of the F.I.R. and the material collected during the course of
investigation done so far that the allegations made in the F.I.R.
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 for the offences punishable under
Sections 420, 406, 409 and 120-B of IPC and also found that
the allegations in the F.I.R. and materials collected during the
course of investigation done so far do not disclose commission
of a cognizable offence justifying investigation and also found
that the allegations made in the F.I.R. 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
CMR,J.
Crl.P.No.4819 of 2020 & batch
for proceeding against the accused, the F.I.R. registered against
the petitioners is liable to be quashed.
123) The Apex Court in the case of Vesa Holdings Private
Limited v. State of Kerala19 held that the complaint did not
disclose any criminal offence at all. Allowing the police
investigation to continue would amount to abuse of process of
Court and High Court committed error in refusing to exercise
power to quash proceedings. Impugned order is set aside.
124) In the case of State of Karnataka v. Arun Kumar
Agarwal20, the Apex Court held at para No.15 of the judgment
as follows:
"... The acts of persons will not be subject of criminal
investigation unless a crime is reported to have been
committed or reasonable suspicion thereto arises. On mere
conjecture or surmise as a flight of fancy that some
crime might have been committed, somewhere, by
somebody but the crime is not known, the persons
involved in it or the place of crime unknown, cannot be
termed to be reasonable basis at all for starting a criminal
investigation."
It is further held:
"....The attempt made by the High Court in this case
appears to us to be in the nature of blind shot fired in the
dark without even knowing whether there is a prey at all.
That may create sound and fury but not result in hunting
down the prey. ......."
125) Though learned Advocate-General submits that text
of WhatsApp messages of some of the petitioners secured during
19 (2015) 8 SCC 293
20 (2000) 1 SCC 210
CMR,J.
Crl.P.No.4819 of 2020 & batch
the course of investigation show that they had communication
with some N.R.Is. alleging that as the capital city is coming in
the said area that they have to hurry to purchase the lands in
that area, as can be seen from the C.D. file produced by the
prosecution, no such text of WhatsApp messages are available
in it. Even if it is true, it cannot be an incriminating material
against the petitioners in view of the above discussion and
findings.
126) Apropos the judgments relied on by the learned
Advocate General are concerned, he relied on the judgments in
the cases of Umesh Kumar v. State of Andhra Pradesh21;
Prakash Singh Badal v. State of Punjab22 on the proposition of
law that criminal prosecution cannot be vitiated merely on the
basis of allegation of political vendetta if there is substance in
the allegations. Irrespective of the motive attributed by the
petitioners to the State in launching the criminal prosecution,
this Court has decided the case on its merits based on law and
found that there is no substance in the report lodged against
the petitioners to prosecute them. Therefore, these cases are of
no avail to the prosecution. For the same reason, the judgment
in S.Pratap Singh v. State of Punjab23 is not of any relevance.
He relied on the cases decided in Imtiyaz Ahmad v. State of
U.P.24; Kurukshetra University v. State of Haryana25 and
21 (2013) 10 SCC 591
22 (2007) 1 SCC 1
23 AIR 1964 SC 72
24 (2012) 2 SCC 688
CMR,J.
Crl.P.No.4819 of 2020 & batch
State of Rajasthan v. Ravi Shankar Srivastava26 on the
proposition that the investigation cannot be stayed as a matter
of routine specifically at the initial stage. These cases are
distinguishable on facts and as this Court found that the
allegations set out in the F.I.R. do not prima facie constitute any
offense against the petitioners, in view of the authoritative
pronouncements on the point in Bhajan Lal's18 case (cited
supra), this Court is inclined to quash the F.I.R.
127) The learned Advocate General also relied on the
judgment of the Apex Court in the case of Skoda Auto
Volkswagen India Pvt. Ltd. v. The State of Uttar Pradesh27.
The observation made by the Apex Court at para No.41 of the
said judgment is more in favour of the petitioners. It is held in
the said judgment that, "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 this Court found that no cognizable
offence or offences of any kind is disclosed in the F.I.R., this
Court is inclined to quash the F.I.R.
128) He then relied on the judgment rendered in the case
of State of Madhya Pradesh v. Awadh Kishore Gupta28 on the
proposition that allegation of mala fides are no consequences
for quashing of F.I.R. Irrespective of the mala fides that are
25 (1977) 4 SCC 451
26 (2011) 10 SCC 632
27 Judgment dated 26.11.2020 in Spl.L.P.(Cri) No.4931 of 2020
28 (2004) 15 SCC 691
CMR,J.
Crl.P.No.4819 of 2020 & batch
attributed by the petitioners, based on factual aspects and legal
position applicable to the facts and circumstances of the case,
this Court has arrived at the above conclusion.
129) The unreported judgment of this Court rendered in
the case of Anne Sudhir Babu v. State of A.P.29, relied on by
the prosecution is distinguishable on facts. That was a case
where originally a report was lodged against certain accused
relating to commission of certain offences. Incidentally the role
played by the Tahsildar in committing certain irregularities in
respect of the lands in question was mentioned in F.I.R. Police
registered case against him also and shown him as accused
No.4. He questioned the F.I.R. registered against him on the
ground that no allegation was made against him regarding
commission of any offence and only incidentally his role was
referred in the F.I.R. and as such that the registration of the
said F.I.R. against him is not valid. So, in that context the
Court held that even though the role played by him was
incidentally mentioned in the F.I.R. that nothing prevents the
police from registering the case against him and investing the
same. So, this judgment does not support the case of the
prosecution in this case.
130) For the aforesaid reasons, all the judgments relied on
behalf of the State are distinguishable on facts and they are of
no avail to the prosecution case.
CMR,J.
Crl.P.No.4819 of 2020 & batch
DENOUEMENT:-
131) To sum up, the upshot of the above detailed
discussion is that right to acquire property is a constitutional
right and legal right of the petitioners as citizens of this country.
As they purchased the lands, in exercise of the said
constitutional and legal right and acquired property from the
sellers who willingly and voluntarily sold them to the petitioners
for a valid sale consideration under registered sale deeds, the
said private sale transactions cannot be criminalized and no
criminal liability can be attributed to the petitioners in the facts
and circumstances of the case to prosecute them for any
offences much less for the offences punishable under Sections
420, 406, 409 and 120-B of IPC. The concept of the offence of
insider trading which is essentially an offence in the field of
stock market relating to selling and buying the securities and
bonds cannot be applied to the offences under Indian Penal
Code and cannot be read into Section 420 IPC or into any
provisions in the scheme of Indian Penal Code. The said
concept of offence of insider trading is totally alien to IPC and it
is unknown to our criminal jurisprudence under the Indian
Penal Code. So, it cannot even contextually or relatively applied
to the facts of the case to prosecute the petitioners. Applying the
said concept of insider trading to the facts of the case to
prosecute the petitioners is totally misconceived and legally
unsustainable in the given facts and circumstances of the case.
CMR,J.
Crl.P.No.4819 of 2020 & batch
The petitioners have no legal obligation to disclose the
information relating to latent advantages in purchasing the land
to the sellers at the time of buying the said land. Therefore, it
does not amount to dishonest concealment of fact as
contemplated under the Explanation appended to Section 415
IPC. It does not amount to any deception under Section 420
IPC read with Section 415 IPC. The sellers did not sustain any
loss on account of the said sale transactions. No element of
criminality is involved in the sale transaction. So, the
petitioners cannot be even remotely connected with any
criminal acts or offence to attribute or fasten any criminal
liability to them in the facts and circumstances of the case.
Therefore, the allegations set out in the F.I.R. coupled with the
material collected during the course of investigation so far done,
do not make out any case or constitute any offences under
Sections 420, 406, 409 and 120-B of IPC. No offence of
conspiracy to do any illegal act or to commit an offence is made
out from the facts of the case. Therefore, in the said facts and
circumstances of the case, the prosecution of the petitioners for
the alleged offences for which the F.I.R. was registered is wholly
unjustifiable and clearly opposed to all cannons and basic
tenets of criminal law and it amounts to sheer abuse of process
of law warranting interference of this Court in exercise of its
inherent powers under Section 482 Cr.P.C. to quash the same
in view of the law enunciated and the grounds enumerated by
the Apex Court in Bhajan Lal's18 case (cited supra).
CMR,J.
Crl.P.No.4819 of 2020 & batch
132) In the light of the aforesaid findings, the only
irresistible conclusion that can be drawn in the facts and
circumstances of the case is that the prosecution against the
petitioners for the alleged offences is not at all maintainable and
the same is liable to be quashed.
133) In fine, the Criminal Petitions are allowed. The
common F.I.R. in Crime No.49 of 2020 of C.I.D.P.S., A.P.,
Amaravati of Mangalagiri, registered against the petitioners for
the offences punishable under Sections 420, 409, 406 and
120-B of I.P.C. and all the proceedings initiated pursuant to the
registration of the said F.I.R. are hereby quashed.
Consequently, miscellaneous applications, pending if any,
shall also stand closed.
________________________________________________
JUSTICE CHEEKATI MANAVENDRANATH ROY
Date:19-01-2021.
Note:
L.R. copy to be marked.
B/O
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