N Sitarama Raju vs The State Of Andhra Pradesh
2022 Latest Caselaw 2165 AP

           THE HONOURABLE SRI JUSTICE D.RAMESH

              CRIMINAL PETITION No.4189 of 2020

ORDER: -
      This criminal petition is filed under Section 482 Cr.P.C.

seeking to quash the proceedings against the petitioner herein who is

arrayed as accused no.1 in Crime No.398/2020 of Mangalagiri Rural

police station.

2.    The case of the prosecution is that basing on the complaint dated

22.9.2020, Mangalagiri Rural police had registered a case in Crime

No.398/2020 under Sections 120-B, 420, 406, 506 r/w 34 IPC. The

contents of the complaint are that R2/defacto complainant(herein after

referred to as R2) is a retired lecturer and he had a house at Vijayawada

and the same was sold in the year 2018.        A2 in the present crime

informed to R2 about construction of an apartment complex at

Krishnayapalem Village in Amaravati and took him to the office of M/s.

Capital Housing Projects Pvt. Ltd and introduced him to the petitioner.

The petitioner has informed to R2 that he is the brother in law of A4

and that A5 who is wife of A4 has got land near the said project and

that purchase of property in this project would be beneficial to him and

the investment in the said property is a lifetime achievement.

Accordingly, A1, A2, A4 and A5 have influenced R2 to make such an

investment in the said project. In the last week of September 2018, R2

along with his brother visited the project site to meet with the land

owners and the accused in the crime were present at the time and that

all of them appraised R2 that the apartments would be completed as

per the specifications mentioned in the brochure and that the site is

litigation free. Basing on the assurances of all the accused in the said

crime, R2 has decided to purchase their flats in the said Lake View
                                           2




Apartments. The petitioner along with A2 and title holders of the said

property    prevailed   over    R2   to       pay    major    portion    of   the   sale

consideration i.e. Rs.50.00lakhs to them on the ground that they are

going to increase the price of the project soon.                   Accordingly, the

complainant had paid major portion of the sale consideration i.e.

Rs.50.00lakhs on 01.10.2019 for two flats.                   He further stated that

having regard to the statements of the petitioner and the title owners

and the relationship between the petitioner and A4, R2 agreed to

purchase the said properties and that he also requested for execution of

agreement of sale and informed about his readiness to pay balance sale

consideration on completion of work of the said two flats.


3.      It is further stated that R2 is in regular touch with the petitioner

and A2 over phone and requested them to send the duly executed

agreement of sale to him.       They kept postponing the same on flimsy

grounds and after great pursuance they sent an agreement titled

construction agreement dated 22.02.2019 for Rs.19.00lakhs in respect

of Flat No.1001 and informed that they would send another agreement

in respect of second flat very soon. R2 gave three cheques i.e.

Rs.19.00lakhs vide cheque no.462678, Rs.18,65,000/- vide cheque

no.462680, Rs.10,50,000/- vide cheque no.462851 drawn on Andhra

Bank,      Prasasan     Nagar    Branch,            Hyderabad    of     his    account

no.140410100000469         dated      24.4.2019          towards        balance     sale

consideration and registration charges.                Accordingly, the Managing

Director of the said company encashed the first two cheques on

24.4.2019.


4.      Further alleged that the Managing Director of the said company

spoke to him over phone and informed that he was in need of funds, for

extension of the said project and wanted to sell the site jointly owned by
                                        3




him and A5 and induced him to purchase the said property with a

promise that it would bring more appreciation as star hotels are coming

up near the said property. Believing said words and upon instructions

of the petitioner, he got transferred Rs.73.00lakhs on 24.4.2019 from

NRO account no.140410100005516 of Andhra Bank, Prasasan Nagar

Branch, Hyderabad towards sale consideration of open plot near the

Lake View Apartments and that the petitioner promised to complete the

registration   within   two   weeks.       While   things   stood   thus,   the

complainant has left to United States of America with his wife and

informed the accused to contact his brother to attend the registration

process and that he underwent knee replacement surgery in USA on

09.9.2019 and his wife suffered brain stroke on 05.11.2019 in USA and

that they came back to India on 14.02.2020 and found that registration

of flat B-1001 was done on 24.7.2019 and that A4 instructed the

petitioner and A2 to register only one flat.


5.    It is also averred that the accused promised that they would

complete the registration within two weeks, but without informing him

and contacting his brother, they executed the registration. Further on

perusing the sale deed, he observed that there were some discrepancies

and that he requested providing of link documents to obtain legal

opinion and that the documents were not sent to him. Further stated

that A5 do not have open plot near the said project for which they took

Rs.73.00lakhs towards sale consideration and that they made him pay

the amount with dishonest intention, petitioner in connivance with A4

and A5 from inception, with an intention to cheat, jointly conspired and

misappropriated his money and also threatened that they would induct

him in false cases. Basing on the said complaint, police had registered
                                          4




a case in Crime no.398/2020 under sections 120-B, 420, 406, 506 r/w

34 IPC.


6.    This Court at the stage of admission on considering the material

on record has passed the following order on 29.9.2020.

              "...Heard Sri Sidharth Luthra, senior counsel and learned Public
      Prosecutor, High Court of Andhra Pradesh.

              As per the allegations made in the complaint, the petitioner
      proposed to purchase flats in Lakeview Apartments and entered into an
      agreement and paid a substantial amount of Rs.80,00,000/- for one flat
      and Rs.73,00,000/- for another flat towards sale consideration. But the
      petitioner allegedly executed a registered sale deed conveying one flat in
      Lakeview apartment but failed to execute registered sale deed for the
      other flat and that there was no flat available for execution of conveyance
      deed.

              The amount was repaid by RTGS transfer and specific two entries
      dated 28.09.2020 vide Cheque No. 126324 and 126323 discloses that an
      amount of Rs.75,00,000/- and Rs.5,00,000/- is debited from the account
      of this petitioner on transfer to Sri K. Arun and Sri. K.Venkat Rayudu.
      Thus, the amount was repaid by the petitioner prima facie to the de facto
      complainant/2nd respondent herein by RTGS transfer.            A copy of the

receipt is also placed on record by the petitioner. Thus, total amount allegedly paid by the 2nd respondent to this petitioner was repaid. Therefore, if these documents are accepted, there is no prima facie material to show that this petitioner made the 2nd respondent to part with any amount with a dishonest intention or the transfer of any property in favour of this petitioner by the de facto complainant/2nd respondent.

Taking into totality of the circumstances, I find that it is a fit case to grant stay of all further proceedings in F.I.R. No.398 of 2020 on the file of Mangalagiri Rural Police Station, Guntur District, for the offences punishable under Sections 120b, 420, 406, 506 r/w 34 IPC, for a period of three weeks and accordingly stayed.

7. Learned counsel Sri Posani Venkateswarlu, appearing on behalf

of the learned counsel for the petitioner has mainly raised two grounds.

First one is all the sections which are referred in the said crime are

compoundable offences. Second one is the allegations made in the

complaint would not attract Section 405 of IPC since no inducement at

the time of creating the contract were established. Hence it would not

attract to punish the petitioner under Section 420 IPC. Even as per the

allegations made in the complaint, no intention of the petitioner to

induce R2 at the time of entering into the agreement. The allegations

made in the complaint has arose within a contractual obligation, when

the liability is based on the contract and on the breach of any condition

in the contract, criminal complaint would not arise and hence

complaint is nothing but abuse of process of law by converting civil

remedy into criminal case.

8. He further contended that Section 120-B IPC would not attract in

the present case as there is no meeting of minds of accused or any

agreement between them to attract the ingredients of Section 120-B

IPC. Therefore, registering the crime under Section 120-B IPC is illegal.

Even according to the complaint, he made payments way back in April,

2019 and he returned from USA on 04.02.2020. But he lodged a

complaint on 22.9.2020 i.e. after a lapse of nearly 1 ½ years and he has

not given any explanation for non-filing of the complaint within a

reasonable period and he has not explained the extraordinary delay in

giving complaint.

9. He further submitted that the defacto complaint had paid the

amount alleged in the complaint only to purchase of flats and

accordingly agreement has been entered and with regard to the other

plot both parties have agreed and accordingly petitioner has remitted an

amount of Rs.80.00lakhs with an understanding that R2 would agree to

withdraw the present F.I.R. after remittance of the amount to the

account number 140410100005516 of Andhra bank, Prasashan Nagar

Branch, Hyderabad. Accordingly, he has also given a receipt on

27.9.2020 and the said amount was remitted to the above stated

account. In view of the said compromise arrived as per the receipt

dated 27.9.2020, R2 who is defacto complainant ought to have

withdrawn the present complaint in spite of pursuing the same. The

dispute or allegations made in the complaint with regard to due of an

amount of Rs.73.00lakhs to R2 is arising out of a contractual

obligation. The amount arrived is based on the contractual obligation,

the criminal complaint would not arise and it is purely a civil dispute.

Hence registering the crime pertaining to civil matter is nothing but

abuse of process of law. When the sections which are referred in the

F.I.R. are amenable to compound and the fact remains that the alleged

amounts were paid to R2 through receipt dated 27.9.2020, the police

have to close the F.I.R. as compounded instead of proceeding with the

investigation. He further submitted that the intention of R2 is only

malafide and politically motivated. It can be clearly construed that

though he had paid amounts in the month of April 2019 for purchase of

certain properties but in view of the changed circumstances with regard

to the capital city, instead of fulfilling the other conditions of the sale

agreement by paying the remaining sale consideration amount, with a

view to defame the petitioner, R2 has filed the present complaint after a

delay of 1 ½ years. The intention of R2 can be construed from his

complaint that after selling of his residential house in Vijayawada, then

he wanted to invest the said amount in Hyderabad, but basing on the

promise made by the petitioner, A2 and other accused, R2 was made

believe to invest the said amounts in this project. By virtue of the same

he sustained heavy loss.

10. Learned counsel further submitted that the said intention is also

reflected in the counter filed by R2 at paragraph no.9 of the counter

which reads as follows:

"Due to the fraudulent acts of the accused, my health was spoiled and I felt mental distress and financially sustained huge loss by keeping money with the accused for all this period. If they have not extracted my money and if I would have invested it at Hyderabad as intended, I would have got much yield. In such a way, the petitioner and others have caused financial loss to me and they were benefited with my money with their fraudulent act. "

To support his above contentions learned counsel has relied on

the decision of the Hon'ble Apex Court reported in Parbatbhai Aahir

alias Parbatbhai Bhimsinhbhai karmur and others vs. State of

Gujarat and another1 wherein it is recited that:

In Narinder Singh (supra), Dr Justice A K Sikri, speaking for a bench of two learned Judges of this Court observed that in respect of offences against society, it is the duty of the state to punish the offender. In consequence, deterrence provides a rationale for punishing the offender. Hence, even when there is a settlement, the view of the offender and victim will not prevail since it is in the interest of society that the offender should be punished to deter others from committing a similar crime. On the other hand, there may be offences falling in the category where the correctional objective of criminal law would have to be given more weightage than the theory of deterrence. In such a case, the court may be of the opinion that a settlement between the parties would lead to better relations between them and would resolve a festering private dispute. The court observed that the timing of a settlement is of significance in determining whether the jurisdiction under Section 482 should be exercised:

Those cases where the settlement is arrived at immediately after the alleged commission of offence and the matter is still under investigation, the High Court may be liberal in accepting the settlement to quash the criminal proceedings/investigation.

It is because of the reason that at this stage the investigation is still on and even the charge-sheet has not been filed. Likewise, those cases where the charge is framed but the evidence is yet to start or the evidence is still at infancy stage, the High Court can show benevolence in exercising its powers favourably, but after prima facie assessment of the circumstances/material mentioned above. On the other hand, where the prosecution evidence is almost complete or after the conclusion of the evidence the matter is at the stage of argument, normally the High Court

(2017) 9 Supreme Court Cases 641

should refrain from exercising its power under Section 482 of the Code, as in such cases the trial court would be in a position to decide the case finally on merits..." This Court held, while dealing with an offence under Section 307 of the Penal Code that the following circumstances had weighed with it in quashing the First Information Report:

We have gone through the FIR as well which was recorded on the basis of statement of the complainant/victim. It gives an indication that the complainant was attacked allegedly by the accused persons because of some previous dispute between the parties, though nature of dispute etc. is not stated in detail.

However, a very pertinent statement appears on record viz., "respectable persons have been trying for a compromise up till now, which could not be finalized". This becomes an important aspect. It appears that there have been some disputes which led to the aforesaid purported attack by the accused on the complainant. In this context when we find that the elders of the village, including Sarpanch, intervened in the matter and the parties have not only buried their hatchet but have decided to live peacefully in future, this becomes an important consideration. The evidence is yet to be led in the Court. It has not even started. In view of compromise between parties, there is a minimal chance of the witnesses coming forward in support of the prosecution case. Even though nature of injuries can still be established by producing the doctor as witness who conducted medical examination, it may become difficult to prove as to who caused these injuries. The chances of conviction, therefore, appear to be remote. It would, therefore, be unnecessary to drag these proceedings..."

The broad principles which emerge from the precedents on the subject, may be summarised in the following propositions :

(i) Section 482 preserves the inherent powers of the High Court to prevent an abuse of the process of any court or to secure the ends of justice. The provision does not confer new powers. It only recognises and preserves powers which inhere in the High Court;

(ii) The invocation of the jurisdiction of the High Court to quash a First Information Report or a criminal proceeding on the ground that a settlement has been arrived at between the offender and the victim is not the same as the invocation of jurisdiction for the purpose of compounding an offence. While compounding an offence, the power of the court is governed by the provisions of Section 320 of the Code of Criminal Procedure, 1973. The power to quash under Section 482 is attracted even if the offence is non-compoundable.

(iii) In forming an opinion whether a criminal proceeding or complaint should be quashed in exercise of its jurisdiction under Section 482, the High Court must evaluate whether the ends of justice would justify the exercise of the inherent power;

(iv) While the inherent power of the High Court has a wide ambit and plenitude it has to be exercised; (i) to secure the ends of justice or (ii) to prevent an abuse of the process of any court;

(v) The decision as to whether a complaint or First Information Report should be quashed on the ground that the offender and victim have settled the dispute, revolves ultimately on the facts and circumstances of each case and no exhaustive elaboration of principles can be formulated;

(vi) In the exercise of the power under Section 482 and while dealing with a plea that the dispute has been settled, the High Court must have due regard to the nature and gravity of the offence. Heinous and serious offences involving mental depravity or offences such as murder, rape and dacoity cannot appropriately be quashed though the victim or the family of the victim have settled the dispute. Such offences are, truly speaking, not private in nature but have a serious impact upon society. The decision to continue with the trial in such cases is founded on the overriding element of public interest in punishing persons for serious offences;

(vii) As distinguished from serious offences, there may be criminal cases which have an overwhelming or predominant element of a civil dispute. They stand on a distinct footing in so far as the exercise of the inherent power to quash is concerned;

(viii) Criminal cases involving offences which arise from commercial, financial, mercantile, partnership or similar transactions with an essentially civil flavour may in appropriate situations fall for quashing where parties have settled the dispute;

(ix) In such a case, the High Court may quash the criminal proceeding if in view of the compromise between the disputants, the possibility of a conviction is remote and the continuation of a criminal proceeding would cause oppression and prejudice; and

(x) There is yet an exception to the principle set out in propositions

(viii) and (ix) above. Economic offences involving the financial and economic well-being of the state have implications which lie beyond the domain of a mere dispute between private disputants. The High Court would be justified in declining to quash where the offender is involved in an activity akin to a financial or economic fraud or misdemeanour. The consequences of the act complained of upon the financial or economic system will weigh in the balance.

11. Here the allegation of R2 is that on 24.4.2019 he has transferred

certain amount with regard to purchase of flats in petitioner's venture

and the petitioner has registered only one flat and he has not registered

the other flat and subsequently, he left the country even after coming

back from USA, despite his request, the petitioner has not registered

the other flat. In view of the said transaction though he has transferred

Rs.73.00lakhs way back in the month of April 2019, still he has not

registered the flat in his name and also not entered agreement of sale

for a plot near to the said project. On perusal of the said complaint, it

clearly demonstrates that the crime registered is overwhelming or

predominantly element of civil dispute. Under the said circumstances

as per the observations of the above stated judgment, the Court can

invoke the inherent power under Section 482 of Cr.P.C to prevent the

abuse of process of the Court. As per clauses 16-5, 16-7 and 16-8 of

the above judgment squarely covers the present case.

12. Learned counsel has further relied on the following with regard to

the allegation made in the complaint, they would not attract the

ingredients of Section 405 and 420 IPC.

Hridaya Ranjan Prasad Verma and others vs. State of Bihar

and another2 wherein the Hon'ble Supreme Court has recited that:

On a reading of the complaint portions of which have been extracted earlier it is clear that the main offence alleged to have been committed by the appellants is 'cheating' punishable under section 420 IPC.

Cheating is defined in Section 415 of the Code as, "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.

The section requires - (1) Deception of any person.

(2) (a) Fraudulently or dishonestly inducing that person (i) to deliver any property to any person; or (ii) to consent that any person shall retain any property; or

(b) intentionally inducing that person 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.

On a reading of the section it is manifest that in the definition there are set forth two separate classes of acts which the person deceived may be induced to do. in the first place he may be induced fraudulently or dishonestly to deliver any property to any person. The second class of acts set forth in the section is the doing or omitting to do anything which the person deceived would not do or omit to do if he were not so deceived. In the first class of cases the inducing must be fraudulent or dishonest. In the second class of acts, the inducing must be intentional but not fraudulent or dishonest.

(2000) 4 Supreme Court Cases 168

In determining the question it has to be kept in mind that the distinction between mere breach of contract and the offence of cheating is a fine one. It depends upon the intention of the accused at the time to inducement which may be judged by his subsequent conduct but for this subsequent conduct is not the sole test. Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction, that is the time when the offence is said to have been committed. Therefore it is the intention which is the gist of the offence. To hold a person guilty of cheating it is necessary to show that he had fraudulent or dishonest intention at the time of making the promise. From his mere failure to keep up promise subsequently such a culpable intention right at the beginning, that is, when he made the promise cannot be presumed.

Alpic Finance Limited vs. P.Sadasivan and another3 wherein

the Hon'ble Apex Court has recited that:

The facts in the present case have to be appreciated in the light of the various decisions of this Court. When somebody suffers injury to his person, property or reputation, he may have remedies both under civil and criminal law. The injury alleged may form basis of civil claim and may also constitute the ingredients of some crime punishable under criminal law. When there is dispute between the parties arising out of a transaction involving passing of valuable properties between them, the aggrieved person may have right to sue for damages or compensation and at the same time, law permits the victim to proceed against the wrongdoer for having committed an offence of criminal breach of trust or cheating. Here the main offence alleged by the appellant is that respondents committed the offence under Section 420 I.P.C. and the case of the appellant is that respondents have cheated him and thereby dishonestly induced him to deliver property. To deceive is to induce a man to believe that a thing is true which is false and which the person practicing the deceit knows or believes to be false. It must also be shown that there existed a fraudulent and dishonest intention at the time of commission of the offence. There is no allegation that the respondents made any wilful misrepresentation. Even according to the appellant, parties entered into a valid lease agreement and the grievance of the appellant is that the respondents failed to discharge their contractual obligations. In the complaint, there is no allegation that there was fraud or dishonest inducement on the part of the respondents and thereby the respondents parted with the property. It is trite law and common sense that an honest man entering into a contract is deemed to represent that he has the present intention of carrying it out but if, having accepted the pecuniary advantage involved in the transaction, he fails to pay his debt, he does not necessarily evade the debt by deception. Moreover, the appellant has no case that the respondents obtained the article by any fraudulent inducement or by wilful misrepresentation. We are told that respondents, though committed default in paying some instalments, have paid substantial amount towards the consideration.

Having regard to the facts and circumstances, it is difficult to discern an element of deception in the whole transaction, whereas it is palpably evident that the appellant had an oblique motive of causing harassment to the respondents by seizing the entire articles through magisterial proceedings. We are of the view that the learned judge was

(2001) 3 Supreme Court Cases 513

perfectly justified in quashing the proceedings and we are disinclined to interfere in such matters.

Dalip Kaur and others vs. Jagnar Singh and another4

wherein the Hon'ble Supreme Court has recited that:

Sections 405 and 415 of the Indian Penal Code defining `criminal breach of trust' and `cheating' respectively read as under:

"405 - Criminal breach of trust.-Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or wilfully suffers any other person so to do, commits "criminal breach of trust".

"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'."

An offence of cheating would be constituted when the accused has fraudulent or dishonest intention at the time of making promise or representation. A pure and simple breach of contract does not constitute an offence of cheating.

The High Court, therefore, should have posed a question as to whether any act of inducement on the part of the appellant has been raised by the second respondent and whether the appellant had an intention to cheat him from the very inception. If the dispute between the parties was essentially a civil dispute resulting from a breach of contract on the part of the appellants by non-refunding the amount of advance the same would not constitute an offence of cheating. Similar is the legal position in respect of an offence of criminal breach of trust having regard to its definition contained in Section 405 of the Indian Penal Code. {See Ajay Mitra v. State of M.P. [(2003) 3 SCC 11]}.

13. There cannot furthermore be any doubt that the High Court would exercise its inherent jurisdiction only when one or the other propositions of law, as laid down in R.Kalyani v. Janak C. Mehta & Ors. [(2009 (1) SCC 516] is attracted, which are as under:

"(1) The High Court ordinarily would not exercise its inherent jurisdiction to quash a criminal proceeding and, in particular, a First Information Report unless the allegations contained therein, even if given face value and taken to be correct in their entirety, disclosed no cognizable offence.

(2) For the said purpose, the Court, save and except in very exceptional circumstances, would not look to any document relied upon by the defence.

(2009) 14 Supreme Court Cases 696

(3) Such a power should be exercised very sparingly. If the allegations made in the FIR disclose commission of an offence, the court shall not go beyond the same and pass an order in favour of the accused to hold absence of any mens rea or actus reus.

(4) If the allegation discloses a civil dispute, the same by itself may not be a ground to hold that the criminal proceedings should not be allowed to continue."

Yet again, in Hira Lal & Ors. v. State of U.P. & Ors. [2009 (5) SCALE 418], this Court held:

"10. The parameters of interference with a criminal proceeding by the High Court in exercise of its jurisdiction under Section 482 of the Code are well known. One of the grounds on which such interference is permissible is that the allegations contained in the complaint petition even if given face value and taken to be correct in their entirety, commission of an offence is not disclosed. The High Court may also interfere where the action on the part of the complainant is mala fide."

Mohammed Ibrahim and others vs. State of Bihar and

another5 wherein the Hon'ble Supreme Court has recited that:

This Court has time and again drawn attention to the growing tendency of complainants attempting to give the cloak of a criminal offence to matters which are essentially and purely civil in nature, obviously either to apply pressure on the accused, or out of enmity towards the accused, or to subject the accused to harassment. Criminal courts should ensure that proceedings before it are not used for settling scores or to pressurise parties to settle civil disputes. But at the same, it should be noted that several disputes of a civil nature may also contain the ingredients of criminal offences and if so, will have to be tried as criminal offences, even if they also amount to civil disputes. [See: G. Sagar Suri v. State of U.P. [2000 (2) SCC 636] and Indian Oil Corporation vs. NEPC India Ltd. [2006 (6) SCC 736]. Let us examine the matter keeping the said principles in mind.

Let us now examine whether the ingredients of an offence of cheating are made out. The essential ingredients of the offence of "cheating" are as follows: (i) deception of a person either by making a false or misleading representation or by dishonest concealment or by any other act or omission; (ii) fraudulent or dishonest inducement of that person to either deliver any property or to consent to the retention thereof by any person or to intentionally induce that person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived; and (iii) such act or omission causing or is likely to cause damage or harm to that person in body, mind, reputation or property. To constitute an offence under section 420, there should not only be cheating, but as a consequence of such cheating, the accused should have dishonestly induced the person deceived (i) to deliver any property to any person, or

(ii) to make, alter or destroy wholly or in part a valuable security (or anything signed or sealed and which is capable of being converted into a valuable security).

(2009) 8 Supreme Court Cases 751

14. When a sale deed is executed conveying a property claiming ownership thereto, it may be possible for the purchaser under such sale deed, to allege that the vendor has cheated him by making a false representation of ownership and fraudulently induced him to part with the sale consideration. But in this case the complaint is not by the purchaser. On the other hand, the purchaser is made a co-accused. It is not the case of the complainant that any of the accused tried to deceive him either by making a false or misleading representation or by any other action or omission, nor is it his case that they offered him any fraudulent or dishonest inducement to deliver any property or to consent to the retention thereof by any person or to intentionally induce him to do or omit to do anything which he would not do or omit if he were not so deceived. Nor did the complainant allege that the first appellant pretended to be the complainant while executing the sale deeds. Therefore, it cannot be said that the first accused by the act of executing sale deeds in favour of the second accused or the second accused by reason of being the purchaser, or the third, fourth and fifth accused, by reason of being the witness, scribe and stamp vendor in regard to the sale deeds, deceived the complainant in any manner. As the ingredients of cheating as stated in section 415 are not found, it cannot be said that there was an offence punishable under sections 417, 418, 419 or 420 of the Code.

A clarification

15. When we say that execution of a sale deed by a person, purporting to convey a property which is not his, as his property, is not making a false document and therefore not forgery, we should not be understood as holding that such an act can never be a criminal offence. 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.

With regard to delay in lodging the complaint, learned counsel

has relied on the following judgment reported in between Lalitha

kumari vs State of Uttarpradesh and others6 wherein it is recited by

the Hon'ble Apex Court that:

Another, stimulating argument raised in support of preliminary inquiry is that mandatory registration of FIRs will lead to arbitrary arrest, which will directly be in contravention of Article 21 of the Constitution.

While registration of FIR is mandatory, arrest of the accused immediately on registration of FIR is not at all mandatory. In fact, registration of FIR and arrest of an accused person are two entirely different concepts under the law, and there are several safeguards available against arrest. Moreover, it is also pertinent to mention that an accused person also has a right to apply for "anticipatory bail" under the provisions of Section 438 of the Code if the conditions mentioned therein are satisfied. Thus, in appropriate cases, he can avoid the arrest under that provision by obtaining an order from the Court.

2014(2) SCC 1

Another judgment reported in between Kishansingh (D) through

lrs vs Gurupal singh and others7 wherein the Hon'ble Apex Court has

recited that:

The case before us relates to a question of the genuineness of the agreement to sell dated 4.1.1988. The said agreement was between Kishori Lal and respondents and according to the terms of the said agreement, the sale deed was to be executed by 10.6.1989. As the sale deed was not executed within the said time, suit for specific performance was filed by the other party in 1989 which was decreed in 1996. So far as the present appellants are concerned, agreement to sell dated 22.10.1988 was executed in favour of their father and the sale deed was to be executed by 15.6.1989. No action was taken till 1996 for non- execution of the sale deed. The appellants' father approached the court after 7 years by filing Suit No.81/1996 for specific performance. However, by that time, the suit filed by the present respondents stood decreed. The appellants' father filed another Suit No.1075/96 for setting aside the judgment and decree passed in favour of the respondents 1 to

4. The said suit was dismissed by the Additional District Judge (Senior Division), Khanna on 10.6.2002. Subsequently, the appellants preferred RFA No. 2488/02 on 15.7.2002 against the aforesaid order, and the said appeal is still pending before the Punjab & Haryana High Court.

It is to be noted that the appellants' father Kishan Singh lodged FIR No.144/02 on 23.7.2002 through his attorney Jaswant Singh Mann under Sections 420/323/467/468/471/120-B IPC, against the respondents. The allegations made in the FIR were substantially similar to the allegations made by the appellants in Civil Suit No.1075/96, which had been decided against them. It is evident that the aforesaid FIR was filed with inordinate delay and there has been no plausible explanation for the same. The appellants lodged the aforesaid FIR only after meeting their Waterloo in the Civil Court. Thus, it is evident that the FIR was lodged with the sole intention of harassing the respondents and enmeshing them in long and arduous criminal proceedings. We are of the view that such an action on the part of the appellants' father would not be bona fide, and the criminal proceedings initiated by him against the respondents amount to an abuse of the process of law.

13. Learned counsel further submitted that on perusal of the present

case, except making statements that he has paid certain amount with

regard to the purchase of flats and the 2nd flat has not been registered

despite repeated requests, there is no element of cheating against the

petitioners. When the question arose that when a civil as well as

criminal remedy is available to the party, the Apex Court held that

whether a criminal law and civil law can run side by side. The two

remedies are not mutually exclusive but clearly extensive and essential

2010 SCC 3624

differ in their content and consequences. The object of criminal case is

to punish the offender who commits an offence against a person,

property or a State. But it would not affect the civil remedies pursuing

the wrong givers. But where a civil remedy is available particularly with

regard to commercial transactions, the criminal prosecution is

completely barred.

14. Learned counsel has further submitted that as per the guidelines

framed by the Hon'ble Apex Court in the judgment reported in State of

Haryana vs. Bhajanlal's case, wherein it is framed that:

(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 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.

(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.

The instant case would fit into the serial no.1 and 5. According to

the said guidelines, if the complaint is taken at its face value and

accepted in their entirety do not prima facie constitute any offence or

make out a case against the accused. In the instant case, even after

accepting the entire allegations made in the complaint, no allegation

attract the ingredients of Section 405 and 406 IPC. The allegations

made in the complaint are absurd and improbable and any prudent

man can read just conclusion that there isn't a sufficient ground. Even

according to the complaint as well as the counter filed by R2, it clearly

discloses that if he would have invested the amounts in Hyderabad, he

would get more money which would not attract the ingredients of

Section 405 or Section 406 IPC.

15. R2 has filed counter stating that the petitioner has not denied the

fact that he is the Managing Director M/s. Capital Housing Projects Pvt.

Ltd. and introduction through A2 to him. It is also not denied their real

estate company is constructing Lake View Apartments at

Krishnayapalem and showing their brochure to him and also not denied

about the relationship with the accused no.4 and 5 as the brother in

law and sister. He further submitted that he paid an amount of

Rs.50.00lakhs on 01.10.2019 towards sale consideration for two flats in

Lake view apartments and the petitioner issued two receipts each for

Rs.25.00lakhs on behalf of the capital housing projects limited. All the

facts were supported by record. Issuance of cheques and encashment of

cheques as stated in complaint. He further submitted that the work of

a flat which was registered in favour of R2 was not yet completed and as

such the averments made in the complaint are not true. The said sale

deed was registered when he was in USA without intimating to his

brother ignoring his direction that his brother should be called at the

time of registration. It is also stated that an amount of Rs.73.00lakhs

was transferred to petitioner's account on 24.4.2019 as mentioned in

the complaint for purchase of an open plot is a fact and it will be borne

out by record. After that he came to know that they have no open plot

as represented and shown to him. Infact they have induced and made

him believe that they are the owners of that plot as mentioned in his

complaint. Petitioner has misrepresented the facts submitted falsehood

and misled the Court by projecting that all the money was repaid to the

respondent and as such the issue was resolved. The court on such

false representation was misled to grant stay of further proceedings

including the investigation into the cognizable offence. The fact remains

that the petitioner has repaid the amount advanced by R2 for the open

plot. They have executed sale deed for only one flat and they have to

execute the sale deed for another flat. Though the petitioner had paid

the substantial money and showing the same was the delay in filing the

complaint, is not correct. Infact he paid the amount through cheques

including registration charges for two flats and left to USA as they

promised to register the flats within two weeks. While going to USA, he

told them to call his brother at the time of registration. But without

intimating his brother, they have completed registration for one flat on

24.7.2019. In fact, it is only a skeleton by that time. But shown as well

furnished flat. Apart from going to USA, he was also undergone knee

replacement surgery on 09.9.2019 and his wife also suffered from brain

stroke on 05.11.2019 and they both underwent treatment at USA and

later returned to India on 04.02.2020 after slight recovery. But he was

not able to move freely as such he was confined to Hyderabad only. But

he was in touch with the accused regularly and demanding to register

the other flat and the open plot and also to send the original sale deed

of the registered flat. Despite persuasions, they sent the registered sale

deed to him. After perusal of the sale deed, he asked to send the link

documents of it but they have not responded. He made all efforts to

come out from the clutches of the accused by taking money back, but of

no use. When he asked them for the refund of his amount, they started

threatening him by stating that they are highly influential in all the

circles and they even threatened to implicate false cases against him.

In view of lockdown period in the end of March 2020, he was confined

to Hyderabad and unable to come to Mangalagiri to file complaint. For

the said reasons, he submitted the complaint to R1 on 22.9.2020. As

such there is no intentional delay in filing the complaint

16. With the above averments in the counter, learned counsel

appearing on behalf of R2 has submitted that the petitioner had

received Rs.80.00lakhs as per receipt dated 27.9.2020, but still there

are disputes pending with regard to registration of other flat. Learned

counsel has further submitted that even at the time of argument that as

per the statements or promises made by the petitioner and A2 he has

invested the amounts in the project of M/s. Capital Housing Projects

private limited. Believing the words of the petitioner, instead of

investing the said amounts at Hyderabad, he has invested at Amaravati.

By virtue of the said investment he lost heavily. Not only stating the

said statement in the counter, the counsel also contended that by virtue

of the words made by the petitioner, he lost huge amount. If he would

have invested the said amount in Hyderabad, he would have good

returns. Hence they have cheated R2 not only by not registering the

second flat but also without having a plot, received Rs.73.00lakhs made

him believe that they would have a plot near to the said project. In fact,

the matter has been stayed by this Court at threshold however the

investigation would be permitted, the entire facts would come to attract

the inducement made by the petitioner.

17. Learned Assistant Public Prosecutor appearing on behalf of the

State has submitted that according to the complaint, the complainant

has clearly alleged that the petitioner and A5 do not have any plot near

to the said project for which they have taken Rs.73.00lakhs towards

sale consideration from the daughter of R2. The said person with

dishonest intention made R2 part with money of Rs.73.00lakhs towards

sale consideration of open plot though they did not have any plot in the

said area. The said allegations would clearly comes under the definition

under Section 405 of IPC. Hence the petitioners are liable for

punishment under Section 420 IPC and he submitted that if the

allegations made in the complaint or otherwise correct or not has to be

decided on the basis of evidence to be laid down during the course of

trial or at the time of investigation.

18. To support his contention he has relied on the judgment of the

Hon'ble Supreme Court reported in between Rajesh Bajaj vs. State

NCT of Delhi and others8 wherein it is recited that:

It is not necessary that a complainant should verbatim reproduce in the body of his complaint all the ingredients of the offence he is alleging. Nor is it necessary that the complainant should state in so many words that the intention of the accused was dishonest or fraudulent. Splitting up of the definition into different components of the offence to make a meticulous scrutiny, whether all the ingredients have been precisely spelled out in the complaint, is not the need at this stage. If factual foundation for the offence has been laid in the complaint the court should not hasten to quash criminal proceedings during investigation stage merely on the premise that one or two ingredients have not been stated with details. For quashing an FIR (a step which is permitted only in extremely rare cases) the information in the complaint must be so bereft of even the basic facts which are absolutely necessary for making out the offence. In State of Haryana vs. Bhajan Lal (supra) this Court laid down the premise on which the FIR can be quashed in rare cases. The following observations made in the aforesaid decisions are a sound reminder:

"We also give a note of caution to the effect that the power of quashing a criminal proceeding should be exercised very sparingly and with circumspection and that too in the rarest of rare cases; that the court will not be justified in embarking upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the FIR or the complaint and that the extraordinary or inherent powers do not confer an arbitrary jurisdiction on the court to act according to its whim or caprice."

The crux of the postulate is the intention of the person who induces the victim of his representation and not the nature of the transaction which would become decisive in discerning whether there was commission of offence or not. The complainant has stated in the body of the complaint that he was induced to believe that respondent would honour payment on receipt of invoices, and that the complainant realised later that the intentions of the respondent were not clear. He also mentioned that respondent after receiving the goods have sold them to

(1999) 3 Supreme Court Cases 259

others and still he did not pay the money. Such averments would prima facie make out a case for investigation by the authorities.

In another judgment of the Hon'ble Apex Court reported in Priti

Saraf and another vs State of NCT of Delhi and Another9 wherein it

is recited that:

Be it noted that in the matter of exercise of inherent power by the High Court, the only requirement is to see whether continuance of the proceedings would be a total abuse of the process of the Court. The Criminal Procedure Code contains a detailed procedure for investigation, framing of charge and trial, and in the event when the High Court is desirous of putting a halt to the known procedure of law, it must use proper circumspection with great care and caution to interfere in the complaint/FIR/charge-sheet in exercise of its inherent jurisdiction.

In the instant case, on a careful reading of the complaint/FIR/charge-sheet, in our view, it cannot be said that the complaint does not disclose the commission of an offence. The ingredients of the offences under Sections 406 and 420 IPC cannot be said to be absent on the basis of the allegations in the complaint/FIR/charge-sheet. We would like to add that whether the allegations in the complaint are otherwise correct or not, has to be decided on the basis of the evidence to be led during the course of trial. Simply because there is a remedy provided for breach of contract or arbitral proceedings initiated at the instance of the appellants, that does not by itself clothe the court to come to a conclusion that civil remedy is the only remedy, and the initiation of criminal proceedings, in any manner, will be an abuse of the process of the court for exercising inherent powers of the High Court under Section 482 CrPC for quashing such proceedings.

Further he has relied on the judgment of Hon'ble Supreme Court

reported in Skoda Auto Volkswagen (India) private limited vs. State

of Uttarpradesh and others10 wherein it is recited that:

It is needless to point out that ever since the decision of the Privy Council in King Emperor vs. Khwaja Nazir Ahmed1, the law is well settled that Courts would not thwart any investigation. It is only in cases where no cognizable offence or offence of any kind is disclosed in the first information report that the Court will not permit an investigation to go on.

19. On considering the complaint made by the defacto complainant, it

clearly establishes that with an oblique motive, the petitioner along with

other accused have deceived R2 by taking Rs.73.00lakhs even without

having any plot in the said area would clearly attracts the ingredients of

Section 420 IPC. Hence as per the observations of the Hon'ble Apex

2021 SCC OnLine SC 206

(2021) 5 Supreme Court Cases 795

court in the above judgments, this Court would not entertain by

invoking section 482 Cr.P.C. and requested to dismiss the criminal

petition and to direct the State to proceed with the investigation.

20. On perusal of the complaint, as well as the submissions made by

all the counsel, no doubt the amount due to R2 is arising out of a

contractual obligation. According to the allegations made in the

complaint that he went to the petitioner along with A2 and after seeing

the project, he has entered into an agreement for purchase of two flats

and accordingly, he paid certain amounts to the petitioner. By believing

the words he has also paid certain other amounts to the petitioner. All

the allegations are pertaining to the commercial transaction between R2

and the petitioner and as far as flats are concerned, even according to

the request made by R2, the petitioner has not registered both the flats

in his favour is purely a civil dispute. According to the agreement what

are the grounds and conditions of the agreement whether any violation

of conditions of the agreement are to be determined by the competent

civil court. But not by the police. As per the observations of the Apex

Court in Parbatbhai Aahir and others case (as recited supra) clearly

stated that a complaint or First Information Report should be quashed

on the ground that the offender and victim have settled the dispute,

revolves ultimately on the facts and circumstances of each case and no

exhaustive elaboration of principles can be formulated and further

stated that when the involvement of the elements arising out of

commercial or financial matters with an essentially a civil flavour may

appropriate circumstances called for quashing while the parties have

settled the dispute. In the instant case, it is not disputed by R2 that

execution of receipt on 27.9.2020. As per the contents of the receipt it

clearly discloses that he would with draw the F.I.R registered as crime

no.398/2020 of Mangalagiri Rural police station, Guntur District

immediately after remittance of the amounts to the bank of the

daughter of R2. In the counter, R2 has admitted the remittance of the

amount. Further on perusal of the complaint, the inducement of the

petitioner has been raised by R2 only to recover the amounts which

were paid to the petitioner. Even according to the complaint it is very

clear that despite his repeated requests for repayment of the amount,

the petitioner has not repaid. That itself discloses that the dispute

between the parties was civil dispute resulting breach of agreement. So,

the part of the complaint is for non-refund of the amount as advanced

by R2 would not constitute the offence of cheating, according to the

observations of the Apex Court in Deepak Kaur and others.

21. Further as per the observation made by the Apex Court in

Hridaya Ranjan Prasad Verma and others vs State of Bihar and

another (reported supra) with regard to the breach of contract and the

offence of cheating as held that mere breach of contract cannot give

raise to criminal prosecution for cheating unless and until fraudulent or

dishonest intention is shown right at the beginning of the transaction

and held that mere violation to keep up promise and subsequently a

couple of intention and when he made the promise cannot be presumed

to be cheating.

22. In view of the law declared by the Hon'ble Apex Court in various

judgments referred to above, to constitute an offence under Section 420

IPC, there must be a specific allegation and prima-facie material in

support of it. On thorough verification of complaint, no allegations to

constitute an offence punishable under Section 405 or 420 IPC. Hence

it can be hold that it is purely civil in nature. Accordingly, the criminal

petition is allowed by quashing the proceedings in Crime No.398/2020

of Mangalagiri Rural police station with regard to petitioner/A1.

As a sequel, pending miscellaneous petitions, if any, shall

stand closed.

_____________________ JUSTICE D.RAMESH Date: 30.4.2022 RD

THE HONOURABLE SRI JUSTICE D.RAMESH

CRIMINAL PETITION No.4189 of 2020 Dated 11.4.2022

RD