Bombay High Court
Ashadevi Rajendra Kumar Gupta And Anr vs The State Of Maharashtra And Anr on 7 October, 2024
Author: Nitin W. Sambre
Bench: Nitin W. Sambre
2024:BHC-AS:40421-DB
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CRIMINAL APPELLATE JURISDICTION
CRIMINAL WRIT PETITION NO.4399 OF 2017
1) Ashadevi Rajendra Kumar Gupta; and
2) Sumit Rajendra Kumar Gupta .... Petitioners
Versus
1) The State of Maharashtra; and
2) Atul Projects India Private Limited .... Respondents
.....
Ms.Pushpa Ganediwala w. Mr.Kushal Mor, Tanmay K., Ankit B.
Rathod, Anshu Agrawal and Subhash Hulyalkar ib. Mr.Rohan
Chavan, Advocate for the Petitioners.
Ms.S.S. Kaushik, APP for Respondent No.1 - State.
Mr.Niranjan Mundargi i/b. Mr.Rishikesh Mohite, Advocate for
Respondent No.2.
PSI Sachin Tambe (Pairavi) MIDC Police Station, present.
.....
CORAM : NITIN W. SAMBRE &
MANJUSHA DESHPANDE, JJ.
DATED : 7th OCTOBER 2024.
JUDGMENT (Per : NITIN W. SAMBRE, J.)
1 Both these Petitioners are arraigned as an accused
in Complaint Case No.525/SW/2015 in the Court of Additional
Chief Metropolitan Magistrate, 22nd Court, Andheri, Mumbai.
Vide order impugned dated 29.12.2015, and disposed of the
complaint was allowed by directing the registration of offence
and investigation to be carried out. As a sequel of above, ME
C.R.No.22 of 2015 came to be registered against the Petitioners
for the offences punishable under Sections 420 and 120(B) of
Indian Penal Code (IPC), which has further culminated into
submission of fnal report against the Petitioners.
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2 The Petitioners have invoked the remedy under
Section 482 of the Criminal Procedure Code (Cr.P.C.) seeking
quashing of not only the order of the Magistrate, but
consequential registration of the offence and fnal report.
3 The facts necessary for deciding the present
Petitioners are as under:
Petitioner No.1 claim to have ownership right of land
CTS No.224 and 227 located as Jogeshwari road, total area
15234.4 square meters. Petitioner No.2 is the son of Petitioner
No.1 and holds a Power of Attorney in relation to above
property. The Respondent complainant developer has agreed to
purchase the property which is subject matter of the complaint.
The aforesaid property which is subject matter of the complaint
vide two alleged agreements dated 2nd November 2010 and
another 21st May, 2012, executed inter se between the
Petitioners owner and the purchaser i.e. the Respondent
complainant was agreed to be sold for a consideration of Rs.80
crores of which 17 crores claim to have been paid to the
Petitioners by 2012-13.
4 Part of the property admeasuring 3920 square
meters, CTS No.224 came to be acquired by virtue of a
development plan reservation and the compensation came to be
received by the Petitioners, which fact was disclosed in the
recitals of the Agreement of Sale dated 02.11.2010.
5 In this background since alleging that the promise
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made under the contract was not honoured, the Respondent
complainant approached before the Court of Metropolitan
Magistrate alleging the offence of cheating and dishonestly
inducing to deliver the property. It is also claimed in the
complaint that a criminal conspiracy was hatched in the matter
of commission of offence of cheating. That being so, the offence
is also made punishable under Section 120(B) of the IPC.
6 In the criminal complaint referred by the
Respondent it is alleged that the Petitioners accused entered
into an unregistered agreement of sale of the land referred
above and induced the Respondent Complainant to pay them a
sum of Rs.15 lakhs towards token. It is also alleged that the
Petitioners were never having intention to comply with the
terms of the Agreement of Sale, and as such, the accused
persons started awarding not only settlement of the draft of the
sale deed but also accepted the consideration with false promise
on execution of sale deed.
7 It is also claimed in the complaint that the
Respondent Complainant has instructed the Petitioners not to
part with possession of the land to the land acquisition offcer
and prohibited the Petitioners from receiving the compensation
without there being consultation and written consent of the
complainant. It is claimed that such an act on the part of the
Petitioners tantamounts to cheating with an intention to deliver
the amount of consideration. According to the Respondent
Complainant vide communication dated 20.06.2015, the
Petitioners have misrepresented before the land acquisition
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offcer about termination of the Agreement of Sale though
neither any notice nor any proceedings were taken out for the
same.
8 While questioning the impugned order, it is argued
that very ingredients of the offence alleged cannot said to be
satisfed against the Petitioners, Ms.Ganediwala, learned
counsel appearing for the Petitioners would urge that, even as
per recitals in the Agreement of Sale even if allegation in the
complaint are taken to be true at its face value, without being
admitting the same, no offence of cheating or dishonestly
inducing since inception to deliver the property could have been
inferred. It is further claimed that the parties hereto have
already invoked the remedy under the Arbitration Act as the
Respondent complainant has lodged his claim with the
Arbitration Tribunal. It is also brought to our notice that while
interpreting the terms of aforesaid MOU vide Award dated
19.10.2023, the Arbitration Tribunal has already recorded an
Award which is subject matter of challenge before the District
Judge under Section 34 of the Arbitration and Conciliation Act,
1996. In this background, it is claimed that the nature of
transactions between the Petitioners and Respondent
complainant are civil/contractual in nature. There is no element
of mens rea or intention on the part of Petitioners to commit the
offence. In such an eventuality, she would claim that since the
parties are already litigating in the pending Application under
Section 34 of the Arbitration and Conciliation Act, 1996, the
respective rights of the parties will be adjudicated qua their
entitlement arising out of the contract in question viz.
02.11.2010.
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9 According to her, it is a settled position of law that
the fndings recorded by the Arbitration Tribunal, which are
civil in nature, will prevail over the allegations in the criminal
case. That being so, in absence of there being fnding of act of
malafde or attempt on the part of the Petitioners to cheat the
Respondent Complainant, the very criminal proceedings against
the Petitioners are not maintainable. She would invite our
attention to the contents of the complaint which has led to
registration of FIR so as to claim that even the ingredients of the
offence alleged, cannot be satisfed from plain reading of the
complaint.
10 Ms.Ganediwala would further urged that the issue of
the development plan reservation on the land which is subject
matter of the contract in question, compulsory acquisition of the
same and the receipt of the compensation is already provide in
various recitals in the agreement. In such an eventuality, plain
reading of the said recitals contemplates that it was Petitioners
who were entitled to receive the compensation. Appropriate
adjustment in amount of consideration to be received under the
contract que the area acquired was also agreed. That being so,
her contentions are that, the element of acquisition of part of
the land viz. CTS No.224 was not only within the knowledge of
the Respondent complainant, but the Respondent complainant
by participating in the acquisition proceedings by lodging an
objection has suffciently acquisitioned itself. In these
background, drawing support from the judgment of the Apex
Court in the matter of Radheyshyam & Ors. Vs. State of
Rajasthan & Anr. (Criminal Appeal No.3020 of 2024) dated
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22.07.2024, particularly paragraphs 8, 9, 10 and 11 she would
claim that in a contractual matter, the offence of cheating
cannot be inferred against the Appellants/Applicants. In
addition to above, the learned counsel has also drawn support
from the Judgment of the Apex in the matter of Naresh Kumar
and Anr. Vs. State of Karnataka and Anr. 1According to her,
perusal of the law laid down in the said judgment apparently
speaks of the non attraction of the criminal prosecution in the
matter of contractual obligation. She would claim that if there is
misuse of legal provision, it is always open for this Court to
exercise jurisdiction under Section 482 of the Cr.P.C.
11 As against above, the counsel for the Respondent -
complainant Mr.Mundargi, so also learned APP Ms.Kaushik
would urge that the conduct of the Petitioners since inception
remain in defance of the conditions of Agreement of Sale dated
02.11.2010. According to him the element of cheating and the
inducement to deliver the property can be inferred when the
Petitioners have received the consideration of around Rs.17
crores from 2010 to 2013. Mr.Mundargi would invite our
attention to the reply submitted by the Petitioners to the
objection preferred by the Respondent in the matter of the
release of compensation, wherein a stand was taken of
termination of Agreement of Sale. As such, he would claim that
the intention to cheat the non Applicants complainant can be
inferred from inception on the part of the Petitioners. Apart
from above, he would claim that the remedy of criminal
prosecution is in addition to civil remedy available to the non
1 Cri. Appeal No.1510 of 2024 (Arising out of SLP (Cri.)No.1570 OF 2021) dt.2.03.2024
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applicants complainant, which he has rightly taken recourse to
and that being so, he would urge that the present Petition is
liable to be rejected.
12 We have considered the survival claims.
13 The admitted facts which are required to be
considered in the case in hand is about the execution of
unregistered Agreement of Sale dated 11.02.2010 for a total
consideration of Rs.80 crores for sale of the property referred in
the forgoing paragraphs. The Petitioners having received the
sale consideration of Rs.15 crores at the time of Agreement of
Sale and Rs.2 crores thereafter.
14 The land to the extent of 3920 square meters was
compulsorily acquired for public purpose i.e. Development Plan
Reservation.
15 The Respondent Complainant has taken out
arbitration proceedings before the Arbitral Tribunal presided
over by three formal judges who have delivered an Award on
19.10.2023.
16 Parties to the Petition i.e. the Petitioners and the
Respondent Complainant against the Arbitral Award dated
19.10.2023, have already applied under Section 34 of
Arbitration and Conciliation Act, 1996, which proceedings are
informed pending consideration.
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17 This Court is required to be sensitive to the
observations made by the Arbitral Tribunal in the Award dated
19.10.2023 in paragraph nos.597, 602, 604 and 769, which
read thus:
"597. The Claimant neither in its pleadings nor in its
evidence has produced any evidence to show that on failure
by the Respondent to take possession from the sub-lessees,
the Claimant instead of terminating the MOU elected to
proceed to take steps to take possession of the PepsiCo land
or to continue with the proceedings taken out by the
Respondent to take possession of the BAPI land.
....
....
602. It is no doubt true that the Claimant has pleaded in
paragraph 16 of the SOC and the same is also refected in
the Affdavit of Evidence of CW-1 that the Claimant has
done acts to the knowledge of the Respondent to take steps
for development of the property. These would be irrelevant
in the context of Clause 5 of the M.O.U. The Respondent no
doubt on payment of Rs.15 crores in terms of clause 2(i) has
done various acts, necessary for the purpose of
development. The Claimant was entitled to submit plans
and obtain IOD. There is no record as to whether the
Claimant in fact applied for IOD. These acts however to my
mind cannot be control the language of clause 5. The
Claimant within a reasonable time of the Respondent failing
to take possession of the land of the sub-lessees ought to
have elected to take steps to take possession from the sub-
lessees. Clause 5 contemplates possession of the both the
PepsiCo land as well as the BAPL portion of the land. The
Respondent did not elect to purchase the property minus of
BAPL Land. On the contrary during the course of the
hearing has fled an affdavit dated 20th April 2023, setting
out that it is ready and willing to retain the area occupied
by BAPL as licensee. Further in the prayer clause, in the
event the plea for specifc performance cannot be granted,
has sought relief of return of monies paid to the
Respondent. In other words has proceeded on the basis that
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the Agreement no longer subsists.
.....
604. The Tribunal therefore is of the opinion that as the
Claimant did not take any steps in terms of clause 5 of the
MOU, to elect, to get possession of the sub-leased land from
the sub-lessees or has taken any steps for getting possession
of the PepsiCo land and BAPL occupied land, it cannot be
said that the Claimant was ready and willing to perform its
part of the obligations.
....
....
769. In view of the above, it is not necessary to go into the
issue as to whether the Claimant has proved the quantum of
loss of proft. The Tribunal having come to the conclusion
that the Claimant is not entitled to an award for specifc
performance on account of its failure to perform its part of
the obligation, Issue No.9 must be answered in the negative
and against the Claimant."
18 The aforesaid fndings recorded by the Arbitral
Tribunal has substantiate the contentions of the Petitioners that
it was the failure of the Respondent Complainant to honour the
terms of the Agreement of Sale in its true letter and spirit as the
corresponding responsibility on the Respondent Complainant in
the matter of taking the contract to its logical end, was not
discharged.
19 The Arbitral Tribunal has directed the Petitioners to
pay an amount of Rs.15 crores with interest at the rate of 12%
from 02.11.2010, till the date of the Award, and thereafter
interest at the rate of 8 % p.m. on the principal cum interest
computed as on the date of the Award, till fnal payment. A
similar order of refund was also passed in relation to the
amount of consideration of Rs.3 crores received by the
Petitioners.
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20 The Petitioners were also directed to pay a sum of
Rs.89,37,496/- with interest at the rate of 12% from 26.06.2022
i.e. from the date of invocation of arbitral clause till the date of
Award, and thereafter at the rate of 8% on the principal cum
interest computed on the date of award from the date of the
Award till fnal payment. The costs of Rs.20 lakhs was quantifed
to be paid by the Petitioners.
21 In this background, it has to be inferred that the
Arbitral Tribunal had not noticed an attempt on the part of the
Petitioners to commit an act of cheating as defned under
Section 415 of the IPC punishable under Section 420 of the IPC.
22 Apart from the above, what is required to be taken
into account is, it is the duty of the Court or Magistrate who
exercise a great deal of actions in the matter of issuance of
process particularly when the matter is essentially of civil or
contractual in nature. The Court of the Magistrate is required to
be sensitive about converting a civil dispute to that of criminal
cases as the parties carry an impression that civil law remedies
are time consuming and do not protect the interest of the
aggrieved party.
13 The pleadings in the complaint in categorical term
speaks of failure to perform a promise made under Agreement
of Sale which is formed to be basis for alleging an offence of
cheating and criminal conspiracy. There has to be an element of
decisiveness or victimizing on the part of the accused persons
thereby fraudulently or dishonestly inducing a person to deliver
any property.
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24 In this case, under an Agreement of Sale,
Respondent No.1 has delivered an amount of Rs.17 crores as
against agreed consideration of Rs.80 crores. However, this
Court is required to be sensitive about the fndings recorded by
the Arbitral Tribunal as to absence of failure to perform the
promise on the part of the Respondent Complainant.
25 A successful support can be drawn in the
authoritative pronouncement in the case of Radheyshyam &
Ors. Vs. State of Rajasthan and Ors. delivered in Criminal
Appeal No.3020 of 2024 (at Special Leave to Petition (Cri.)
No.13675 of 2023, so as to infer that in the matter of Civil
nature the provisions of Criminal Law cannot be invoked. .
In the said judgment, the Hon'ble Apex Court has an
occasion to consider a similar case like the one which is alleged
in the present Petition. While in the backdrop of the provisions
of Sections 415, 420 of the IPC, the Hon'ble Apex Court has held
as under:
"9 From the bare perusal of the FIR, it is evident
that there was no act of cheating, that is, the
complainant was nowhere fraudulently induced or
dishonestly deceived by the appellants. A commercial
transaction took place between the parties during
which the parties consensually agreed for the sale of
the property of the appellants and respondent no.2
paid the part consideration. The default in payment of
their loan dues on part of the appellants is not
refective of their deceitful intention towards the
complainant. Mere non-registration of the sale or its
refusal cannot amount to cheating. The delivery of the
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advance payment towards consideration was made in
furtherance of an Agreement to Sell and it is not the
case of the respondent that he was in any way deceived
or duped to make such payments to the appellants. It is
a civil dispute and gives rise to the complainant's right
to resort to the remedies provided under civil law by
fling a suit for specifc performance.
10....
11....
12 In the present case, the appellants were not
entrusted with any property by respondent no.2 -
complainant. The only delivery made was of part
payment towards an Agreement to sell between the
parties. The amount paid towards consideration cannot
be said to have been entrusted with the appellants by
respondent no.2. Additionally, merely because the
appellants are refusing to register the sale, it does not
amount to misappropriation of the advance payment.
Since there was no entrustment of property, the
offence of misappropriation of such property and
thereby criminal breach of trust cannot be said to be
made out."
26 As such, having regard to the fact that there was
failure on the part of the Respondent Complainant to discharge
the obligation under the Agreement of Sale, the failure on the
part of the Petitioners in refusing to register a sale deed in any
case cannot be stretched to an act of cheating.
27 Even otherwise, in the complaint, the Respondent
Complainant has not satisfed the very ingredients of the offence
of cheating as defned under Section 415 of the IPC, which is
made punishable under Section 420 of the IPC.
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28 The necessary ingredients of the said offence
warrants meeting of minds and an intention to hatch a
conspiracy to commit an act of cheating. In the case in hand
even if what has been claimed in criminal complaint is
considered, it cannot be inferred that the very ingredients of the
offence of criminal conspiracy can be to inferred therefrom.
29 In this background, it is required to be observed that
the necessary ingredients of the offence of cheating and
criminal breach of trust cannot be said to have been established.
There is one more facet to the case in hand, the land
admeasuring 3920 square meters which was reserved under
the development plan and the recitals in the Agreement of Sale
dealing with the aforesaid issues are required to be worth
referring.
"2(v)In case the Party of the Second Part is able to get
First C.C. for the property even in case the area
occupied by M/s.Bharati Automobiles Private
Limited as licensee is not vacated and handed over
to Party of the Second Part, then in that
eventuality the Party of the Second Part shall have
the option as mentioned in para 2(vi) hereinbelow
to either retain the portion or sub-divide the
property and take conveyance of the property
without the portion of the property occupied by
M/s.Bharati Automobiles Private Limited as
licensee and deduct a sum of Rs.2250/- (Rupees
Two Thousand Five Hundred Only) per sq.ft in
case of area under Reservation and a sum of
Rs.6500/- (Rupees Six Thousand Five Hundred
only) per sq.ft in respect of area under "R" Zone
from the amount of Rs.120000000/= which is the
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balance payable by te Party of the Second Part to
the Party of the First Part as mentioned in para
2(iii) hereinabove.
....
10. As per the P.R. Card the area of the said property
as described in the Third Schedule hereunder
written is 15153 sq.mtrs. or thereabout and
comprise of C.T.S. No.224 admeasuring 3920.3
sq.mtrs which is entirely reserved as "G" and
C.T.S. No.227 (including C.T.S.Nos.227(1)(2)
admeasuring 11234.4 sq.mtrs, C.T.S.No.227 is
Affected By The Following Reservations D.P. Road
Set Back-396 sq.mtrs, reservation for "c" - 1540
sq.mtrs, reservation for "G"-475 sq.mtrs thus
leaving an area of about 8,825 sq.mtrs in "R" Zone.
(As per latest D.P. Plan (annexed - 5) the area in R
zone is shown as 9028.63 sq.mtrs). However, as
per Conveyance dated 2nd October, 1970 the area of
land is shown to be about 5,652 sq.mtrs. (1,505
sq.mtrs. Plus 4,147 sq.mtrs.) as against 3,920.03
sq.mtrs. shown in the P.R. Card. It is agreed and
understood that in the event the area is found to be
more than 3,920.03 sq. mtrs. As per P.R. Card, the
Party of the Second Part shall pay additional
amount to the Party of the First Part as mentioned
in para 11(b) appearing hereafter."
30 Perusal of the aforesaid recitals in the Agreement of
Sale establishes that fact of reservations on the property which
was agreed to be sold by Petitioners to the Respondent was not
only brought to the notice of the Respondent purchaser, but also
about the adjustment of consideration. Compensation received
against the compulsory acquisition can also be inferred in
favour of the Petitioners. As such, there is no element of the
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conspiracy being hatched to cheat the Respondent Complainant.
31 If we appreciate the case of the Petitioners in the
backdrop of the law laid down by the Apex Court in the case of
Paramjeet Batra Vs. State of Uttarakhand2. It can always be
claimed that the complaint disclosing civil transactions made
also have a criminal texture. But the Court is required to see
whether the dispute which is of essentially a civil nature, if it
given a colour of criminal offence, in such a situation, the
remedy of quashing under Section 482 of Cr.P.C. can be said to
be very much available. As such, this Court while exercising the
powers under Section 482 of Cr.P.C., which saves are the
inherent powers should exercise the same judiciously and with
great caution to prevent abuse of processes of law and to secure
the ends of justice.
In our opinion, present case can be said to be ft case
to exercise the process to quash the criminal prosecution.
32 In this background, the present Writ Petition stands
allowed in terms of prayer clause A, which reads thus:
(a) That after going through the complaint fled by the
Complainant M/s Atul Projects India Limited, and
order dated 29/12/2015 passed thereon by the 22 nd
Court of Metropolitan Magistrate, Andheri, Mumbai
and the F.I.R. being M.E.C.R. No.22/15 registered by
the M.I.D.C. Police Station for the offences
punishable u/s 420 and 120-B of the Indian Penal
2 (2013) 11 SC 673
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Code, this Hon'ble Court be pleased to quash and set
aside order dated 29/12/2015 passed thereon by the
22nd Court of Metropolitan Magistrate, Andheri,
Mumbai, the F.I.R. being M.E.C.R.No.22/15 dated
29/12/2015 registered by the M.I.D.C. Police Station
for the offences punishable u/s 420 and 120-B of the
Indian Penal Code and the investigation carried out
pursuant thereto."
(MANJUSHA DESHPANDE, J.) (NITIN W. SAMBRE , J.)
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