Kashish Bhatia vs The State Of Jharkhand
2021 Latest Caselaw 4703 Jhar

                                   1                         Cr.M.P. No. 2164 of 2017
                                                                       with
                                                             Cr.M.P. No. 1596 of 2017



       IN THE HIGH COURT OF JHARKHAND AT RANCHI
                      Cr.M.P. No. 2164 of 2017
     Kashish Bhatia, D/o Sri Suresh Mirchandani, aged about 30 years,
     Manager, CRM of Bombay Realty, Island City Centre (ICC) (Bombay
     Dyeing), G.D. Ambedkar Marg, Dadar (E), P.O., P.S. & District-
     Mumbai-400014                               ... Petitioner
                             -Versus-
1.   The State of Jharkhand
2.   Raj Kumar Agarwal, S/o Late Prabhu Dayal Agarwal, r/o Shantikunj, 4
     Circuit House Area (North), Jamshedpur
3.   Rahul Agarwal, S/o Raj Kumar Agarwal, r/o Shantikunj, 4 Circuit
     House Area (North), Jamshedpur              ... Opposite Parties

                                   With
                       Cr.M.P. No. 1596 of 2017
1.   Virendra Singh, s/o Vinod Kumar Singh, the General Manager-CRM of
     Bombay Realty, Island City Centre (ICC) (Bombay Dyeing), G.D.
     Ambedkar Marg, Dadar (E), P.O., P.S. & District- Mumbai-400014
2.   Kamal Soonderji, w/o Bhavin Soonderji, the Assistant General
     Manager, Leasing of Bombay Realty, Island City Centre (ICC)
     (Bombay Dyeing), G.D. Ambedkar Marg, Dadar (E), P.O., P.S. &
     District- Mumbai-400014
3.   Jehangir Nusli Wadia, S/o Nusli Wadia, the Managing Director,
     Bombay Realty, Island City Center (ICC) (Bombay Dyeing), G.D.
     Ambedkar Marg, Dadar (E), P.O., P.S. & District- Mumbai-400014
                                                     ... Petitioners
                             -Versus-
1.   The State of Jharkhand
2.   Raj Kumar Agarwal, S/o Late Prabhu Dayal Agarwal, r/o Shantikunj, 4
     Circuit House Area (North), P.O. & P.S. Mango, Jamshedpur
3.   Rahul Agarwal, S/o Raj Kumar Agarwal, r/o Shantikunj, 4 Circuit
     House Area (North), P.O. & P.S. Mango, Jamshedpur
                                                     ... Opposite Parties
                               -----

PRESENT HON'BLE MR. JUSTICE SANJAY KUMAR DWIVEDI

-----

For the Petitioner : Mr. Aabad Ponda, Sr. Advocate (In Cr.M.P.-1596/17) Mr. Jugal Kanani, Advocate Mr. Varun Sharma, Advocate Mr. Mrinal Singh, Advocate For the Petitioners : Mr. Nipun Bakshi, Advocate (In Cr.M.P.-2164/17) For O.P. Nos.2 & 3 : Mr. Sumeet Gadodia, Advocate (In both cases) Mr. Siddharth Ranjan, Advocate

-----

C.A.V. on 01.11.2021 Pronounced on 09.12.2021

Heard Mr. Aabad Ponda, learned Senior counsel assisted by Mr. Jugal

Kanani, Mr. Varun Sharma and Mr. Mrinal Singh, learned counsel for the

petitioner in Cr.M.P. No.1596 of 2017 and Mr. Nipun Bakshi, learned counsel

with Cr.M.P. No. 1596 of 2017

for the petitioner in Cr.M.P. No.2164 of 2017 and Mr. Sumeet Gadodia

assisted by Mr. Siddharth Ranjan, learned counsel for the opposite party

nos. 2 and 3 in both the petitions.

2. In both the petitions, similar F.I.R. is under challenge and that is why

both the petitions have been heard together.

3. Mr. Aabad Ponda, learned Senior counsel has argued Cr.M.P. No.1596

of 2017 and Mr. Nipun Bakshi, learned counsel has adopted his argument

in Cr.M.P. No.2164 of 2017.

4. These petitions have been filed for quashing of noting of Bistupur

P.S. Case No. 40 of 2017, corresponding to G.R. Case No.429 of 2017,

dated 15.02.2017, registered under Sections 420/406/120-B/34 of the

Indian Penal Code against the petitioners, pending in the court of the

learned Chief Judicial Magistrate at Jamshedpur.

5. Mr. Ponda, learned Senior counsel appearing for the petitioners at

the outset submitted that petitioner no.1 is the General Manager-Customer

Relationship Management with respect to the Project and petitioner no.2 is

the Assistant General Manager of the Project and petitioner no.3 is the

Managing Director of the Company, who is not involved in the day to day

affairs of the business of the Company.

6. The complaint petition being C1 Case No.297 of 2017 was filed by

opposite party no. 2, who is represented through its constituted attorney,

namely, Sri Aditya Narayan Mahto alleging therein that the complainant

booked a Flat bearing No. Apartment no.801 in Two ICC, situated at Island

City Centre, Dadar (East), Mumbai-400014 on the 8th Floor and

accordingly paid a sum of Rs.1,95,94,431/- as per schedule given by the

accused persons. It was also alleged in the complaint case that the

complainant booked the said Flat on 31.08.2014 by way of submitting the

with Cr.M.P. No. 1596 of 2017

Booking Application Form and booked the Apartment bearing No.801 on

the 8th Floor, consisting of 4 BHK, and measuring Area 1941 sq. ft., carpet

area, with two car parking spaces in the residential building known as Two

ICC, situated at Island City Centre. The complainant paid a sum of

Rs.25,00,000/- as booking amount through RTGS on 29.08.2014. The

complainant confirmed the said booking on 15.09.2014 and subsequently

the accused company issued the allotment letter on 06.10.2014.

Thereafter, the complainant used to pay the installments in terms of the

schedule of the agreement, but the accused company was not constructing

the proposed Apartment as per their commitment and thus the Project

became delayed by more than a year as such the complainant proposed to

the accused persons to change the scheme in Construction Linked Plan in

stead of previous 30:70 Plan. It was further alleged that after several

persuasions and making correspondences with all the accused persons

individually through mails then the said proposal was accepted on

09.06.2016 and accordingly mail was sent by the accused company.

Thereafter, the complainant requested the accused persons to send the

payment schedule in terms of the new scheme i.e. CLP but they instructed

to make payment as per previous plan. The accused persons always misled

the complainant and misrepresented the complainant in spite of several

requests made by him. Thereafter, the accused persons instructed the

accused persons to cancel the Booking of the Apartment in question and to

refund the paid amount i.e. Rs.1,95,94,431/- with 18% interest till final

payment of the amount duly acknowledged by the company. It was also

alleged in the complaint case that the agreement entered with them was

executed under the old scheme of 30:70. The said agreement has since

been novated and even the said scheme has become invalid. A new

with Cr.M.P. No. 1596 of 2017

proposal was given by the complaint for entering into a fresh agreement

based on Constructive Linked Plan. The said proposal was duly accepted by

them and in the meantime, various startling facts came to the knowledge

of the complainant, which further strengthened the complainant's belief

that they are acting in an unfair, unethical and illegal manner in order to

cause wrongful loss to the complainant and wrongful gain to themselves.

There was complete breach of trust, which the complainant had reposed

on they while booking the said Flat based on their representations. The

complainant was compelled to cancel the said booking and demand refund

of the said amount paid by them. However, despite repeated requests, they

have failed and/or neglected to refund the said amount and withheld the

same with malafide motive. It was further alleged that the complainant

was cheated of valuable sums by the accused persons with a common

intention and with the connivance of each other. Thereafter, the

complainant sent a legal notice to the accused persons by his lawyer, but in

spite of receipt of the said notice, the accused persons have not refunded

the said amount, paid by the complainant. The accused persons with the

connivance of each other cheated the complainant and misappropriated a

sum of Rs.1,95,94,431/- of the complainant for which they all are liable to

be prosecuted for the offences punishable under Section 420/406/34/120-B

of the Indian Penal Code.

7. The said complaint was sent by the learned Chief Judicial Magistrate,

Jamshedpur to the Officer-in-charge of Bistupur Police Station, Jamshedpur

under Section 156(3) of the Cr.P.C. Pursuant to that Bistupur P.S. Case No.

40 of 2017 was registered on 15.02.2017. At the first instance, these

matters were heard on 24.07.2017 and interim protection was provided to

the petitioners by the said order.

with Cr.M.P. No. 1596 of 2017

8. Mr. Aabad Ponda, learned Senior counsel appearing for the

petitioners submitted that for a civil wrong, if any criminal case has been

instituted against the petitioners, the same is against the mandate of law.

He firstly attacked the noting on the complaint by which the said complaint

case was sent under Section 156(3) Cr.P.C. to the Officer-in-charge of the

concerned police station. He further submitted that the FIR was lodged on

the direction where the court has exercised power under Section 156(3)

Cr.P.C. He also submitted that none of the procedure laid down under

Section 154 Cr.P.C. has been followed. According to him, there is no

affidavit, filed by the complainant to suggest that he had at all approached

the police before filing the complaint. He further submitted that the prayer

in the complaint was either to take cognizance or refer the matter under

Section 156(3) Cr.P.C. He contended that when the court has exercised its

jurisdiction under Section 156(3) Cr.P.C., it was the duty of the court to

satisfy itself as to whether the pre conditions as laid down under Section

154 Cr.P.C. has been complied or not. In support of this submission, he

relied upon the judgment rendered by the Hon'ble Supreme Court in the

case of Priyanka Srivastava & another v. State of U.P. & others ,

reported in (2015) 6 SCC 287. He relied upon paragraphs 29, 30 and 31

of the said judgment, which are quoted herein below:

"29. At this stage it is seemly to state that power under Section 156(3) warrants application of judicial mind. A court of law is involved. It is not the police taking steps at the stage of Section 154 of the Code. A litigant at his own whim cannot invoke the authority of the Magistrate. A principled and really grieved citizen with clean hands must have free access to invoke the said power. It protects the citizens but when pervert litigations takes this route to harass their fellow citizens, efforts are to be made to scuttle and curb the same.

30. In our considered opinion, a stage has come in this country where Section 156(3) CrPC applications are to be supported by an affidavit duly sworn by the applicant who seeks the invocation of the jurisdiction of the Magistrate. That apart, in an appropriate case, the learned Magistrate would be

with Cr.M.P. No. 1596 of 2017

well advised to verify the truth and also can verify the veracity of the allegations. This affidavit can make the applicant more responsible. We are compelled to say so as such kind of applications are being filed in a routine manner without taking any responsibility whatsoever only to harass certain persons. That apart, it becomes more disturbing and alarming when one tries to pick up people who are passing orders under a statutory provision which can be challenged under the framework of the said Act or under Article 226 of the Constitution of India. But it cannot be done to take undue advantage in a criminal court as if somebody is determined to settle the scores.

31. We have already indicated that there has to be prior applications under Sections 154(1) and 154(3) while filing a petition under Section 156(3). Both the aspects should be clearly spelt out in the application and necessary documents to that effect shall be filed. The warrant for giving a direction that an application under Section 156(3) be supported by an affidavit is so that the person making the application should be conscious and also endeavour to see that no false affidavit is made. It is because once an affidavit is found to be false, he will be liable for prosecution in accordance with law. This will deter him to casually invoke the authority of the Magistrate under Section 156(3). That apart, we have already stated that the veracity of the same can also be verified by the learned Magistrate, regard being had to the nature of allegations of the case. We are compelled to say so as a number of cases pertaining to fiscal sphere, matrimonial dispute/family disputes, commercial offences, medical negligence cases, corruption cases and the cases where there is abnormal delay/laches in initiating criminal prosecution, as are illustrated in Lalita Kumari are being filed. That apart, the learned Magistrate would also be aware of the delay in lodging of the FIR."

9. Mr. Ponda, learned Senior counsel further submitted that a

coordinate Bench of this Court in the case of Prashant Mohan v. State

of Jharkhand & another, reported in (2020) SCC OnLine Jharkhand

1397 has considered Section 156(3) Cr.P.C. in light of the judgment in the

case of Priyanka Srivastava (supra), at paragraph 15 of that judgment,

which is quoted herein below:

"15. Further I find that this case arises out of a complaint. The complainant had filed a complaint which was registered as C.P Case No. 2137 of 2015. On receipt of the said complaint the Judicial Magistrate, Dhanbad had written on the margin of the complaint that the police to investigate the case as per provision under Section 156(3) Cr.P.C. This is the one line order which was passed by the Magistrate referring the complaint to investigate in terms of Section 156(3) Cr.P.C. The Hon'ble Supreme Court in the case of Priyanka Srivastava (Supra) has held that there should be application of

with Cr.M.P. No. 1596 of 2017

mind while passing an order under Section 156 (3) Cr.P.C. The Hon'ble Supreme Court has dealt with several judgments and has specifically laid down the law in Paragraph Nos. 20, 21 and 27 of the aforesaid judgment. The Hon'ble Supreme Court in Paragraph No. 27 has held that the Magistrate has to remain vigilant with regard to the allegations made and the nature of allegations and not to issue directions without proper application of mind. He has also to bear in mind that sending the matter would be conducive to justice and then he may pass the requisite order. Further it has been held that the said application which has been filed under Section 156(3) Cr.P.C. should be supported by an affidavit and the purpose of filing such affidavit is to prevent abuse of the process which has become more common these days. When I go through the instant case and the complaint petition I find that there is no affidavit annexed along with the said complaint petition. I find that there was no prior invocation of Section 154(3) while filing this petition before the court under Section 156(3). Thus, this order and the action of the Magistrate, sending the complaint to the police station for investigation 156(3) Cr.P.C and registering an FIR is not in consonance with the law laid down by the Hon'ble Supreme Court. In this score also the order registering the FIR which has been passed by the Magistrate is also absolutely bad."

10. By way of relying on these two judgments, he submitted that on this

ground itself, these petitions are fit to be allowed by this Court.

11. He further elaborated his arguments by way of placing paragraphs

5,6, 8 and 17 of the complaint/FIR. By way of referring these paragraphs,

he submitted that in paragraph 5 it has been stated that the complainant

booked a Flat bearing No. Apartment no.801 in Two ICC, situated at Island

City Centre, Dadar (East), Mumbai-400014 on the 8th Floor and paid a sum

of Rs.1,95,94,431/- as per schedule given by the Company. He also

submitted that opposite party no.2 proposed to the Company to change

the scheme in Construction Linked Plan in stead of previous 30:70 plan. He

further submitted that all the allegations are arising out of contractual

conditions and none of the ingredients of the offence of cheating can even

be remotely inferred in view of the categorical assertions of the petitioners

that they are absolutely firm on fulfilling their promise to opposite party

nos. 2 and 3. He further elaborated his argument by way of submitting that

with Cr.M.P. No. 1596 of 2017

the Company in the year 2011 launched its prime development project

namely ICC project wherein it offered premium residences inclusive of

residential building/Towers known as One ICC/Two ICC on portion of the

property belonging to the Company, to its prospective customers. In the

month of August, 2014 with the help of the broker namely Shri Rajesh L.

Dube, opposite party no.2 visited the Company's office in order to inquire

about the Company's project and after being satisfied with the services of

the Company and its top rated market presence, opposite party no.2 filled

the booking inquiry form and submitted the same with the Company. The

opposite party no.2 was elaborately explained all the terms and conditions

of the booking application form with respect to the Project of the Company.

On 31.08.2014, the opposite party no.2 visited the Company's office,

wherein, he was elaborately explained the terms and conditions of the

Booking Application Form. After thoroughly reading the terms and

conditions provided in the Booking Application Form, the opposite party

nos. 2 and 3 executed the Booking Application Form with the Company,

wherein they were allotted an apartment bearing no.801 in Two ICC on 8th

Floor along with 2 car parking lots. The opposite party nos. 2 and 3 also

agreed to pay an amount of Rs.9,94,41,300/- (total consideration) towards

booking of an apartment in the project. The Company also issued an

acknowledgment receipt dated 31.08.2014 with respect to Rs25,00,000/-

towards the amount already deposited by the opposite party no.2. He

further submitted that amongst agreeing with many other terms and

conditions of the Booking Application Form, it was also agreed by the

opposite party nos. 2 and 3 that the total consideration amounting to

Rs.9,94,41,300/- plus applicable taxes were to be paid by opposite party

no.2 in a ratio of 30:70. He drawn attention of the Court to Clauses 26 and

with Cr.M.P. No. 1596 of 2017

27 of the Booking Application Form, contained in Annexure-3 of the

petition. Clause 27 stipulates as under:

"27. We understand, agree, undertake and confirm to pay the below amounts:

a. Rs.25,00,000/- (Rupees Twenty Five Lakhs) as the booking amount along with this application form; and b. Within the next 30 (thirty) days of submission of this Booking Application Form, to pay an amount equivalent to 10% (ten percent) of total consideration value less the booking amount; and c. Within the next 60 (sixty) days of submission of this Booking Application Form, to pay an amount equivalent to 9% (nine percent) of total consideration; and d. 11% (eleven percent) of the total consideration amount at the time of completion of raft; and e. The balance 70% (Seventy percent) of the total consideration amount to be paid at the time of possession of the said Unit."

12. Mr. Ponda, learned Senior counsel further submitted that it was

agreed by opposite party nos. 2 and 3 that if there was any delay in

payment of the booking amount/total consideration or any installment or

taxes, then under that condition the Company can levy an interest @ 18%

per annum on the applicants from the due date of payment of each

installments. By way of referring Clauses 34 and 35 of the Booking

Application Form, he submitted that undertaking of payment has been

made by opposite party nos. 2 and 3 in view of these Clauses. He further

referred Clause 42 of the Booking Application Form and submitted that

arbitration clause is there in case of any differences and the jurisdiction is

made at Mumbai. He submitted that the dispute was there and the

opposite party nos. 2 and 3 were required to invoke arbitration under the

Arbitration and Conciliation Act, 1996. He also referred letter dated

15.09.2014, contained in Annexure-5 of the petition and submitted that by

this letter, the booking by the opposite party nos. 2 and 3 was confirmed.

By way of referring last paragraph of this letter, he submitted that delayed

with Cr.M.P. No. 1596 of 2017

payment attracted interest @ 18% per annum. He further referred the

letter dated 15.10.2014, contained in Annexure-8 and submitted that by

way of this letter the demand of remaining amount was made by the

Company as the amount was not paid in terms of the agreement. Pursuant

thereto the Company received the sum of Rs.91,92,075/-. By way of

referring the allotment letter dated 06.10.2014, contained in Annexure-7,

he submitted that by this letter, the said Flat was allotted to the opposite

party nos. 2 and 3. He referred Clauses D, G, H and P of the allotment

letter and submitted that the conditions are stipulated in these clauses. By

way of referring Clause H, he submitted that if any payment is made after

60 days from the due date, then the Company without prejudice to its

rights and remedies available in law, reserves the right to cancel the

booking or terminate the agreement and treat the allotment of the said

unit as automatically cancelled. He referred the e-mail of the opposite

party nos. 2 and 3 dated 10.11.2015 of the opposite party nos.2 and 3,

contained in Annexure-11 and submitted that the opposite party nos. 2 and

3 requested to change the payment mode as construction based in the

form of 20:5:75. The same was also requested by the e-mail dated

18.11.2015 by the opposite party nos. 2 and 3. He referred to the request

letter dated 21.01.2016 of the Company, whereby, request was made to

the opposite party nos. 2 and 3 for payment of the amount for stamping

and registration process for agreement to sell. He also submitted that by

the letter dated 23.01.2016, contained in Annexure-13, a request was

made by the opposite party nos. 2 and 3 to switch over from 30:70 scheme

to Construction Linked Plan at prevailing rates. By way of referring the

letter dated 05.02.2016, Mr. Ponda the learned Senior counsel submitted

that the building was completed and the demand of dues was made by the

with Cr.M.P. No. 1596 of 2017

Company and reminder was sent by Annexures- 15, 17, 18 and 19

respectively. These letters have not been answered by the opposite party

nos. 2 and 3. By way of referring the letter dated 24.10.2016, contained in

Annexure-20 which is a letter written by the opposite party nos. 2 and 3 to

the Company, he submitted that the proposal for change of plan was

accepted by the Company. However by that letter the opposite party nos. 2

and 3 have communicated that they cannot continue with the said booking

and requested to refund entire consideration amount paid till that date

being an amount of Rs.1,95,94,33/- with interest @ 18% per annum from

the date of respective payments. He further referred to the counter

affidavit filed on behalf of the opposite party no.2 and submitted that in

paragraph 5(d), it has been accepted that they have made a request for

change of plan. By way of referring paragraph 19 of the complaint/FIR, he

submitted that the agreement entered with them was executed under the

old scheme and the new proposal was made by the opposite party nos. 2

and 3. No case of breach of trust is made out against the petitioners. On

these grounds, he submitted that the case is arising out of a contractual

agreement and if any wrong is there, civil suit is the remedy not the

criminal case. He further submitted that a mere transaction of sale cannot

amount to an entrustment. To buttress this argument, he relied upon the

judgment rendered by the Hon'ble Supreme Court in the case of State of

Gujarat v. Jaswantlal Nathalal, reported in AIR 1968 SC 700.

Paragraph 8 of the said judgment is quoted herein below:

"'8. The term "entrusted" found in Section 405 I. P. C. governs not only the word "with the property" immediately following it but also the words "or with any dominion over the property" occurring thereafter-see Velji Raghavji Patel v. State of Maharashtra. Before there can be any entrustment there must be a trust meaning thereby an obligation annexed to the ownership of property and a confidence reposed in and accepted by the owner or declared and accepted by him for

with Cr.M.P. No. 1596 of 2017

the benefit of another or of another and the owner. But that does not mean that such an entrustment need conform to all the technicalities of the law of trust-see Jaswantrai Manilal v. State of Bombay. The expression entrustment" carries with it the implication that the person handing over any property or on whose behalf that property is handed over to another, continues to be its owner. Further the person handing over the pro perty must have confidence in the person taking the property so as to create a fudiciary, relationship between them. A mere transaction of sale cannot amount to an entrustment. It is true that the government had sold the cement in question to BSS solely for the purpose of being used in connection with the construction work referred to earlier. But that circumstance does not make the transaction in question anything other than a sale. After delivery of the cement, the government had neither any right nor dominion over it. If the purchaser or his representative had failed to comply with the requirements of any law relating to cement control, he should have been prosecuted for the same. But we are unable to hold that there was any breach of trust."

13. Mr. Ponda, learned Senior counsel further submitted that the exercise

of merely taking advantage of a relatively quick relief granted in a criminal

case in contrast to a civil dispute, is nothing but an abuse of the process of

law. He also submitted that the case is arising out of the agreement and no

ingredients of Section 406, 420, 120-B/34 of the Indian Penal Code are

made out against the petitioners. He relied upon the judgment rendered by

the Hon'ble Supreme Court in the case of Mitesh Kumar J. Sha v. State

of Karnatka & others, reported in 2021 SCC OnLine SC 976.

Paragraphs 16, 27, 28, 36, 41, 42, 43 and 44 of the said judgment are

quoted herein below:

"16. The Appellants placed reliance on the judgment of this Court in case of Prof. R.K. Vijayasarathy v. Sudha Seetharam, to substantiate the above stated argument. The relevant paras referred are as hereunder:--

"23. The jurisdiction under Section 482 of the Code of Criminal Procedure has to be exercised with care. In the exercise of its jurisdiction, a High Court can examine whether a matter which is essentially of a civil nature has been given a cloak of a criminal offence. Where the ingredients required to constitute a criminal offence are not made out from a bare reading of the complaint, the continuation of the criminal proceeding will constitute an abuse of the process of the court.

24. In the present case, the son of the appellants has instituted a civil suit for the recovery of money against

with Cr.M.P. No. 1596 of 2017

the first respondent. The suit is pending. The first respondent has filed the complaint against the appellants six years after the date of the alleged transaction and nearly three years from the filing of the suit. The averments in the complaint, read on its face, do not disclose the ingredients necessary to constitute offences under the Penal Code. An attempt has been made by the first respondent to cloak a civil dispute with a criminal nature despite the absence of the ingredients necessary to constitute a criminal offence. The complaint filed by the first respondent against the appellants constitutes an abuse of process of court and is liable to be quashed."

27. In order to ascertain the veracity of contentions made by the parties herein, it is imperative to firstly examine whether the relevant ingredients of offences which the appellants herein had been charged with, are prima facie made out. The relevant sections read as follows:--

"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".

[Explanation [1].--A person, being an employer [of an establishment whether exempted under section 17 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952), or not] who deducts the employee's contribution from the wages payable to the employee for credit to a Provident Fund or Family Pension Fund established by any law for the time being in force, shall be deemed to have been entrusted with the amount of the contribution so deducted by him and if he makes default in the payment of such contribution to the said Fund in violation of the said law, shall be deemed to have dishonestly used the amount of the said contribution in violation of a direction of law as aforesaid.] [Explanation 2.--A person, being an employer, who deducts the employees' contribution from the wages payable to the employee for credit to the Employees' State Insurance Fund held and administered by the Employees' State Insurance Corporation established under the Employees' State Insurance Act, 1948 (34 of 1948), shall be deemed to have been entrusted with the amount of the contribution so deducted by him and if he makes default in the payment of such contribution to the said Fund in violation of the said Act, shall be deemed to have dishonestly used the amount of the said contribution in violation of a direction of law as aforesaid.]

406. Punishment for criminal breach of trust-- Whoever commits criminal breach of trust shall be punished with imprisonment of either description for a

with Cr.M.P. No. 1596 of 2017

term which may extend to three years, or with fine, or with both.

419. Punishment for cheating by personation-- Whoever cheats by personation shall be punished with imprisonment of either description for a term which may extend to three years, or with fine, or with both.

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."

28. In the instant case, the complaint levelled against the Appellants herein is one which involves commission of offences of criminal breach of trust and cheating. While a criminal breach of trust as postulated under section 405 of the Penal Code, 1860, entails misappropriation or conversion of another's property for one's own use, with a dishonest intention, cheating too on the other hand as an offence defined under section 415 of the Penal Code, 1860, involves an ingredient of having a dishonest or fraudulent intention which is aimed at inducing the other party to deliver any property to a specific person. Both the sections clearly prescribed 'dishonest intention', as a pre-condition for even prima facie establishing the commission of said offences. Thus, in order to assess the relevant contentions made by the parties herein, the question whether actions of the Appellants were committed in furtherance of a dishonest or fraudulent scheme is one which requires scrutiny.

36. At this stage, by placing reliance on the judgment of this Court in Priti Saraf v. State of NCT of Delhi (Supra) and Sri Krishna Agencies v. State of Andhra Pradesh (Supra), it has been further submitted by Respondent No. 2 that Appellants cannot evade a criminal case by merely contending that the person whose property has been sold has filed a civil suit for recovery of the property, or that the dispute had been referred to arbitration.

41. Having considered the relevant arguments of the parties and decisions of this court we are of the considered view that existence of dishonest or fraudulent intention has not been made out against the Appellants. Though the instant dispute certainly involves determination of issues which are of civil nature, pursuant to which Respondent No. 2 has even instituted multiple civil suits, one can by no means stretch the dispute to an extent, so as to impart it a criminal colour. As has been rightly emphasised upon by this court, by way of an observation rendered in the case of Indian Oil Corporation v. NEPC India Ltd., as under:--

"14. While no one with a legitimate cause or grievance should be prevented from seeking remedies available in criminal law, a complainant who initiates or persists with a prosecution, being fully aware that the criminal proceedings are unwarranted and his remedy lies only in civil law, should himself be made accountable, at the

with Cr.M.P. No. 1596 of 2017

end of such misconceived criminal proceedings, in accordance with law."

42. It was also observed:--

"13. While on this issue, it is necessary to take notice of a growing tendency in business circles to convert purely civil disputes into criminal cases. This is obviously on account of a prevalent impression that civil law remedies are time consuming and do not adequately protect the interests of lenders/creditors....There is also an impression that if a person could somehow be entangled in a criminal prosecution, there is a likelihood of imminent settlement. Any effort to settle civil disputes and claims, which do not involve any criminal offence, by applying pressure though criminal prosecution should be deprecated and discouraged."

43. On an earlier occasion, in case of G. Sagar Suri v. State of UP, this Court has also observed:--

"8. Jurisdiction under Section 482 of the Code has to be exercised with a great care. In exercise of its jurisdiction High Court is not to examine the matter superficially. It is to be seen if a matter, which is essentially of civil nature, has been given a cloak of criminal offence. Criminal proceedings are not a short cut of other remedies available in law. Before issuing process a criminal court has to exercise a great deal of caution. For the accused it is a serious matter. This Court has laid certain principles on the basis of which High Court is to exercise its jurisdiction under Section 482 of the Code. Jurisdiction under this Section has to be exercised to prevent abuse of the process of any court or otherwise to secure the ends of justice."

44. Furthermore, in the landmark judgment of State of Haryana v. Ch. Bhajan Lal regarding exercise of inherent powers under section 482 of CrPC, this Court has laid down following categories of instances wherein inherent powers of the can be exercised in order to secure the ends of justice. These are:--

"(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 F.I.R. 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; (5) where the allegations made in the FIR or complaint

with Cr.M.P. No. 1596 of 2017

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."

14. Mr. Ponda, learned Senior counsel also submitted that inherent

power given to the High Court under Section 482 Cr.P.C. is with the

purpose and object of advancement of justice. He relied upon the

judgment rendered by the Hon'ble Supreme Court in the case of Vineet

Kumar & others v. State of Uttar Pradesh & another, reported in

(2017) 13 SCC 369. Paragraphs 22, 23, 24, 26, 27, 28, 29, 30 and 41 of

the said judgment are quoted herein below:

"'22. Before we enter into the facts of the present case it is necessary to consider the ambit and scope of jurisdiction under Section 482 CrPC vested in the High Court. Section 482 CrPC saves the inherent power of the High Court to make such orders as may be necessary to give effect to any order under this Code, or to prevent abuse of the process of any court or otherwise to secure the ends of justice.

23. This Court time and again has examined the scope of jurisdiction of the High Court under Section 482 CrPC and laid down several principles which govern the exercise of jurisdiction of the High Court under Section 482 CrPC. A three- Judge Bench of this Court in State of Karnataka v. L. Muniswamy held that the High Court is entitled to quash a proceeding if it comes to the conclusion that allowing the proceeding to continue would be an abuse of the process of the court or that the ends of justice require that the proceeding ought to be quashed. In para 7 of the judgment, the following has been stated: (SCC p. 703) "7. ... In the exercise of this wholesome power, the High Court is entitled to quash a proceeding if it comes to the conclusion that allowing the proceeding to continue would be an abuse of the process of the court or that the ends of justice require that the proceeding ought to be quashed. The saving of the High Court's inherent powers, both in civil and criminal matters, is

with Cr.M.P. No. 1596 of 2017

designed to achieve a salutary public purpose which is that a court proceeding ought not to be permitted to degenerate into a weapon of harassment or persecution. In a criminal case, the veiled object behind a lame prosecution, the very nature of the material on which the structure of the prosecution rests and the like would justify the High Court in quashing the proceeding in the interest of justice. The ends of justice are higher than the ends of mere law though justice has got to be administered according to laws made by the legislature. The compelling necessity for making these observations is that without a proper realisation of the object and purpose of the provision which seeks to save the inherent powers of the High Court to do justice, between the State and its subjects, it would be impossible to appreciate the width and contours of that salient jurisdiction."

24. The judgment of this Court in State of Haryana v. Bhajan Lal has elaborately considered the scope and ambit of Section 482 CrPC. Although in the above case this Court was considering the power of the High Court to quash the entire criminal proceeding including the FIR, the case arose out of an FIR registered under Sections 161, 165 IPC and Section 5(2) of the Prevention of Corruption Act, 1947. This Court elaborately considered the scope of Section 482 CrPC/Article 226 of the Constitution in the context of quashing the proceedings in criminal investigation. After noticing various earlier pronouncements of this Court, this Court enumerated certain categories of cases by way of illustration where power under Section 482 CrPC can be exercised to prevent abuse of the process of the Court or secure the ends of justice.

26. A three-Judge Bench in State of Karnataka v. M. Devendrappa had the occasion to consider the ambit of Section 482 CrPC. By analysing the scope of Section 482 CrPC, this Court laid down that authority of the Court exists for advancement of justice and if any attempt is made to abuse that authority so as to produce injustice the Court has power to prevent abuse. It further held that Court would be justified to quash any proceeding if it finds that initiation/continuance of it amounts to abuse of the process of court or quashing of these proceedings would otherwise serve the ends of justice. The following was laid down in para 6: (SCC p. 94) "6. ... All courts, whether civil or criminal possess, in the absence of any express provision, as inherent in their constitution, all such powers as are necessary to do the right and to undo a wrong in course of administration of justice on the principle quando lex aliquid alicui concedit, concedere videtur et id sine quo res ipsae esse non potest (when the law gives a person anything it gives him that without which it cannot exist). While exercising powers under the section, the court does not function as a court of appeal or revision. Inherent jurisdiction under the section though wide has to be exercised sparingly, carefully and with caution and only when such exercise is justified by the tests specifically laid down in the section itself. It is to be exercised ex debito justitiae to do real and substantial justice for the administration of which alone courts

with Cr.M.P. No. 1596 of 2017

exist. Authority of the court exists for advancement of justice and if any attempt is made to abuse that authority so as to produce injustice, the court has power to prevent abuse. It would be an abuse of process of the court to allow any action which would result in injustice and prevent promotion of justice. In exercise of the powers court would be justified to quash any proceeding if it finds that initiation/continuance of it amounts to abuse of the process of court or quashing of these proceedings would otherwise serve the ends of justice. When no offence is disclosed by the complaint, the court may examine the question of fact. When a complaint is sought to be quashed, it is permissible to look into the materials to assess what the complainant has alleged and whether any offence is made out even if the allegations are accepted in toto."

27. Further in para 8 the following was stated:

(Devendrappa case, SCC p. 95) "8. ... Judicial process should not be an instrument of oppression, or, needless harassment. Court should be circumspect and judicious in exercising discretion and should take all relevant facts and circumstances into consideration before issuing process, lest it would be an instrument in the hands of a private complainant to unleash vendetta to harass any person needlessly. At the same time the section is not an instrument handed over to an accused to short-circuit a prosecution and bring about its sudden death. The scope of exercise of power under Section 482 of the Code and the categories of cases where the High Court may exercise its power under it relating to cognizable offences to prevent abuse of process of any court or otherwise to secure the ends of justice were set out in some detail by this Court in State of Haryana v. Bhajan Lal."

28. In Sunder Babu v. State of T.N., this Court was considering the challenge to the order of the Madras High Court where application was under Section 482 CrPC to quash criminal proceedings under Section 498-A IPC and Section 4 of the Dowry Prohibition Act, 1961. It was contended before this Court that the complaint filed was nothing but an abuse of the process of law and allegations were unfounded. The prosecuting agency contested the petition filed under Section 482 CrPC taking the stand that a bare perusal of the complaint discloses commission of alleged offences and, therefore, it is not a case which needed to be allowed. The High Court accepted the case of the prosecution and dismissed the application. This Court referred to the judgment in Bhajan Lal case and held that the case fell within Category

7. The Apex Court relying on Category 7 has held that the application under Section 482 deserved to be allowed and it quashed the proceedings.

29. In another case in Priya Vrat Singh v. Shyam Ji Sahai, this Court relied on Category 7 as laid down in State of Haryana v. Bhajan Lal. In the above case the Allahabad High Court had dismissed an application filed under Section 482 CrPC to quash the proceedings under Sections 494, 120-B and 109 IPC and Sections 3 and 4 of the Dowry Prohibition Act.

with Cr.M.P. No. 1596 of 2017

After noticing the background facts and parameters for exercise of power under Section 482 CrPC the following was stated in paras 8 to 12:

"8. Further, it is pointed out that the allegation of alleged demand for dowry was made for the first time in December 1994. In the complaint filed, the allegation is that the dowry torture was made sometime in 1992. It has not been explained as to why for more than two years no action was taken.

9. Further, it appears that in the complaint petition apart from the husband, the mother of the husband, the subsequently married wife, husband's mother's sister, husband's brother-in-law and Sunita's father were impleaded as party. No role has been specifically ascribed to anybody except the husband and that too of a dowry demand in February 1993 when the complaint was filed on 6-12-1994 i.e. nearly after 22 months. It is to be noted that in spite of service of notice, none has appeared on behalf of Respondent 1.

10. The parameters for exercise of power under Section 482 CrPC have been laid down by this Court in several cases.

11. '19. The section does not confer any new power on the High Court. It only saves the inherent power which the Court possessed before the enactment of the Code. It envisages three circumstances under which the inherent jurisdiction may be exercised, namely, (i) to give effect to an order under the Code, (ii) to prevent abuse of the process of court, and (iii) to otherwise secure the ends of justice. It is neither possible nor desirable to lay down any inflexible rule which would govern the exercise of inherent jurisdiction. No legislative enactment dealing with procedure can provide for all cases that may possibly arise. Courts, therefore, have inherent powers apart from express provisions of law which are necessary for proper discharge of functions and duties imposed upon them by law. That is the doctrine which finds expression in the section which merely recognises and preserves inherent powers of the High Courts. All courts, whether civil or criminal, possess, in the absence of any express provision, as inherent in their constitution, all such powers as are necessary to do the right and to undo a wrong in course of administration of justice on the principle quando lex aliquid alicui concedit, concedere videtur id sine quo res ipsa esse non potest (when the law gives a person anything it gives him that without which it cannot exist). While exercising powers under the section, the Court does not function as a court of appeal or revision. Inherent jurisdiction under the section though wide has to be exercised sparingly, carefully and with caution and only when such exercise is justified by the tests specifically laid down in the section itself. It is to be exercised ex debito justitiae to do real and substantial justice for the administration of which alone courts exist. Authority of the court exists for advancement of justice and if any attempt is made to abuse that authority so as to produce injustice, the

with Cr.M.P. No. 1596 of 2017

court has power to prevent abuse. It would be an abuse of process of the court to allow any action which would result in injustice and prevent promotion of justice. In exercise of the powers court would be justified to quash any proceeding if it finds that initiation/continuance of it amounts to abuse of the process of court or quashing of these proceedings would otherwise serve the ends of justice.

20. As noted above, the powers possessed by the High Court under Section 482 of the Code are very wide and the very plenitude of the power requires great caution in its exercise. Court must be careful to see that its decision in exercise of this power is based on sound principles. The inherent power should not be exercised to stifle a legitimate prosecution. The High Court being the highest court of a State should normally refrain from giving a prima facie decision in a case where the entire facts are incomplete and hazy, more so when the evidence has not been collected and produced before the Court and the issues involved, whether factual or legal, are of magnitude and cannot be seen in their true perspective without sufficient material. Of course, no hard-and-fast rule can be laid down in regard to cases in which the High Court will exercise its extraordinary jurisdiction of quashing the proceeding at any stage.'

12. The present case appears to be one where Category 7 of the illustrations given in State of Haryana v. Bhajan Lal is clearly applicable."

30. From the material on records, the following facts are disclosed from the sequence of events which preceded the registration of FIR on 6-11-2015. The complainant, her husband and son had taken different amounts totalling Rs 22 lakhs 50 thousand in the month of May 2015 for business/shop purposes from the accused. Three agreements were written on non-judicial stamp papers on 29-5-2015, 1-6- 2015 and 31-8-2015 wherein the complainant, her husband and son have acknowledged receipt of the money in cash as well as by cheque. Cheques of Rs 6 lakhs, Rs 14 lakhs 50 thousand were given to the accused for ensuring the repayment. Cheques were drawn on Prathama Bank, Kanth Branch, District Moradabad. Cheques were deposited in the bank which were returned with endorsements "No Sufficient Balance". After cheques having been dishonoured, complaints under Section 138 of the Negotiable Instruments Act were filed by the accused against the husband and son of the complainant which were registered in the month of September/October and were pending before alleged incident dated 22-10-2015.

41. Inherent power given to the High Court under Section 482 CrPC is with the purpose and object of advancement of justice. In case solemn process of Court is sought to be abused by a person with some oblique motive, the Court has to thwart the attempt at the very threshold. The Court cannot permit a prosecution to go on if the case falls in one of the categories as illustratively enumerated by this Court in State of Haryana v. Bhajan Lal. Judicial process is a solemn proceeding which cannot be allowed to be converted into an

with Cr.M.P. No. 1596 of 2017

instrument of operation or harassment. When there are materials to indicate that a criminal proceeding is manifestly attended with mala fide and proceeding is maliciously instituted with an ulterior motive, the High Court will not hesitate in exercise of its jurisdiction under Section 482 CrPC to quash the proceeding under Category 7 as enumerated in State of Haryana v. Bhajan Lal3, which is to the following effect: (SCC p. 379, para 102) "102. (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."

Above Category 7 is clearly attracted in the facts of the present case. Although, the High Court has noted the judgment of State of Haryana v. Bhajan Lal3, but did not advert to the relevant facts of the present case, materials on which final report was submitted by the IO. We, thus, are fully satisfied that the present is a fit case where the High Court ought to have exercised its jurisdiction under Section 482 CrPC and quashed the criminal proceedings."

15. By way of relying on these judgments, he submitted that where a

criminal proceeding is manifestly attended with malafide and maliciously

with any ulterior motive, this Court is empowered to quash the entire

criminal proceedings. He further submitted that the complaint was

affidavited by another person, which is also not in accordance with law. He

further relied upon the judgment rendered by the Hon'ble Supreme Court

in the case of Ramdev Food Products Pvt. Ltd. v. State of Gujrat ,

reported in (2015) 6 SCC 439. Paragraphs 26 and 27 of the said

judgment are quoted herein below:

"26. In M.C. Abraham v. State of Maharashtra, it was observed:

14. "... In the first place, arrest of an accused is a part of the investigation and is within the discretion of the investigating officer. Section 41 of the Code of Criminal Procedure provides for arrest by a police officer without an order from a Magistrate and without a warrant. The section gives discretion to the police officer who may, without an order from a Magistrate and even without a warrant, arrest any person in the situations enumerated in that section. It is open to him, in the course of investigation, to arrest any person who has been concerned with any cognizable offence or against whom reasonable complaint has been made or credible information has been received, or a reasonable suspicion exists of his having been so concerned.

with Cr.M.P. No. 1596 of 2017

Obviously, he is not expected to act in a mechanical manner and in all cases to arrest the accused as soon as the report is lodged. In appropriate cases, after some investigation, the investigating officer may make up his mind as to whether it is necessary to arrest the accused person. At that stage the court has no role to play. Since the power is discretionary, a police officer is not always bound to arrest an accused even if the allegation against him is of having committed a cognizable offence. Since an arrest is in the nature of an encroachment on the liberty of the subject and does affect the reputation and status of the citizen, the power has to be cautiously exercised. It depends inter alia upon the nature of the offence alleged and the type of persons who are accused of having committed the cognizable offence. Obviously, the power has to be exercised with caution and circumspection."

27. The nature of cases dealt with under Section 202 are cases where material available is not clear to proceed further. The Magistrate is in seisin of the matter having taken the cognizance. He has to decide whether there is ground to proceed further. If at such premature stage power of arrest is exercised by police, it will be contradiction in terms. As regards denial of opportunity to record confession under Section 27 of the Evidence Act, it has to be kept in mind that admissibility of such confession cannot guide exercise of power of arrest. Source of power of arrest is governed by other provisions and not by Section 27. It is only if arrest is otherwise permissible that provision of Section 27 may be invoked. If exercise of power of arrest is not otherwise warranted, admissibility of confession under Section 27 of the Evidence Act, 1872 cannot facilitate such exercise. We, thus, hold that police of its own cannot exercise its power of arrest in the course of making its report in pursuance of direction under Section 202."

16. On the point of affidavit, Mr. Ponda the learned Senior counsel relied

upon two judgments, firstly the judgment rendered by the Hon'ble

Supreme Court in the case of Amar Singh v. Union of India & others ,

reported in (2011) 7 SCC 69 and secondly the judgment rendered by the

Hon'ble Bombay High Court in the case of Sayed Anwar Ahmed &

another v. State of Maharashtra & another in Criminal Writ

Petition No.924 of 2016 with Criminal Application No.486 of 2016 ,

dated 27th and 28th February, 2017. He relied upon paragraph 23 (5)of the

judgment rendered by the Hon'ble Bombay High Court, which is quoted

herein below:

with Cr.M.P. No. 1596 of 2017

"23 5. (1) Every affidavit should clearly specify what portion of the statement is made on the declarant's knowledge and what portion of the statement is made on his information or belief.

(2) When a particular portion is not within the declarant's own knowledge but it is stated from information obtained from others, the declarant must use the expression "I am informed" and if it is made on belief should add "I verily believe it to be true." He must also state the source or ground of the information or belief, and give the name and address of, and sufficiently described or the purpose of identification, the person or persons from whom he had received such information.

(3) When the statement rests on facts disclosed in documents or copies of documents procured from any Court or other person, the declarant shall state the source from which they were procured and his information, or belief, as to the truth of the facts disclosed in such documents."'

17. Mr. Ponda, the learned Senior counsel also submitted that even the

Company is still ready to handover the Flat after receiving the remaining

amount. By way of referring additional affidavit filed on behalf of the

petitioners, he submitted that the colour photographs have been annexed,

therein, it has been shown that the building in question has been

completed. On these grounds, Mr. Ponda the learned Senior counsel

submitted that the criminal proceeding is abuse of the process of law and

this Court is empowered to exercise its jurisdiction under Section 482

Cr.P.C. and the FIR may kindly be quashed.

18. Per contra Mr. Sumeet Gadodia, the learned counsel appearing for

opposite party nos. 2 and 3 at the outset submitted that there is ingredient

of cheating Sections and at this stage, this Court may not interfere with the

FIR. He referred paragraph 4 of the complaint/FIR and submitted that the

accused nos. 2 to 6 are the persons in-charge of the affairs of the project.

He further referred paragraph 13 of the complaint/FIR and submitted that

the accused regularly used to change the person to whom the

correspondence has to be made and to contact. He also submitted that

there are allegations of breach of trust. He referred to Annexure-9 dated

with Cr.M.P. No. 1596 of 2017

23.10.2014 issued by the Company and submitted that it has been

disclosed that the Company is mobilizing to start the works latest by the

end of November, 2014. For the mode of payment, he referred page 12 of

the petition, wherein, mode of payment has been disclosed by the

petitioners. Mr. Gadodia, learned counsel further submitted that at page

33 paragraph xix of the petition, it has been stated that the Company

decided to waive off the interest liability that was imposed upon the

opposite party nos. 2 and 3 and also revised the payment plan to the

construction based plan. He also submitted that the payment consideration

was revised, which has been admitted therein. By way of referring

Annexure-16 at page 127 of the petition, he submitted that as a special

case, the case of the opposite party nos. 2 and 3 with regard to payment

plan has been accepted. By way of referring paragraph 10 of the

complaint/FIR, he submitted that several correspondences were made and

only on 09.06.2016 the same was accepted by the Company. By way of

referring paragraph xx at page 34 of the petition, he submitted that

reminder letter dated 19.08.2016 has been disclosed. He referred

Annexure-20 at page 136 of the petition and submitted that entire

consideration amount was requested to be refunded by the opposite party

nos.2 and 3. Mr. Gadodia, learned counsel relied upon paragraphs 12, 13,

24, 26, 27, 28, 29, 31, 32, 33, 34, 35 and 36 of the judgment rendered by

the Hon'ble Supreme Court in the case of Priti Saraf & another v. State

of NCT of Delhi & another, reported in (2021) SCC OnLine SC 206,

which are quoted herein below:

"12. Learned counsel further submits that the exercise of inherent power of the High Court under Section 482 CrPC is an exceptional one. Great care should be taken by the High Court before embarking to scrutinise the complaint/FIR/charge-sheet in deciding whether the rarest of the rare case is made out to scuttle the prosecution in its

with Cr.M.P. No. 1596 of 2017

inception. It was expected from the High Court to prima facie consider the complaint, charge-sheet and the statement of witness recorded in support thereof which was recorded by the Investigating Officer in arriving at a conclusion whether court could take cognizance of the offence, on that evidence and proceed further with the trial. If it reaches a conclusion that no cognizable offence is made out, no further act could be done except to quash the FIR/charge-sheet. But only in exceptional cases, i.e., in rarest of rare cases of mala fide initiation of the proceedings to wreak private vengeance process is availed of in laying a complaint or FIR itself does not disclose any cognizable offence.

13. Learned counsel submits that the High Court has committed a manifest error in ignoring the material facts on record which make the orders sensitively susceptible and further submits that the learned Additional Sessions Judge had considered the entire gamut of facts and appositely opined that the order taking cognizance could not be flawed but the High Court has completely erred in its conclusion and has not even looked into the bare facts available on record and has proceeded on a premise that in case where there is an agreement to sell and its subsequent termination for its alleged breach, such disputes are civil disputes and more so where the arbitral proceedings are pending, criminal proceedings will be an abuse of the process of the Court, in the given circumstances, what has been made to be a basis by the learned Judge is unsustainable in law and hence the order deserves to be set aside.

24. The question which is raised for consideration is that in what circumstances and categories of cases, a criminal proceeding may be quashed either in exercise of the extraordinary powers of the High Court under Article 226 of the Constitution, or in the exercise of the inherent powers of the High Court under Section 482 CrPC. This has often been hotly debated before this Court and various High Courts. Though in a series of decisions, this question has been answered on several occasions by this Court, yet the same still comes up for consideration and is seriously debated.

26. This Court has clarified the broad contours and parameters in laying down the guidelines which have to be kept in mind by the High Courts while exercising inherent powers under Section 482 CrPC. The aforesaid principles laid down by this Court are illustrative and not exhaustive. Nevertheless, it throws light on the circumstances and the situation which is to be kept in mind when the High Court exercises its inherent powers under Section 482 CrPC.

27. It has been further elucidated recently by this Court in Arnab Manoranjan Goswami v. State of Maharashtra where jurisdiction of the High Court under Article 226 of the Constitution of India and Section 482 CrPC has been analysed at great length.

28. It is thus settled that the exercise of inherent power of the High Court is an extraordinary power which has to be exercised with great care and circumspection before embarking to scrutinise the complaint/FIR/charge-sheet in deciding whether the case is the rarest of rare case, to scuttle the prosecution at its inception.

29. In the matter under consideration, if we try to analyse

with Cr.M.P. No. 1596 of 2017

the guidelines of which a reference has been made, can it be said that the allegations in the complaint/FIR/charge-sheet do not make out a case against the 2 nd respondent or do they disclose the ingredients of an offence alleged against the 2nd respondent or the allegations are patently absurd and inherently improbable so that no prudent person can ever reach to such a conclusion that there is sufficient ground for proceeding against the 2nd respondent.

31. 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.

32. 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.

33. We have perused the pleadings of the parties, the complaint/FIR/charge-sheet and orders of the Courts below and have taken into consideration the material on record. After hearing learned counsel for the parties, we are satisfied that the issue involved in the matter under consideration is not a case in which the criminal trial should have been short- circuited. The High Court was not justified in quashing the criminal proceedings in exercise of its inherent jurisdiction. The High Court has primarily adverted on two circumstances,

(i) that it was a case of termination of agreement to sell on account of an alleged breach of the contract and (ii) the fact that the arbitral proceedings have been initiated at the instance of the appellants. Both the alleged circumstances noticed by the High Court, in our view, are unsustainable in law. The facts narrated in the present complaint/FIR/charge- sheet indeed reveal the commercial transaction but that is hardly a reason for holding that the offence of cheating would elude from such transaction. In fact, many a times, offence of cheating is committed in the course of commercial transactions and the illustrations have been set out under Sections 415, 418 and 420 IPC. Similar observations have been made by this Court in Trisuns Chemical

with Cr.M.P. No. 1596 of 2017

Industry v. Rajesh Agarwal (supra):--

"9. We are unable to appreciate the reasoning that the provision incorporated in the agreement for referring the disputes to arbitration is an effective substitute for a criminal prosecution when the disputed act is an offence. Arbitration is a remedy for affording reliefs to the party affected by breach of the agreement but the arbitrator cannot conduct a trial of any act which amounted to an offence albeit the same act may be connected with the discharge of any function under the agreement. Hence, those are not good reasons for the High Court to axe down the complaint at the threshold itself. The investigating agency should have had the freedom to go into the whole gamut of the allegations and to reach a conclusion of its own. Pre- emption of such investigation would be justified only in very extreme cases as indicated in State of Haryana v. Bhajan Lal [1992 Supp (1) SCC 335]"

34. So far as initiation of arbitral proceedings is concerned, there is no correlation with the criminal proceedings. That apart, the High Court has not even looked into the charge- sheet filed against 2nd respondent which was on record to reach at the conclusion that any criminal offence as stated is prima facie being made out and veracity of it indeed be examined in the course of criminal trial.

35. The submission made by Mr. P. Chidambaram, learned senior counsel for 2nd respondent showing bonafides and taking us through the documentary evidence annexed to the counter affidavit on record to show that it was a simple case of termination because of breach of terms of the contract giving rise to a purely civil dispute or initiation of the arbitral proceedings would not attract the provisions under Sections 406, 420, 34 IPC may not hold good at this stage for the reason what is being suggested by the learned counsel for the 2nd respondent can be his defence during the course of trial but was not open to be examined by the High Court to take a judicial notice and for quashing of the criminal proceedings in exercise of its inherent powers under Section 482 CrPC.

36. So far as the further submission made by learned counsel for the 2nd respondent that if the High Court has failed to consider the charge-sheet and other material available on record, the matter be remitted back to the High Court for re- consideration afresh in accordance with law. There may be some substance in what being urged by learned counsel for the 2nd respondent but for the reason that matter has been argued threadbare before us, and learned counsel for the parties have taken us through the record of criminal proceedings. After going through the record, we are satisfied that there was sufficient material available as manifests from the record of criminal proceedings to connect the 2nd respondent in the commission of crime. Consequently, we do not consider it appropriate to remit the matter back at this stage, as it would be an exercise in futility; on the contrary, it will just delay the proceedings, and hold the criminal trial at bay, which deserves to be expedited."

19. By way of relying this judgment, Mr. Gadodia submitted that at this

with Cr.M.P. No. 1596 of 2017

stage this Court may not exercise its power under Section 482 Cr.P.C. He

further referred page 67 of the compilation, supplied by the opposite party

nos. 2 and 3, in which, the letter of the I.O. addressed to the learned Chief

Judicial Magistrate, East Singhbhum, Jamshedpur has been annexed and

submitted that the I.O. has requested for issuance of non-bailable warrant

against the petitioners. He distinguished the case of Priyanka Srivastava

(supra) by way of referring paragraph 31 of the said judgment and

submitted that on the point of affidavit, paragraph no.31 has been

discussed by the Hon'ble Supreme Court. By way of distinguishing the

judgment rendered by the Hon'ble Bombay High Court in the case of

Sayed Anwar Ahmed (supra), he submitted that the Hon'ble Bombay

High Court was having the Rule of the affidavit and that case is not helping

the petitioners. By way of referring page 147 of the petition, he submitted

that the affidavit was sworn by the Attorney, who was authorized to file the

case. On these grounds, he submitted that only the FIR has been

challenged and the investigation is going, no case of interference is made

out and, hence, these petitions are fit to be dismissed.

20. By way of reply, Mr. Ponda the learned Senior counsel appearing for

the petitioners submitted that in the complaint itself, the prayer for sending

the complaint under Section 156(3) is made, which is not in accordance

with law. He further referred Section 297 of the Cr.P.C. and submitted that

the authorities before whom the affidavits may be sworn, is also disclosed

in the Cr.P.C. He submitted that the contentions of the learned counsel for

opposite party nos. 2 and 3 are not well founded. He distinguished the

case of Priti Saraf (supra) relied by the learned counsel for opposite

party nos. 2 and 3 by way of placing paragraphs 3 and 4 of the said

judgment and submitted that a conspiracy was hatched with broker in

with Cr.M.P. No. 1596 of 2017

that case and in the facts and circumstances of that case, the judgment

was passed by the Hon'ble Supreme Court. He further referred paragraph

27 of the Priyanka Srivastava (supra) case and submitted that it has

been observed that it needs to be reiterated that the learned Magistrate

has to remain vigilant with regard to the allegations made and the nature

of allegations and not to issue directions without proper application of

mind. On these grounds by way of replying the arguments of the learned

counsel for opposite party nos. 2 and 3, he submitted that the case is fit to

be allowed.

21. In light of the above facts and submissions of the learned counsel

appearing for the parties, this Court has gone through the materials on the

record. It is an admitted fact that the case is arising out of the complaint.

The complainant has filed the complaint case, which has been registered

as C1 Case No.297 of 2017. On receipt of the said complaint, the learned

Chief Judicial Magistrate, Jamshedpur has written on the margin of the first

page that the police to investigate the case as per the provision under

Section 156(3) Cr.P.C. This is not a separate order and it has been merely

endorsed on the said petition by way of referring the same. The Hon'ble

Supreme Court in the case of Priyanka Srivastava (supra) has held that

there should be application of mind while passing an order under Section

156(3) Cr.P.C. In that case, the Hon'ble Supreme Court has dealt with

several judgments and law has been laid down in paragraphs 27, 29, 30

and 31. In paragraph 27 of the said judgment, the Hon'ble Supreme Court

has held that the learned Magistrate has to remain vigilant with regard to

the allegations made and the nature of allegations and not to issue

directions without proper application of mind. It has further been held that

the said application, which has been filed under Section 156(3) Cr.P.C.

with Cr.M.P. No. 1596 of 2017

should be supported by an affidavit and the purpose of filing such affidavit

is to prevent abuse of process, which has become more common in these

days. The manner of affidavit has also been prescribed in Section 297

Cr.P.C. There was no prior invocation of Section 154(3) Cr.P.C. while filing

the petition before the Court under Section 156 (3) Cr.P.C. In the complaint

case itself, it has been prayed to send the complaint to Bistupur Police

Station for registration of the FIR. Thus, this order and action of the

learned Chief Judicial Magistrate changing the complaint to the Police

Station for investigation under Section 156(3) Cr.P.C and registering an FIR

is not in consonance with the law laid down by the Hon'ble Supreme Court.

On this score, the order of registering the FIR is bad in law. The judgment

of the Hon'ble Supreme Court in the case of Priyanka Srivastava

(supra) has been subsequently followed in the case of Vikram Johar v.

State of Uttar Pradesh & another, reported in (2019) 14 SCC 207.

On the same line, the Hon'ble Bombay High Court has considered Section

156(3) Cr.P.C. in the case of Enercon GMBH & others v. State of

Maharashtra & others, reported in 2016 SCC OnLine Bom 4867. The

allotment letter dated 06.10.2014 particularly Clauses D and E set out the

terms of payment, which are quoted herein below:

D. All the terms and conditions mentioned in your Booking Application Form shall form an integral part of this Allotment letter and deemed to have been reproduced herein verbatim and agreed upon by the parties. A copy of the Booking Application Form is annexed hereto and marked as at Annexure B. E. The agreed consideration value of Rs.9,94,41,300/- shall be paid as under:

 Sr. No.                      Particulars                       Amount Due (Rs.)
    i.     Earnest Booking Amount                                             25,00,000
   ii.     Within 30 days of the booking application form                     74,44,130
           (Amount equivalent to 10% of total

Consideration Value less the earnest amount) iii. Within 60 days of the booking application form 89,49,717 (Amount equivalent to further 9% of total Consideration Value) iv. 11% (Eleven percent) of the total consideration to 1,09,38,543

with Cr.M.P. No. 1596 of 2017

be paid at the time of completion of Raft v. On Possession (amount equivalent to further 70% 6,96,08,910 of the total consideration value) Total Agreement Value 9,94,41,300

22. Clause P of the allotment letter dated 06.10.2014 speaks for

cancellation of the agreement in case of commitment of breach of the

terms. Clause P is quoted herein below:

"P. In case you commit a breach of the terms or fall or neglect to comply with any of the conditions mentioned herein, the allotment of the said Unit before or after the execution of the Agreement for Sale, the Company shall forfeit 19% of the consideration value or any such amount paid till date whichever is less plus the Company shall also be entitled to deduct the amount of interest accrued if any and the Agreement for Sale/Agreement to Sell shall automatically stand cancelled & revoked without requiring us to send to you any further notice."

23. The Booking Application Form dated 31.08.2014 speaks of arbitration

Clause, contained in Clause 42, which is quoted herein below:

"42. In case of any differences the same shall be referred to Arbitration under the Arbitration and Conciliation Act, 1996 and any amendments thereto. The Arbitration shall be conducted in Mumbai and in English language. The Sole Arbitrator shall be appointed by the Company and his award shall be final and binding on all parties."

These two letters speak of mode of payments and arbitration.

24. It is settled proposition of law that every breach of contract would

not give rise to an offence of cheating and only in those cases breach of

contract would amount to cheating where there was any deception played

at the very inception. If the intention to cheat has developed later on, the

same cannot amount to cheating. In the case in hand, both the parties

have entered into an agreement, as discussed above. The allotment letter

and Booking Application Form, which are quoted herein above suggest that

there was no fraudulent or dishonest intention at the time of making

promise or representation. It is also well settled that a given set of facts

may make out a civil wrong as also a criminal offence and only because a

civil remedy may be available to the complainant that itself cannot be a

with Cr.M.P. No. 1596 of 2017

ground to quash a criminal proceeding. The real test is whether the

allegations in the complaint disclose the criminal offence of cheating or not.

A reference may be made to the judgment rendered by the Hon'ble

Supreme Court in the case of VESA Holdings Private Limited &

another v. State of Kerala & others , reported in (2015) 8 SCC 293.

Paragraph 13 of the said judgment is quoted herein below:

"13. It is true that a given set of facts may make out a civil wrong as also a criminal offence and only because a civil remedy may be available to the complainant that itself cannot be a ground to quash a criminal proceeding. The real test is whether the allegations in the complaint disclose the criminal offence of cheating or not. In the present case there is nothing to show that at the very inception there was any intention on behalf of the accused persons to cheat which is a condition precedent for an offence under Section 420 IPC. In our view the complaint does not disclose any criminal offence at all. The criminal proceedings should not be encouraged when it is found to be mala fide or otherwise an abuse of the process of the court. The superior courts while exercising this power should also strive to serve the ends of justice. In our opinion, in view of these facts allowing the police investigation to continue would amount to an abuse of the process of the court and the High Court committed an error in refusing to exercise the power under Section 482 of the Criminal Procedure Code to quash the proceedings."

25. A fraudulent or dishonest inducement is an essential ingredient of

the offence under Section 415 of the Indian Penal Code. A person who

dishonestly induced any person to deliver any property is liable for the

offence of cheating. In the present case, for purchase of Flat agreement,

the allotment letter and Booking Application Form were entered into. The

Company started the construction, which has been completed. The

complainant-opposite party nos. 2 and 3 failed to pay certain EMIs in terms

of the mode of payment. They requested the Company to change the

mode of payment, which has been accepted. Later on, they desired not to

continue with the said project and requested to refund the amount already

paid, which shows that this is a case of civil nature and it can be safely

said that it is an attempt to cloak a civil dispute with criminal nature

with Cr.M.P. No. 1596 of 2017

despite the absence of ingredients necessary to constitute a criminal

offence. It has been repeatedly submitted by the learned Senior counsel

for the petitioners that the Flat in question is ready and on receiving of the

amount, the Company is willing to handover the same to the opposite

party nos. 2 and 3. The complaint filed by the opposite party nos. 2 and 3

constitute the abuse of process of court and is liable to be quashed.

26. When the Company is accused, its Directors can be roped in only if

there is sufficient incriminating evidence against them coupled with

criminal intent or the statutory regime attracts the doctrine of vicarious

liability. Reference may be made to the judgment rendered by the Hon'ble

Supreme Court in the case of Sunil Bharti Mittal v. Central Bureau of

Investigation, reported in (2015) 4 SCC 609. Paragraph 45.2 of the

said judgment is quoted herein below:

"45.2. Sham Sunder v. State of Haryana: (SCC p. 632, para 9) "9. But we are concerned with a criminal liability under penal provision and not a civil liability. The penal provision must be strictly construed in the first place. Secondly, there is no vicarious liability in criminal law unless the statute takes that also within its fold. Section 10 does not provide for such liability. It does not make all the partners liable for the offence whether they do business or not.""

27. The facts of the judgment relied by the learned counsel for the

opposite party nos. 2 and 3 in the case of Priti Saraf (supra) are

different. In that case, the respondents hatched a conspiracy with broker

so as to cheat and deceive the complainant and misappropriated the

amount of the complainant and the Hon'ble Supreme Court in paragraph

38 of the said judgment made it clear that what has been observed by the

Hon'ble Supreme Court is only for the purpose of disposal of that appeal.

Thus, the judgment relied by the learned counsel for the opposite party

nos. 2 and 3 is not helping the opposite party nos. 2 and 3.

with Cr.M.P. No. 1596 of 2017

28. For the non-compliance of Sections 154 and 156 Cr.P.C and

considering the nature of the case, which is civil in nature, the FIR against

the petitioners being Bistupur P.S. Case No. 40 of 2017, corresponding to

G.R. Case No.429 of 2017, dated 15.02.2017, pending in the court of the

learned Chief Judicial Magistrate at Jamshedpur is quashed. It is made

clear that no opinion has been expressed by this Court on the merit of

recovery of money and availing the civil remedy.

29. Accordingly, these petitions stand allowed and disposed of.

30. Consequently, pending interlocutory applications, if any, also stand

disposed of.

                                                     (Sanjay Kumar Dwivedi, J.)
High Court of Jharkhand, Ranchi
Dated: the 9th day of December, 2021
Ajay/        N.A.F.R.