Mrs. Manisha Prashant Mehta vs State Of Karnataka
2021 Latest Caselaw 1812 Kant

IN THE HIGH COURT OF KARNATAKA AT BENGALURU
                                                                 R
     DATED THIS THE 23RD DAY OF MARCH 2021

                          BEFORE

       THE HON'BLE MR.JUSTICE H.P.SANDESH

        CRIMINAL PETITION No. 6248 OF 2020

BETWEEN:

1.    Mrs. Manisha Prashant Mehta,
      Aged 54 years,
      W/o Prashant Mehta,
      R/a No. 555, 9th 'A' Main Road,
      1st Stage, Indiranagar,
      Behind Metro Station,
      Bengaluru - 560 037.

2.    Ms. Avni P Mehta,
      Aged 20 years,
      D/o Prashant Mehta,
      R/a No. 555, 9th 'A' Main Road,
      1st Stage, Indiranagar,
      Behind Metro Station,
      Bengaluru - 560 037.

3.    Mr. Prashant Mehta,
      Aged 59 years,
      S/o Jasvantrai Mehta,
      R/a No. 555, 9th 'A' Main Road,
      1st Stage, Indiranagar,
      Behind Metro Station,
      Bengaluru - 560 037.
                                                ...Petitioners
(By Sri. Kiran S Javali, Advocate, for Sri K.Chandrashekar,
Advocate)
                             -2-


AND:

1.     State of Karnataka,
       By R.T.Nagar Police Station,
       Bengaluru - 560 032,
       Rep by SPP,
       High Court Building,
       Bengaluru - 560 001.

2.    M/s Sanchaya Land and Estate Pvt. Ltd.,
      No. 482, HMT Layout, R.T.Nagar,
      Bengaluru - 560 032,
      Rep. by its Authorised Signatory,
      Mr. Dhastgir Sharief.
                                            ...Respondents
(By Sri.H.R.Showri, HCGP, for R1;
Sri Ashwin Vaish, Advocate, for Sri Goutham S Bharadwaj,
Advocate, for R2)

       This Criminal Petition is filed under Section 482 of
Cr.P.C. praying to quash the FIR in Cr. No. 195/2020 on
the file of IV Additional CMM Court, Bengaluru.

      This Criminal Petition coming on for admission this
day, the Court made the following:

                             ORDER

This petition is filed under section 482 of Cr.P.C

praying this court to quash the FIR in Cr.No. 195/2020 on

the file of IV Additional CMM, Bengaluru, for the offences

punishable under sections 420, 406, 409 and 384 of IPC,

sections 38, 39, 40, 5 of the Karnataka Money Lenders Act

and section 4 of the Karnataka Prohibition of Charging

Exorbitant Interest Act, 2004.

2. The factual matrix of the case is that respondent

No.2 has filed the complaint before the respondent No.1 on

20.8.2020 making the allegations against the petitioners

that the complainant is the authorized representative of

M/s Sanchaya Land and Estate Private Limited, a company

duly incorporated under the Companies Act and carrying

out the business of project development and construction.

The complainant was authorized to prefer the present

complaint. It is alleged in the complaint that accused Nos.

1 and 3 who are husband and wife are Directors of accused

No.5 which is a company incorporated under the

Companies Act. The accused persons claim to be in the

business of unofficial financing among other things and are

on the look out for soft targets to lend money and in turn

usurp their immovable properties by charging illegal

interest rates, which can never be repaid. The said

accused persons were introduced by one Rajiv Gupta,

finance facilitator, befriended personnel of the said

company and in August 2019 misled the complainant into

taking a business loan in a sum of Rs.75,00,000/-. The

said money was received via cheque payments and Rajiv

Gupta received commission. The accused persons

dishonestly and fraudulently deceived the complainant with

an intention to cause wrongful loss to the company and

wrongful gain to themselves, into accepting, that since

they do not have a money lenders licence and would be

charging high interest rate at 2% per month till repayment

of the principal amount of the loan advanced, they should

instead of executing an MOU for the said loan, secure the

loan amount by ostensibly transferring sale deeds of 6

flats/properties bearing Nos. 102, 503, 601, 602, 701, 801

in Maple Blocks which form part of the said company's

project at Kasaba Hobli, Anekal Taluk, in the name of

accused No.1 during August 2019. The accused insisted

that they have to execute sale deeds at circle value instead

of market value, as the same was only a formality to

secure the loan advanced and therefore despite the

cumulative consideration amount for the 6 flats being

Rs.1,05,75,000/-, Rs.30,75,000/- was returned. They were

further misled into executing bogus rent agreements

during the same period, to secure in favour of the accused

the 2% per monthly interest amount ostensibly payable as

rent initially for 11 months which agreements would

extend indefinitely, till the principal amount is not paid. It

was agreed that on payment of principal amount, the sale

and rent documents executed in August 2019 would be

cancelled. It is also the allegation that on 26.2.2020

accused No.3 misled the said company i.e., taking into a

business loan in a sum of Rs.2,24,10,080/-. The said

money was received via cheque payments from accused

No.2's personal account. Hence, in the complaint the

complainant sought to take action against the accused on

the ground that they dishonestly and fraudulently deceived

the complainant with an intention to cause wrongful loss to

the company and wrongful gain to themselves to secure

the loan amount. Based on the complaint, the police have

registered the case and investigated the matter and

consequent upon the registration of FIR based on the

complaint, petitioners are before this court.

3. Counsel for the petitioners vehemently contended

that in view of the understanding between the parties,

respondent No.2 is the developer who developed the

project agreed to sell 6 flats in favour of petitioner No.1

and 20 flats in favour of petitioner No.2 and 30 flats in

favour of petitioner No.3. In this connection, sale

agreement was also executed and subsequently, sale deed

was also executed. There is an arbitration clause in the

sale deed and sale agreement that if any dispute arises

between the parties, the same has to be settled by

arbitration. It is also contended by the counsel for the

petitioners that there is a rental agreement. However,

there is no any arbitration clause with regard to any

dispute arising between the parties regarding rental. He

has approached the appropriate forum for the said relief.

Counsel would vehemently contend that having taken note

of the contents in the complaint, police cannot decide in

investigation with regard to the nature of the documents

which are in existence between the parties. Counsel also

brought to the notice of this court the provision made in

the agreement to sell, i.e., clause No.33 in respect of the

property which they agreed and also brought to the notice

of this court copy of the sale deed and the arbitration

clause providing that if any dispute arises, the parties

have to settle the same through arbitration. Counsel also

would contend that already arbitration proceedings are

initiated against respondent No.2. The dispute between

the parties is of civil in nature and the same has to be

decided in a civil court and not in criminal proceedings.

Hence, the continuation of criminal proceedings against the

petitioners would be leading to miscarriage of justice and it

requires interference by this court.

4. Per contra, learned counsel for respondent No.2

brought to the notice of this court the statement of

objections filed by him and also the documents, i.e.,

Annexures R1 and R2. Annexure-R2 is with regard to the

invoice and Annexure-R1 is with regard to the return

payment made and also brought to the notice of this court

the observations made by the court while granting bail in

favour of the petitioners herein. Counsel also brought to

the notice of this court the conversations taken place

between the parties in terms of Annexure-R3. Counsel

referring to these documents would vehemently contend

that the dispute between the parties is not civil in nature.

The amount was taken and instead of loan, documents

sale agreement and sale deeds are obtained since they

were not having the licence and, arbitration clause in the

documents of sale agreement and sale deed will not take

away the right of the respondent in initiating criminal

proceedings against the petitioners. Counsel contended

that with dishonest intention, the petitioners have cheated

respondent No.2 and hence criminal prosecution is

maintainable against the petitioners and the petitioners

cannot contend that it is a purely a civil dispute and as

there is an arbitration clause, they cannot pursue criminal

prosecution against the petitioners herein. Counsel in

support of his contentions relied on the judgment of the

Apex Court in the case of Trisuns Chemical Industry vs

Rajesh Agarwal and Others [(1999) 8 SCC 686] and

brought to the notice of this court paragraph 9 wherein the

Apex Court held that, 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 vs. Bhajan Lal [1992 Supp

(1) SCC 335].

4.1. The learned counsel also relied upon a recent

judgment of the Apex Court in the case of Kamal Shivaji

- 10 -

Pokarnekar vs State of Maharashtra and Others

[(2019) 14 SCC 350] and brought to the notice of this

court paragraph 6 of the judgment wherein the Apex Court

held that defences that may be available, or facts/aspects

which when established during the trial, may lead to

acquittal, are not grounds for quashing the complaint at

the threshold. At that stage, the only question relevant is

whether the averments in the complaint spell out the

ingredients of a criminal offence or not.

4.2. Counsel also brought to the notice of this court

the judgment of the Apex Court in the case of V.M.Salim

vs Fathima Muhammed and Others [(2011) 15 SCC

756] and relied upon paragraph No.5 wherein it is stated

"an allegation had been made that in reality there was no

sale and the sale deed was a paper transaction. The court

had to record a finding on this point. "

5. Having heard the petitioners counsel and also the

counsel appearing for respondent No.2, this court has to

examine the material available on record. In the present

- 11 -

petition, the relief is sought for quashing of FIR and when

the order has been sought for quashing of FIR, the court

has to look into the contents of the complaint. On a

perusal of the complaint dated 20.8.2020, it can be seen

that specific averments are made against the petitioners

herein that accused persons dishonestly and fraudulently

deceived the complainant with an intention to cause

wrongful loss to the company and wrongful gain to

themselves. Having perused the complaint averments,

specific averments are made with regard to dishonestly

inducing the complainant in parting the money. It is also

not in dispute as contended by the petitioners counsel that

the documents came into existence in connection with the

transaction between the parties. The learned counsel for

the petitioners brought to the notice of the court

agreement of sale and sale deeds which are executed and

contended that it is purely a civil dispute between the

parties. Counsel would vehemently contend that nature of

these documents cannot be ascertained by the

investigating officer. It has to be noted that the Apex

- 12 -

Court in the case of Dineshbhai Chandubhai Patel vs

State of Gujarat and Others [(2018) 3 SCC 104] has

summarized the principles in the context of FIR when the

same has been challenged before the High Court while

exercising the power under section 482 of Cr.P.C. The

Apex Court in this judgment held that when allegation of

committing cognizable offence is made, the High Court

should not venture to curtail the rights of the investigating

officer and allow the investigating officer to probe the

crime and unearth the crime. The only factor to be

considered is once the FIR prima facie discloses the

allegation of cognizable offence, the investigating officer

has to be allowed to probe and unearth the crime as per

procedure established. The learned counsel for

respondent No.2 brought to the notice of this court the

provision with regard to the arbitration clause in the

documents and no doubt the petitioners counsel also

brought to the notice of the court the clause available in

the agreement of sale and also sale deed that if any

dispute arises between the parties, the matter has to be

- 13 -

settled by arbitration. The court has to look into the

averments made in the complaint and whether the

complaint averments discloses at the inception of the

transaction any inducement or cheating has taken place.

If that is the case, the court has to allow the investigating

officer to probe into the matter. The Apex Court in the

recent judgment delivered on 10.3.2021 in the case of

Priti Saraf and Another vs State of NCT of Delhi and

Another [2021 SCC Online SC 206] in paragraph 31

held 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.

- 14 -

In paragraph 32 it is held that, 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.

- 15 -

The Apex Court making the above observations quashed

the order of the High Court and restored the complaint.

6. Having considered the principles in the aforesaid

judgment and also the judgments referred by the counsel

for respondent No.2, this court has to examine whether

the material available on record amounts to abuse of

process if proceedings is continued. Having taken note of

the contents of the complaint, specific allegations are

made that at the inception of the transaction there was an

intention to cheat and dishonestly entered into the

transaction and specific allegations are also made with

regard to cheating of the complainant. When the

complaint prima facie discloses committing of cognizable

offence, the High Court should not venture to restrain the

investigating officer and the investigating officer has to

probe and unearth the crime as held by the Apex Court in

Dineshbhai Chandubhai Patel (supra). When specific

allegations are made in the complaint that at the inception

of the transaction there was dishonest intention, the

- 16 -

matter has to be probed and at the initial stage the

investigating officer cannot be restrained to probe the

crime, at this juncture the court has to only look into the

complaint averments and hence I do not find any merit to

quash the proceedings initiated against the petitioners.

In view of the discussions made above, I pass the

following : -

ORDER

a) Petition is rejected.

b) However, liberty is reserved to the petitioners to move

the court, if need arises after filing of the final report.

Sd/-

JUDGE

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