Karnataka High Court
Mrs. Vaijayanti Sachin Belose vs The State Of Karnataka on 20 December, 2023
Author: M. Nagaprasanna
Bench: M. Nagaprasanna
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 20TH DAY OF DECEMBER, 2023
BEFORE
THE HON'BLE MR. JUSTICE M. NAGAPRASANNA
CRIMINAL PETITION No.6292 OF 2023
BETWEEN:
1. MRS. VAIJAYANTI SACHIN BELOSE
W/O SACHIN SURESH BELOSE
AGED ABOUT 57 YEARS
R/AT NO. 6C, 'D' BLOCK
VICEROY COURT, THAKUR VILLAGE
KANDIVALLI EAST, MUMBAI - 400 101.
2. SRI AJAY KUMAR
S/O SRI D. CHANDRAKANTH MOURYA
AGED ABOUT 38 YEARS
C/O CHANDRAKANTHA MOURYA
FLAT NO. 182
BATUKJI CGHS LIMITED
PLOT NO. 5-B, DWARAKA SECTOR - 3
SOUTH WEST DELHI - 110 078.
3. SMT. POOJA NIGAM
W/O SRI ACHIN KUMAR
AGED ABOUT 39 YEARS
R/AT NO. 165, PRODYOGIKI APARTMENT
PLOT NO. 11, SECTOR - 3
N.S.I.T. DWARAKA
SOUTH WEST DELHI - 110 078.
... PETITIONERS
(BY SRI SANJAY B.K., ADVOCATE)
2
AND:
1. THE STATE OF KARNATAKA
JAYANAGAR POLICE
REPRESENTED BY
LEARNED GOVERNMENT ADVOCATE
HIGH COURT BUILDINGS
BENGALURU - 560 001.
2. M/S. JAGADISH AIR TRAVELS PVT. LTD.,
HAVING THEIR REGISTERED OFFICE AT NO. 51
11TH MAIN, 4TH BLOCK, JAYANAGAR
BENGALURU - 560 011.
REPRESENTED BY ITS
AUTHORISED SIGNATORY
SRI RAKESH P.,
S/O JAGADISH
AGED ABOUT 40 YEARS
... RESPONDENTS
(BY SRI THEJESH P., HCGP FOR R1;
SRI SUSHAL TIWARI, ADVOCATE FOR R2)
THIS CRIMINAL PETITION IS FILED UNDER SECTION 482 OF
CR.P.C., PRAYING TO QUASH FIR IN CR.NO.92/2023 (DOCUMENT
NO.1), PENDING ON THE FILES OF THE LEARNED IV ADDITIONAL
CHIEF METROPOLITAN MAGISTRATE, BENGALURU CITY AT
BENGALURU PERTAINING TO JAYANAGAR POLICE STATION FOR
THE OFFENCES P/U/S 34, 406 AND 420 OF IPC AND TO PASS ANY
OTHER APPROPRIATE ORDERS AS MAY BE NECESSARY, TILL THE
FINAL DISPOSAL OF THIS PETITION.
THIS CRIMINAL PETITION HAVING BEEN HEARD AND
RESERVED FOR ORDERS ON 01.12.2023, COMING ON FOR
PRONOUNCEMENT THIS DAY, THE COURT MADE THE FOLLOWING:-
3
ORDER
The petitioners are before this Court calling in question
registration of a crime in Crime No.92 of 2023 pending on the file of
the IV Additional Chief Metropolitan Magistrate, Bengaluru
registered for offences punishable under Sections 406, 420 and 34
of the IPC.
2. Heard Sri B.K. Sanjay, learned counsel appearing for the
petitioners, Sri P. Thejesh, learned High Court Government Pleader
appearing for respondent No.1 and Sri Sushal Tiwari, learned
counsel appearing for respondent No.2.
3. The facts, in brief, germane are as follows:-
The petitioners are accused Nos.4, 5 and 8. M/s Jagadish Air
Travels Private Limited ('the Company' for short) is the 2nd
respondent/complainant, a tour operator. It appears that the 2nd
respondent and the petitioners who are office bearers of a Company
by name Miki Travel (Hong Kong) India Limited entered into an
agreement for a tour between 09-03-2023 and 15-03-2023 for
about 184 people to Frankfurt, Stuttgart, Cologne, Eindhoven,
Veldhoven, Brussels and Paris. During the tour, it appears that
customers had various grievances about the arrangements made in
the tour and have posted certain reviews on social media platform
about the tour conducted by the 2nd respondent in agreement with
the aforesaid petitioners' company. Petitioner No.2 is said to be the
key person who had initiated for the terms and conditions of the
agreement. Petitioners 1 and 3 are only office bearers of the said
Company. The 2nd respondent claiming to be aggrieved by the
tarnishing of the name that it made for the last 56 years in the
travel industry, registers a crime in Crime No.92 of 2023 for
offences punishable under Sections 406 and 420 of the IPC.
4. The gist of the complaint is that the trip to Europe
involving 184 persons was initiated with the 3rd petitioner, the
Group Manager of Miki Travel (Hong Kong) India Limited, the 2nd
petitioner/Sales Manager had to arrange food, transportation and
accommodation facilities at the tourists' locations. The complaint
further narrates that upon arrival at the destinations of the
aforesaid places, the arrangements were not up to the mark. The
customers had several grievances and, therefore, gift vouchers had
to be issued to those customers who had grievances and the
allegation is that the name of the Company is tarnished and,
therefore, Miki Travel (Hong Kong) India Limited has cheated the
complainant and has broken the trust it had reposed in it. The
complaint becomes a crime in crime No.92 of 2023 for offences
under Section 406 and 420 of the IPC. On registration of the crime,
the petitioners have knocked at the doors of this Court in the
subject petition.
5. The learned counsel appearing for the petitioners would
contend that the allegations against the petitioners are a product of
breach of agreement. On breach of agreement, it is his contention,
that criminal law cannot be set into motion. Grievances between
Miki Travel (Hong Kong) India Limited and the 2nd respondent
galore. Though grievances arose it all allegedly against certain
faulty arrangements during the door, all of which, can be thrashed
out in different proceedings and not in criminal proceedings. He
would further contend that all the events have happened in
Indiranagar police jurisdiction. But, deliberately, the 2nd
respondent approaches Jayanagar Police who registers the crime
without jurisdiction. On these contentions, he would seek
quashment of the entire proceedings.
6. On the other hand, the learned counsel representing the
2nd respondent/complainant would vehemently refute the
submissions to contend that petitioners 1 and 3 are the office
bearers who have acted upon the behest of the 2nd petitioner. It is
the 2nd petitioner who had lured the complainant in getting into an
agreement with Miki Travel (Hong Kong) India Limited to make
travel arrangements for 184 people which tour was organized by
the complainant. Several reviews are posted on social media that
arrangements made were horrible in the tour and, therefore, the
name of the 2nd respondent is tarnished and its business has
affected. He would take this court to e-mail correspondences
between Miki Travel (Hong Kong) India Limited and the 2nd
respondent to demonstrate that the petitioners are responsible for
faulty arrangement and they should be permitted to be proceeded
in the crime registered. He would submit that the matter is still at
the stage of investigation and therefore, the petition should be
dismissed.
7. The learned counsel for the petitioners would join issue by
submitting that not a single customer has complained against any
arrangement in the entire tour or after the tour. They have posted
some reviews in the social media which cannot give rise to any
proceedings much less, to the impugned proceedings, against the
petitioners.
8. I have given my anxious consideration to the submissions
made by the respective learned counsel and have perused the
material on record.
9. The afore-narrated facts are not in dispute and they would
not require reiteration, as the issue lies in a narrow compass. The
2nd respondent being in the business of tour operation for ages is a
matter of record. Miki Travel (Hong Kong) India Limited, whose
office bearers are the petitioners and the 2nd respondent enter into
an agreement. The agreement is in great detail. The agreement is
termed as core business agreement. Several conditions of
arrangement of services and support services are found in the
agreement. Therefore, the relationship between the complainant
and Miki Travel (Hong Kong) India Limited in which the petitioners
are the office bearers arise out of an agreement entered into
between them on 27-01-2023 for the purpose of travel
arrangements at the places indicated hereinabove. The travel takes
place. All the persons who had travelled abroad in the subject
itinerary, have travelled and come back. It is an admitted fact that
not a single customer has raised any finger or registered a written
complaint against the complainant even as on date.
10. The contention of the complainant is that there has been
a breach of agreement entered into between the parties and,
therefore, such breach would amount to criminal breach of trust
and since arrangements were not up to the mark, it amounts to
cheating. It is, therefore, necessary to notice both the provisions
which are invoked against the petitioners. Section 406 of the IPC
has its ingredients in Section 405. Section 405 of the IPC reads 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."
Section 405 mandates that there must be entrustment of property
and such entrustment should be misappropriated by the accused.
If these are to be the ingredients, I fail to understand as to what
was the entrustment to the hands of the petitioners which they
have misappropriated. It was an agreement between the two for
operation of tour. The tour appears to have turned sore, not to any
customer but to the complainant who had to pay certain gift
vouchers on account of tour getting sore. The other provision that
is invoked is Section 420 of the IPC, the ingredients of which are
found in Section 415. Section 415 of the IPC reads as follows:
"415. Cheating.--Whoever, by deceiving any person,
fraudulently or dishonestly induces the person so deceived to
deliver any property to any person, or to consent that any
person shall retain any property, or intentionally induces the
person so deceived to do or omit to do anything which he
would not do or omit if he were not so deceived, and which
act or omission causes or is likely to cause damage or harm
to that person in body, mind, reputation or property, is said
to "cheat".
Explanation.--A dishonest concealment of facts is a
deception within the meaning of this section."
Section 415 mandates that one who commits the offence of
cheating by inducing the victim with a dishonest intention right
from the inception of the transaction and such transaction has
resulted in loss to the victim, he is amenable for punishment. The
case at hand revolves round an agreement between the two - the
travel itinerary agreement. The travel has turned sore to a few
customers who have not addressed any written complaint to the
complainant but have posted their reviews on social media. Since it
is arising out of breach of agreement, it is ununderstandable as to
how it amounts to offence under Section 405 or Section 420 of the
IPC.
11. What has triggered registration of complaint is clearly a
breach of agreement and arrangements that are made as per the
said agreement. Criminal law cannot be set into motion on breach
of agreements for recovery of any money or otherwise is by now a
well settled principle of law. To arrive at this conclusion, I am
fortified with several judgments rendered by the Apex Court from
time to time. Quoting every judgment would only lead to bulk of the
subject order and, therefore, I deem it appropriate to quote a
judgment of the Apex Court in the case of VIJAY KUMAR GHAI v.
STATE OF WEST BENGAL1. The Apex Court considers the entire
spectrum of law where criminal law is set into motion for offences
punishable under Sections 406 and 420 of the IPC inter alia on
(2022) 7 SCC 124
breach of agreements. The Apex Court, in the said judgment, has
held as follows:
"27. Section 405IPC defines "criminal breach of trust"
which reads as under:
"405. Criminal breach of trust.--Whoever, being in
any manner entrusted with property, or with any dominion
over property, dishonestly misappropriates or converts to his
own use that property, or dishonestly uses or disposes of
that property in violation of any direction of law prescribing
the mode in which such trust is to be discharged, or of any
legal contract, express or implied, which he has made
touching the discharge of such trust, or wilfully suffers any
other person so to do, commits "criminal breach of trust"."
The essential ingredients of the offence of criminal
breach of trust are:
(1) The accused must be entrusted with the property
or with dominion over it,
(2) The person so entrusted must use that property,
or;
(3) The accused must dishonestly use or dispose of
that property or wilfully suffer any other person to do so in
violation,
(a) of any direction of law prescribing the mode in
which such trust is to be discharged, or;
(b) of any legal contract made touching the discharge
of such trust.
28. "Entrustment" of property under Section 405
of the Penal Code, 1860 is pivotal to constitute an
offence under this. The words used are, "in any
manner entrusted with property". So, it extends to
entrustments of all kinds whether to clerks, servants,
business partners or other persons, provided they are
holding a position of "trust". A person who dishonestly
misappropriates property entrusted to them contrary
to the terms of an obligation imposed is liable for a
criminal breach of trust and is punished under Section
406 of the Penal Code.
29. The definition in the section does not restrict the
property to movables or immovables alone. This Court
in R.K. Dalmia v. Delhi Admn. [R.K. Dalmia v. Delhi Admn.,
(1963) 1 SCR 253 : AIR 1962 SC 1821] held that the word
"property" is used in the Code in a much wider sense
than the expression "movable property". There is no
good reason to restrict the meaning of the word
"property" to movable property only when it is used
without any qualification in Section 405.
30. In Sudhir Shantilal Mehta v. CBI [Sudhir Shantilal
Mehta v. CBI, (2009) 8 SCC 1 : (2009) 3 SCC (Cri) 646] it
was observed that the act of criminal breach of trust
would, inter alia mean using or disposing of the
property by a person who is entrusted with or has
otherwise dominion thereover. Such an act must not
only be done dishonestly but also in violation of any
direction of law or any contract express or implied
relating to carrying out the trust.
31. Section 415IPC defines "cheating" which reads as
under:
"415. Cheating.--Whoever, by deceiving any person,
fraudulently or dishonestly induces the person so deceived to
deliver any property to any person, or to consent that any
person shall retain any property, or intentionally induces the
person so deceived to do or omit to do anything which he
would not do or omit if he were not so deceived, and which
act or omission causes or is likely to cause damage or harm
to that person in body, mind, reputation or property, is said
to "cheat"."
The essential ingredients of the offence of cheating
are:
1. Deception of any person
2. (a) Fraudulently or dishonestly inducing that
person--
(i) to deliver any property to any person; or
(ii) to consent that any person shall retain any
property; or
(b) intentionally inducing that person to do or
omit to do anything which he would not do or omit if
he were no so deceived, and which act or omission
causes or is likely to cause damage or harm to that
person in body, mind, reputation or property.
32. A fraudulent or dishonest inducement is an
essential ingredient of the offence. A person who
dishonestly induces another person to deliver any
property is liable for the offence of cheating.
33. Section 420IPC defines "cheating and dishonestly
inducing delivery of property" which reads as under:
"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."
34. Section 420IPC is a serious form of cheating that
includes inducement (to lead or move someone to happen) in
terms of delivery of property as well as valuable securities.
This section is also applicable to matters where the
destruction of the property is caused by the way of cheating
or inducement. Punishment for cheating is provided under
this section which may extend to 7 years and also makes the
person liable to fine.
35. To establish the offence of cheating in
inducing the delivery of property, the following
ingredients need to be proved:
(i) The representation made by the person was
false.
(ii) The accused had prior knowledge that the
representation he made was false.
(iii) The accused made false representation with
dishonest intention in order to deceive the person to
whom it was made.
(iv) The act where the accused induced the
person to deliver the property or to perform or to
abstain from any act which the person would have not
done or had otherwise committed.
36. As observed and held by this Court in R.K.
Vijayasarathy v. SudhaSeetharam [R.K.Vijayasarathy v.
Sudha Seetharam, (2019) 16 SCC 739 : (2020) 2 SCC (Cri)
454] , the ingredients to constitute an offence under Section
420 are as follows:
(i) a person must commit the offence of cheating
under Section 415; and
(ii) the person cheated must be dishonestly induced
to:
(a) deliver property to any person; or
(b) make, alter or destroy valuable security or
anything signed or sealed and capable of being converted
into valuable security. Thus, cheating is an essential
ingredient for an act to constitute an offence under Section
420IPC.
37. The following observation made by this Court
in Uma Shankar Gopalika v. State of Bihar [Uma Shankar
Gopalika v. State of Bihar, (2005) 10 SCC 336 : (2006) 2
SCC (Cri) 49] with almost similar facts and circumstances
may be relevant to note at this stage : (SCC pp. 338-39,
paras 6-7)
"6. Now the question to be examined by us is as to
whether on the facts disclosed in the petition of the
complaint any criminal offence whatsoever is made out much
less offences under Sections 420/120-BIPC. The only
allegation in the complaint petition against the accused
persons is that they assured the complainant that when they
receive the insurance claim amounting to Rs 4,20,000, they
would pay a sum of Rs 2,60,000 to the complainant out of
that but the same has never been paid. ... It was pointed out
on behalf of the complainant that the accused fraudulently
persuaded the complainant to agree so that the accused
persons may take steps for moving the consumer forum in
relation to the claim of Rs 4,20,000. It is well settled 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 present
case, it has nowhere been stated that at the very inception
that there was intention on behalf of the accused persons to
cheat which is a condition precedent for an offence under
Section 420IPC.
7. In our view petition of complaint does not disclose
any criminal offence at all much less any offence either
under Section 420 or Section 120-BIPC and the present case
is a case of purely civil dispute between the parties for which
remedy lies before a civil court by filing a properly
constituted suit. In our opinion, in view of these facts
allowing the police investigation to continue would amount to
an abuse of the process of court and to prevent the same it
was just and expedient for the High Court to quash the same
by exercising the powers under Section 482CrPC which it has
erroneously refused."
38. There can be no doubt that a mere breach of
contract is not in itself a criminal offence and gives rise to
the civil liability of damages. However, as held by this Court
in Hridaya Ranjan Prasad Verma v. State of Bihar [Hridaya
Ranjan Prasad Verma v. State of Bihar, (2000) 4 SCC 168 :
2000 SCC (Cri) 786] , the distinction between mere breach
of contract and cheating, which is criminal offence, is a fine
one. While breach of contract cannot give rise to criminal
prosecution for cheating, fraudulent or dishonest intention is
the basis of the offence of cheating. In the case at hand,
complaint filed by Respondent 2 does not disclose dishonest
or fraudulent intention of the appellants.
39. In Vesa Holdings (P) Ltd. v. State of Kerala [Vesa
Holdings (P) Ltd. v. State of Kerala, (2015) 8 SCC 293 :
(2015) 3 SCC (Cri) 498] , this Court made the following
observation : (SCC pp. 297-98, para 13)
"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 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
420IPC. In our view, the complaint does not disclose any
criminal offence at all. 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
[Maniprasad v. State of Kerala, 2011 SCC OnLine Ker 4251]
an error in refusing to exercise the power under Section
482CrPC to quash the proceedings."
40. Having gone through the complaint/FIR and
even the charge-sheet, it cannot be said that the
averments in the FIR and the allegations in the
complaint against the appellant constitute an offence
under Sections 405 and 420IPC, 1860. Even in a case
where allegations are made in regard to failure on the
part of the accused to keep his promise, in the absence
of a culpable intention at the time of making promise
being absent, no offence under Section 420IPC can be
said to have been made out. In the instant case, there
is no material to indicate that the appellants had any
mala fide intention against the respondent which is
clearly deductible from the MoU dated 20-8-2009
arrived at between the parties."
(Emphasis supplied)
The Apex Court after considering the judgment in the case of
G. SAGAR SURI holds that mere breach of agreement without
criminal intention will not amount to offence under Section 406 or
420 of the IPC. The law as laid down by the Apex Court would
clearly become applicable to the facts in the case at hand, as even
in the case at hand what is alleged is, breach of agreement. If
breach of agreement cannot result in registration of crime,
permitting further proceedings in the case at hand against the
petitioners will amount to an abuse of the process of law and result
in miscarriage of justice. In MITESH KUMAR J. SHA v. STATE OF
KARNATAKA2 the Apex Court has held as follows:
"Whether the necessary ingredients of offences
punishable under Sections 406, 419 and 420 are prima
facie made out?
25. 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
(2022) 14 SCC 572
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 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."
26. 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 precondition for even
prima facie establishing the commission of the 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.
27. Coming to the facts of the case at hands, the
contested contention between the parties is that the builder
company had sold four excess flats beyond its share, in terms
of the JDA and supplementary agreement entered into
between the parties. Respondent 2 contends that builder
company which was entitled to sell only 9 flats in its favour,
has instead executed sale deed for 13 flats in total. Thus, the
company simply could not have sold the flats beyond 9 flats
for which it was authorised and resultantly cannot evade
criminal liability on a mere premise that a civil dispute is
already pending between the parties.
28. The appellants on the other hand contend that in
terms of a subsequent MoU dated 19-2-2015, it was mutually
agreed between the parties, that partial payment for a loan
amount borrowed by Respondent 2 from Religare Finvest Ltd.,
would be paid out from the sale proceeds of the said
development project undertaken by both the parties. Pursuant
to this MoU, the appellants had agreed to get an NOC for 15
flats by making payment of Rs 40,00,000 for each flat.
29. The key contention, and also the central point of
dispute, made by the appellants is that, it was specifically
agreed between the parties that the appellants would be
entitled to sell additional flats beyond their share, as
adjustments for payment made to Religare Finvest Ltd. on
behalf of Respondent 2. It is further contended that
Respondent 2 had also agreed to execute a ratification deed to
the JDA and GPA eventually, which would have formally
authorised the appellants to sell additional apartments.
30. Nonetheless, the ratification deed was never made
and Respondent 2 subsequently even revoked the GPA
unilaterally, contending that the terms of JDA were not
followed. It was only after revocation of GPA that the company
filed an application for arbitration seeking interim orders to
restrain Respondent 2 from alienating the disputed property.
Simultaneously, while this dispute was pending adjudication
before the arbitrator Respondent 2 filed a criminal complaint
against the appellants.
31. At this juncture, it further becomes pertinent to
mention that eventually though both the parties partly
succeeded before the arbitrator, in terms of their respective
claims, the arbitrator observed that GPA indeed could not have
been revoked unilaterally at the instance of Respondent 2.
Aggrieved, Respondent 2 thereafter even preferred a challenge
to the award passed by the arbitrator. Moreover, pending
arbitration proceedings issue regarding selling of excess flats
at the instance of the appellants, was also withdrawn by
Respondent 2 seeking liberty to pursue his claim with regard
to selling of four excess flats in pending civil proceedings.
32. Upon a careful assessment of such facts, by no
stretch can it be concluded that the appellants herein have
deceptively or intentionally tried to sell excess flats if any, as
contended by Respondent 2. Here, it must also be borne in
mind that subsequent to the revocation of GPA, it was the
appellants herein who had first resorted to arbitration
proceedings on 2-3-2016 for redressal of dispute between the
parties, to which Respondent 2 had accordingly filed his
statement of objections dated 9-3-2016. It was only on 29-3-
2016 that Respondent 2 had filed the FIR in question bearing
Crime No. 185/2016 against the appellants. Moreover, it was
Respondent 2 who had withdrawn his prayer with respect to
selling of four excess flats by the appellants, only to pursue
the same in civil proceedings.
33. At this stage, by placing reliance on the judgment of
this Court in Priti Saraf v. State (NCT of Delhi) [Priti
Saraf v. State (NCT of Delhi), (2021) 16 SCC 142 : 2021 SCC
OnLine SC 206] and Sri Krishna Agencies v. State of A.P. [Sri
Krishna Agencies v. State of A.P., (2009) 1 SCC 69 : (2009) 1
SCC (Civ) 18 : (2009) 1 SCC (Cri) 241] , it has been further
submitted by Respondent 2 that the 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.
34. Although, there is perhaps not even an iota of
doubt that a singular factual premise can give rise to a
dispute which is both, of a civil as well as criminal
nature, each of which could be pursued regardless of
the other. In the instant case, the actual question which
requires consideration is not whether a criminal case
could be pursued in the presence of a civil suit, but
whether the relevant ingredients for a criminal case are
even prima facie made out. Relying on the facts as
discussed in previous paragraphs, clearly no cogent
case regarding a criminal breach of trust or cheating is
made out.
35. The dispute between the parties, could at best
be termed as one involving a mere breach of contract.
Now, whether and what, is the difference between a mere
breach of contract and an offence of cheating has been
discussed in the ensuing paragraphs."
(Emphasis supplied)
The contents of the agreement clearly make out a case for initiation
of any other proceedings except setting criminal law in motion.
Therefore, the observations made in the course of the order would
be only for the purpose of consideration of the case of the petitioner
under Section 482 of the CrPC. However, the complainant is at
liberty to initiate any proceedings against Miki Travel (Hong Kong)
India Limited or the petitioners, as the case would be.
12. For the aforesaid reasons, I pass the following:
ORDER
(i) Criminal Petition is allowed.
(ii) Crime registered in F.I.R.No.92 of 2023 pending before
the IV Additional Chief Metropolitan Magistrate,
Bengaluru City stands quashed qua the
petitioners/accused 4, 5 & 8.
(iii) It is made clear that the observations made in the
course of the order are only for the purpose of
consideration of the case of petitioners under Section
482 of Cr.P.C. and the same shall not bind or influence
the proceedings against any other accused in the
pending proceedings.
Sd/-
JUDGE
bkp
CT:SS
