Karnataka High Court
K Latha Narasimha Murthy vs Gujjala Praveen Kumar Reddy on 21 November, 2023
-1-
NC: 2023:KHC:41970
CRL.P No. 8945 of 2021
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 21ST DAY OF NOVEMBER, 2023
BEFORE
THE HON'BLE MR JUSTICE R. NATARAJ
CRIMINAL PETITION NO. 8945 OF 2021
BETWEEN:
1. K. LATHA NARASIMHA MURTHY
PARTNER OF M/S.MELANGE PRIME PROPERTIES
W/O. A.M. NARASIMHA MURTHY,
AGED ABOUT 43 YEARS,
R/AT NO.20, AGARA VILLAGE AND POST,
SARJAPURA ROAD,
BENGALURU-560102.
2. A.M. NARASIMHA MURTHY
AGED ABOUT 54 YEARS,
R/AT NO.20, AGARA VILLAGE AND POST,
SARJAPURA ROAD,
BENGALURU-560102
3. SANTOSH KUMAR
SALES MANAGER,
M/S. MELANGE PRIME PROPERTIES
A REGISTERED PARTNERSHIP FIRM
Digitally HAVING ITS OFFICE
signed by
SUMA NO.1153, 3RD FLOOR,
Location: 24TH MAIN, 2ND SECTOR,
HIGH HSR LAYOUT,
COURT OF BENGALURU-560102.
KARNATAKA
...PETITIONERS
(BY SRI. PAVANA CHANDRA SHETTY H., ADVOCATE)
AND:
1. GUJJALA PRAVEEN KUMAR REDDY
S/O. GUJJALA SESHA REDDY
PRESENTLY R/AT.8643
ALDERSHOT DR HENRICO,
VA, USA 23294-5114
-2-
NC: 2023:KHC:41970
CRL.P No. 8945 of 2021
REPRESENTED BY HIS GPA HOLDER AND
BROTHER GUJJALA SIVA PRASADA REDDY,
S/O.GUJJALA SESHA REDDY,
AGED ABOUT 36 YEARS
R/AT B-4, SMART NEIGHBOURHOODS,
SARJAPURA VILLAGE,
CHIKKA THIRUPATHI ROAD,
OPP. TO PALACE GARDEN,
BENGALURU-562125
2. STATE OF KARNATAKA
SARJAPURA POLICE STATION,
BENGALURU RURAL DISTRICT,
REP: BY HIGH COURT SPP,
BENGALURU-560001
3. SURESH BABU POKURI
S/O. VENKATA SESHA RAO POKURI
R/AT BLOCK-1, FLAT NO.402,
VADDEPALLY ENCLAVE,
NEAR CHITTARAMMA TEMPLE
VIVEKANANDA NAGAR,
KUKATPALLY, HYDERABAD,
TELANGANA-500072.
RESPONDENT NO.3 DELETED
AS PER ORDER DATED 23.02.2023.
...RESPONDENTS
(BY SRI. SAMPREETH V., ADVOCATE FOR SRI. ISMAIL MUNEEB
MUSBA, ADVOCATE FOR RESPONDENT NO.1;
SRI. RAJAT SUBRAMANYAM, HIGH COURT GOVERNMENT PLEADER
FOR RESPONDENT NO.2;
VIDE ORDER DATED 23.02.2023, RESPONDENT NO.3 IS DELETED)
THIS CRL.P IS FILED UNDER SECTION 482 OF THE CODE OF
CRIMINAL PROCEDURE, 1973 PRAYING TO QUASH THE FIR IN
CR.NO.168/2021 PENDING ON THE FILE OF THE COURT OF
PRINCIPAL CIVIL JUDGE (Jr.Dn.) AND JMFC, ANEKAL, BENGALURU
RURAL DISTRICT AGAINST THE PETITIONER FOR THE OFFENCE
PUNISHABLE UNDER SECTIONS 506, 504, 406, 420 OF IPC,
PRODUCED HEREWITH AS DOCUMENT NO.1 AND ETC.,
-3-
NC: 2023:KHC:41970
CRL.P No. 8945 of 2021
THIS PETITION, COMING ON FOR ADMISSION, THIS DAY, THE
COURT MADE THE FOLLOWING:
ORDER
The petitioners have challenged the registration of
Cr.No.168/2021 by the respondent No.2 for the offences
punishable under Sections 506, 504, 406 and 420 of Indian
Penal Code, 1860 (henceforth referred to as 'IPC' for short)
pending consideration before the Principal Civil Judge (Jr.Dn.)
and JMFC Court, Anekal, Bengaluru Rural District.
2. The petitioner Nos.1 and 2 were purportedly the
partners of M/s.Melange Prime Properties, which was
developing a project at Anekal named 'Smart neighbourhoods'.
The respondent No.1 herein desired to purchase a Villa and
accordingly, the petitioner No.3 being the sales manager at
M/s.Melange Prime Properties, introduced the respondent No.1
to the petitioner Nos.1 and 2 and negotiations ensued between
them for sale of a Villa to the respondent No.1. Accordingly, an
agreement was drawn up on 12.12.2020, incorporating the
terms and conditions of the sale of the Villa. The respondent
No.1 claimed that the agreement was executed and part of the
sale consideration was paid. Since the respondent No.1 was to
NC: 2023:KHC:41970
leave India on 30.01.2020, he executed a power of attorney in
favour of his brother, to obtain a sale deed in respect of Villa.
Later, the petitioner Nos.1 and 2 and the brother of the
respondent No.1 decided that the sale deed would be executed
on 31.03.2021. Accordingly, a sale deed was prepared and the
remaining sale consideration as mentioned in the sale
agreement was paid by the respondent No.1 and the sale deed
came to be executed in favour of the respondent No.1
represented by his brother and the possession of the property
was delivered to the brother of the respondent No.1.
3. Long thereafter on 06.08.2021, it was stated that a
representative from the State Bank of India, visited the Villa
and demanded the amount borrowed by the accused No.4. It
was stated that the petitioner Nos.1 and 2 had executed an
agreement of sale in favour of accused No.4/Sureshbabu Pokuri
on 03.04.2017 and a tripartite agreement dated 15.04.2017
was entered into with the bank, based upon which, loan of a
sum of Rs.93,75,000/- was sanctioned and was transferred into
the account of M/s.Melange Prime Properties. The brother of
the respondent No.1 called the petitioners and asked them
about the tripartite agreement entered into. However, the
NC: 2023:KHC:41970
petitioner Nos.1 and 2 evaded the brother of the respondent
No.1 and thereafter, he visited the branch of bank and obtained
copies of the documents entered into, which disclosed that the
petitioners had executed an agreement of sale of the very
same Villa in favour of the accused No.4 and had received a
sum of Rs.93,75,000/- from the bank.
4. The respondent No.1 therefore alleged that the
petitioners by not disclosing the earlier transaction entered into
by them with the accused No.4, had committed fraud. As a
result, he claimed that the bank was attempting to initiate
proceedings to recover the money from the Villa. He therefore
lodged a complaint before the respondent No.2 requesting
them to initiate suitable action. Consequent to this, the
respondent No.2 registered Cr.No.168/2021 for the offences
punishable under Sections 506, 504, 406 and 420 of IPC and
took up investigation. The petitioners being aggrieved by the
registration of FIR and consequent investigation undertaken by
the respondent No.2, have filed this petition challenging the
proceedings.
NC: 2023:KHC:41970
5. The learned counsel for the petitioners contended
that the accused No.4 was the one who introduced the
respondent No.1 to the petitioners and therefore, the
respondent No.1 was bound to know about the transaction
entered into by the petitioners with the accused No.4. He
submitted that at any rate, the offences alleged against them is
not attracted, as it is purely a civil dispute. In support of his
contentions, he relied upon the judgments of the Hon'ble Apex
Court in the case of G.Sagar Suri and Another Vs. State of
U.P. and Others - (2000) 2 SCC 636, in the case of Alpic
Finance Ltd. Vs. P.Sadasivan and Another - (2001) 3 SCC
513 and in the case of Anand Kumar Mohatta and Another
Vs. State (NCT of Delhi), Department of Home and
Another - (2019) 11 SCC 706 and contended that the
offence under Section 406 of IPC is not made out, as there was
no element of trust reposed by the respondent No.1 in the
petitioners. He contended that there was no entrustment of the
property for attracting an offence under Section 420 of IPC and
therefore, the initiation of proceedings against the petitioners
was unwarranted. He further contended that all the accused are
sought to be involved in the investigation, though an offence
NC: 2023:KHC:41970
under Section 120B of IPC is not mentioned in the FIR. He
further submits that after the respondent No.1 filed a
complaint, the petitioners No.1 and 2 have paid up a sum of
Rs.84,37,500/- to the State Bank of India by demand draft
dated 22.10.2021 and therefore, the petitioners cannot be
accused of offences under Section 420 of IPC.
6. Per contra, the learned counsel for the respondent
No.1 submits that the petitioners knowing fully well that an
agreement of sale was executed by them in favour of accused
No.4, and received a sum of Rs.93,75,000/- ought to have
disclosed this fact to the respondent No.1 before agreeing to
sell and executing a sale deed in respect of the very same
property. He submits that this agreement was within the
knowledge and notice of the petitioners and therefore it was
incumbent upon them to disclose this fact, as the respondent
No.1 despite exercise of due diligence, could not have came to
know about the execution of the said agreement in favour of
the accused No.4. He submits that as a result of non-
disclosure, the respondent No.1 is now exposed to the risk of
losing the Villa, sold in favour of respondent No.1. He further
contends that the petitioners ought to have taken sufficient
NC: 2023:KHC:41970
measures to cancel the tripartite agreement dated 15.04.2017
and by not doing so, and without disclosing this, executing a
sale deed in favour of the respondent No.1, amounts to an act
of fraud and therefore, the petitioners are bound to be involved
in an investigation. He further contends that the complaint
lodged by the respondent No.1 is yet to be investigated and
investigating officer would after conducting an investigation,
take out necessary proceedings, to either prosecute the
petitioners or to file a 'B' report, if the case involved a civil
dispute. He therefore, contends that the investigation against
the petitioners cannot be halted, at this initial stage, that too
when there are traces of offences punishable under Section 420
of IPC are involved.
7. I have considered the submissions made by the
learned counsel for the petitioners as well as the learned
counsel for the respondent No.1
8. The fact that the petitioner Nos.1 and 2 have
executed a sale agreement in respect of a Villa promoted by
them bearing No.B-4 at 'Smart Neighbourhoods', in favour of
the respondent No.1 at a cost of Rs.64,00,000/- is not in
NC: 2023:KHC:41970
dispute. The agreement did not disclose about the tripartite
agreement entered into by the petitioners and the accused
No.4 and the State Bank of India earlier. It is also not in
dispute that the petitioners had received a sum of
Rs.93,75,000/- from State Bank of India, being the housing
loan sanctioned to the accused No.4. The petitioner Nos.1 and
2 while encumbering the very same flat to the respondent No.1
was bound to disclose the tripartite agreement dated
15.04.2017 referred above, as that would have given an
opportunity to the respondent No.1 to buy any other Villa or
to even abandon the project to purchase the said Villa.
However, the petitioners do not seem to have disclosed this
from the date of entering into an agreement of sale, till they
executed a sale deed in favour of the respondent No.1 and till
they placed him in possession of the Villa. It is noticed that
even from the date of executing the sale deed, till the
complaint was lodged by the respondent No.1, no attempt was
made by the petitioners to cancel the tripartite agreement
entered into by them with the State Bank of India and the
accused No.4. This forced the State Bank of India demanding
money from the respondent No.1 who was in possession of the
- 10 -
NC: 2023:KHC:41970
property and it was only then the brother of the respondent
No.1 came to know about the transaction entered into between
the petitioner nos.1 and 2 and the accused No.4. Therefore, it
cannot be claimed that the petitioners had not committed
cognizable offence punishable under Section 420 of IPC.
9. Section 415 of IPC, is relevant and is extracted
below.
"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.
Therefore, there was an element of cheating by the
petitioner Nos.1 and 2 to defraud the respondent No.1. The
contention of the learned counsel for the petitioners that this
was a civil dispute cannot be accepted, as there was no
- 11 -
NC: 2023:KHC:41970
disclosure about the tripartite agreement entered into between
the petitioner Nos.1 and 2, accused No.4 and State Bank of
India. If only that was done, it could be said that the
respondent No.1 knowing fully well about the prior
encumbrance over the property, had taken the risk to
purchase the property. Since that is a question of fact that
needs to be considered by the investigating officer, this is not a
fit case for exercise of jurisdiction by this Court, particularly
under Section 482 of Criminal Procedure Code.
10. The judgments relied upon by the learned counsel
for the petitioner in the case of G.Sagar supra is not
applicable since in that case, a proceeding under Section 138 of
Negotiable Instruments Act, 1881 was initiated and a parallel
proceedings to prosecute the parents of the directors of a
company which had issued a cheque, was challenged on the
ground that the investigating officer did not source any material
to establish the complicity of the parents of the director in an
offence under Sections 406 and 420 of IPC. In the present
case, the facts are entirely different and therefore, the
contention of the learned counsel for the petitioners that this is
- 12 -
NC: 2023:KHC:41970
a civil dispute and therefore, the process of criminal law should
not be invoked, is liable to be rejected.
11. Similarly Alpic Finance Ltd., supra that was a
case where an agreement was entered into between the parties
regarding supply of dental equipments and the purchaser was
not regular in making the payments and committed default in
payments of the installments and the cheques issued towards
payment of the installments were dishonoured. Therefore, in
that circumstance, the Hon'ble Apex Court held that since there
is an agreement between the parties, resorting to proceeding
under Sections 406 or 420 of IPC is unwarranted, as that was a
civil dispute between the parties arising out of the agreement
entered into between them.
12. In Anand Kumar supra that was a case where an
agreement was entered into between two parties regarding
development of the property to construct a high-rise building,
the agreement could not be fulfilled as the new building
regulations which was introduced, prohibited the construction
of high-rise building in the Lutyenx Bungalow zone, where the
property was situated. Thus, the developer addressed a letter
- 13 -
NC: 2023:KHC:41970
to the owner expressing that he was not interested to develop
the property and the owners did not take any further action nor
did they return the amount of Rs.1,00,00,000/- received by
them under the agreement. The owner filed a complaint
alleging offence under Sections 406 and 420 of IPC and on
refusal of the police authorities to register FIR, a private
complaint was initiated, which was referred to the police under
Section 156(3) of Cr.P.C, consequent to which, an FIR was
drawn. In that context, the Hon'ble Apex Court held that this
was a pure civil dispute entered into between the parties, as it
arose out of the agreement entered into between them. The
present case can easily be distinguished on facts, as the
respondent No.1 categorically mentioned in the complaint that
the petitioners did not disclose about the earlier tripartite
agreement dated 15.04.2017 entered into by them with the
accused No.4 and the State Bank of India. Therefore, all the
contentions of the petitioners are liable to be rejected.
13. Hence this petition is dismissed.
14. While parting, the learned counsel for the petitioner
insisted that the State is selectively filing an application for
- 14 -
NC: 2023:KHC:41970
vacating stay and therefore, contends that the State is
colluding and conspiring with the accused No.4. He also claims
that State is colluding with the accused No.4 as he is not traced
till date by the State. He contends that the State should be
filing applications for vacating stay on a non-discriminatory
basis in all cases, where stay is granted by this Court.
15. This submission of the learned counsel for the
petitioners is uncharacteristic of an Advocate. If the State
desires to seek vacating an order of stay, it is left to it and the
petitioners cannot compel that the State should file application
for vacating stay in all cases on a non-discriminatory basis. It
would augur well for the learned counsel, if he avoids making
such statements in the Court.
Sd/-
JUDGE
HJ
