Naini Narottam Reddy vs The State Of Telangana
2021 Latest Caselaw 1295 Tel

             HON'BLE SRI JUSTICE K. LAKSHMAN

             CRIMINAL PETITION No.886 OF 2018
ORDER:

This Criminal Petition is filed under Section - 482 of the Code

of Criminal Procedure, 1973 (for short 'Cr.P.C.') to quash the

proceedings in C.C. No.1 of 2017 on the file of Additional Judicial

Magistrate of First Class, Karimnagar. The petitioner herein is

accused No.1 in the said C.C. The offences alleged against him are

under Sections - 420 and 406 read with 34 of IPC.

2. Heard Mr. N. Avaneesh, learned counsel for the petitioner

and Mr. A. Ananda Chary, learned counsel for respondent No.2 and

also learned Assistant Public Prosecutor appearing on behalf of

respondent No.1.

3. The allegations levelled against the petitioner herein are as

follows:

i) The petitioner herein is the Managing Director of M/s.

Pravista Infra Private Limited, Durgammagadda,

Karimnagar and hereinafter referred to as 'the Company';

ii) the Company has given attractive advertisement and

business promotion stating that it would construct a gated

community;

iii) believing the version of the Company represented by the

petitioner - accused No.1 herein, son of respondent No.2

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- de facto complainant, Mr. Dr. Rendla Srinivas, entered

into an agreement of sale on 28.06.2010 with accused

No.1 in respect of Flat No.220 in 'B' Block with

constructed area of 1575 square feet for a total

consideration of Rs.18,82,500/-;

iv) son of respondent No.2 has paid 25% of the total sale

consideration amounting to Rs.4,70,625/- towards part

sale consideration in terms of the agreement of sale;

v) the petitioner herein agreed to complete the construction

of flat within eighteen (18) months from the date of said

agreement which would expire by 28.12.2011;

vi) M/s. Deewan Housing Finance Corporation (DHFC) has

also sanctioned house loan to a tune of Rs.14,35,963/- for

the said flat and out of which, M/s. DHFC has disbursed

an amount of Rs.12,15,963/- to the Company under a

tripartite agreement, dated 29.09.2010 signed by accused

Nos.1 and 3;

vii) on 15.02.2011, accused Nos.1 and 3 executed a sale deed

bearing registration No.1456;

viii) later, construction work was stopped in the month of

February, 2011. thus, the petitioner constructed only 40%

and thereafter accused No.2 became the Managing

Director of the Company;

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ix) all the purchasers of flats have formed a society under the

name and style 'Pravista Owners Welfare Society' and

hereinafter referred to as 'Society'

x) Accused Nos.3, 4, 5, 6 and 7 being the Directors of the

said Company have negotiated with the Office Bears of

the said Society and accordingly entered into an

agreement on 02.09.2012, wherein the Directors have

agreed to return the principal amount with 2% interest

per month to the purchasers including son of respondent

No.2 herein;

xi) but, the Directors failed to keep up their commitment and

thereby the said company represented by its Directors

and accused No.1 being the Managing Director have

misappropriated the funds and committed breach of trust

reposed on them and thereby cheated LW.1, son of

respondent No.2 (LW.2); and

xii) therefore, respondent No.2 lodged a complaint with

police against the petitioner and others for taking

necessary action against them in accordance with law.

4. On receipt of the complaint dated 02.05.2015, the Station

House Officer, Karimnagar III Town Police Station, Karimnagar,

registered a case in Crime No.88 of 2015 against the petitioner and

others for the aforesaid offences. After completion of investigation,

KL,J Crl.P. No.886 of 2018

the police have laid charge sheet against the petitioner herein and

other accused for the aforesaid offences and the same was taken on

file by the learned Magistrate vide C.C. No.1 of 2017.

5. Mr. N. Avaneesh, learned counsel for the petitioner, would

submit that the police have not registered any case against the

Company, and in the absence of the said Company, the petitioner

being the Managing Director of the said Company is not liable for any

prosecution. He would further submit that respondent No.2 is not the

victim and his son is the victim and, therefore, the complaint lodged

by respondent No.2 against the petitioner herein is not maintainable.

The allegation against the petitioner herein is that he being the

Managing Director of the said Company, stopped the construction and

thereby failed to complete the construction in terms of the agreement

of sale dated 28.06.2010, and if at all son of respondent No.2 is

aggrieved of the same, he has to avail civil remedies or he can file an

application under the provisions of the Consumer Protection Act.

Instead of doing so, respondent No.2, who is not a victim, lodged the

complaint implicating the petitioner herein in the above crime.

6. He would further submit that the police, without considering

the said aspects, registered the aforesaid crime and laid charge sheet.

The contents of complaint and charge sheet lacks the ingredients of

the offences alleged against the petitioner herein. The petitioner was

terminated as Managing Director of the said Company on 02.11.2011

and thereafter he has nothing to do with the said Company. The said

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aspect also was not even considered by the Investigating Officer while

laying charge sheet. The Company is not made as a party - accused to

the aforesaid proceedings. Respondent No.2 is trying to criminalize

the civil proceedings. In support of his contentions, he has placed

reliance on the judgments rendered by the Hon'ble Supreme Court in

Anil Mahajan v. Bhor Industries Ltd.1 and S.K. Alagh v. State of

U.P.2. With the said contentions, the learned counsel sought to quash

the proceedings in C.C. No.1 of 2017 against the petitioner - accused

No.1.

7. Per contra, Mr. A. Ananda Chary, learned counsel for

respondent No.2, would submit that the petitioner herein, accused

No.1, being the Managing Director of the Company induced the son

of respondent No.2 stating that they would construct gated community

houses and flats and they have given attractive advertisement to attract

various customers including the son of respondent No.2 herein.

Respondent No.2 and his son have believed the petitioner and other

Directors of the Company and accordingly agreed to purchase Flat

No.220 in 'B' Block with plinth area of 1575 square feet for a total

sale consideration of Rs.18,82,500/-. Accordingly, an agreement of

sale dated 28.06.2010 was entered into between the son of respondent

No.2 and the petitioner being the Managing Director of the Company,

but the petitioner failed to complete the construction in terms of the

said agreement of sale. The son of respondent No.2 has paid 25% of

. (2005) 10 SCC 228

. AIR 2008 SC 1731

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the total sale consideration amount which comes to Rs.4,70,625/-

towards part payment of sale consideration. M/s. DHFC has also

sanctioned Housing Loan to a tune of Rs.14,35,963/- and out of which

it disbursed an amount of Rs.12,15,963/- to the said Company under a

tripartite agreement dated 29.09.2010 signed by accused Nos.1 and 3.

Thus, in all, LW.2, son of respondent No.2, paid an amount of

Rs.16,86,588/-. Even then, the said Company represented by the

petitioner herein as a Managing Director, did not complete the

construction and thereby the petitioner and other Directors of the

Company committed the aforesaid offences. He would further submit

that there are several triable issues to be decided during the course of

trial. The petitioner, instead of facing trial, filed the present petition

seeking to quash the proceedings in the said C.C. which cannot be

considered at this stage. As per criminal jurisprudence, anybody can

set criminal law in motion. Respondent No.2 is the father of LW.1 -

victim and LWs.3 and 4 are also victims. The Investigating Officer

has recorded their statements. After accused No.2 taking over as

Managing Director of the Company, an agreement dated 02.09.2012

was entered into between the Company represented by its Directors,

Accused Nos.2 to 7 and the Office Bears of the Society, wherein the

accused have agreed to return the principal amount with interest @

2% per month, but they did not do so and thereby all the accused

including the petitioner herein committed the aforesaid offences.

With the said submissions, the learned counsel sought to dismiss the

present criminal petition.

KL,J Crl.P. No.886 of 2018

8. The learned Assistant Public Prosecutor, on instructions,

would submit that there are several triable issues which cannot be

decided by this Court in the present petition under Section - 482 of

Cr.P.C. as the same have to be decided by the trial Court after

completion of full-fledged trial and finally he sought to dismiss the

present petition.

9. The aforesaid submissions would reveal that the petitioner

herein, accused No.1, was the Managing Director of the Company.

Even according to him, he was removed from the Directorship of the

said Company on 02.09.2012 itself, whereas, the agreement of sale

between LW.2 and the said Company represented by the petitioner

herein as the Managing Director, was entered into on 28.06.2010 in

respect of Flat No.220 in 'B' Block. LW.2, son of respondent No.2,

has paid 25% of the total sale consideration amounting to

Rs.4,70,625/- towards advance and part payment. The said Company

represented by the petitioner has agreed to complete the construction

within eighteen (18) months from the date of said agreement of sale

which was expired by 27.12.2011. Pursuant to a tripartite agreement

dated 29.09.2010, M/s. DHFC has sanctioned housing loan of

Rs.14,35,963/- and out of which, an amount of Rs.12,15,963/- had

disbursed to the said Company. Thus, in all, the son of respondent

No.2, has paid an amount of Rs.16,86,588/- to the said company.

After removal of the petitioner herein from the said Company as the

Managing Director, accused No.2 became the Managing Director of

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the said Company. The purchasers of the flats have organized and

formed into a society under the name and style 'Pravista Owners

Welfare Society'. Thereafter, on 02.09.2012, the Directors of the said

Company including accused Nos.2 to 7 have negotiated with the

Office Bears of the said Society and entered into an agreement. As

per the said agreement, the accused have agreed to return the principal

amount with interest @ 2% per month to the purchasers including

LW.2 herein. But, the accused failed to keep up their commitment,

and according to respondent No.2, accused including the petitioner

herein have committed criminal breach of trust and cheating.

10. It s relevant to note that the Investigating Officer, during

the course of investigation, has recorded the statements of respondent

No.2, his son (LW.2), LWs.3 and 4, victims, who have paid amounts

to the said company like LW.2 herein. The Investigating Officer has

also recorded the statement of Auditor of the Company as LW.5,

Watchman of the Company as LW.6, Manager of M/s. DHFC as

LW.8 and Fire Officer as LW.9 to show that the said Company was

not obtained no-objection certificate from Fire Services with regard to

their construction project. Thus, considering the submissions of the

above said witnesses, the Investigating Officer has laid charge sheet

against the petitioner and others accused for the aforesaid offences.

There are several triable issues which are mentioned below to be

decided by the trial Court after full-fledged trial:

KL,J Crl.P. No.886 of 2018

(a) the petitioner - accused No.1 removed as Managing

Director of the Company on 02.09.2012;

(b) accused No.2 was appointed as Managing Director of the

Company;

(c) the petitioner - accused No.1 has entered into an

agreement of sale dated 28.06.2010 with LW.2, son of

respondent No.2 (LW.1) with the specific terms and

conditions mentioned therein;

(d) the agreed period for completion of construction is 18

months which would expire by 27.12.2011;

(e) LW.2 paid 25% of the total sale consideration to the

petitioner amounting to Rs.4,70,625/-;

(f) a tripartite agreement dated 29.09.2010 was signed by

accused Nos.1 and 3 on behalf of the Company with M/s.

DHFC and son of respondent No.2;

(g) M/s. DHFC has sanctioned housing loan of

Rs.14,35,963/- and out of which, it has disbursed an

amount of Rs.12,15,963/- to the petitioner's company;

(h) thus, LW.2, son of respondent No.2 herein, has paid a

total amount of Rs.16,86,588/- to the Company towards

advance and part payment of sale consideration;

(i) on 15.02.2011, accused Nos.1 and 3 have executed a

registered sale deed bearing document No.1456 in favour

of LW.2;

KL,J Crl.P. No.886 of 2018

(j) the Company stopped the construction in February, 2011

and thus, they have completed only 40% of the

construction;

(k) an agreement dated 02.09.2012 was entered between the

office bearers of the Society and the Directors of the

company wherein the Directors have agreed to return the

principal amount with interest @ 2% per month to the

purchasers including LW.2, but they failed to keep up

their promise.

Thus, the above said triable issues are to be decided only by the trial

Court after completion of full-fledged trial.

11. The above said facts would also reveal that as on the date

of agreement of sale dated 28.06.2010, the petitioner herein was the

Managing Director of the said Company, he signed the said agreement

of sale on behalf of the said Company and also received the aforesaid

amount. Thus, at the inception i.e., as on the date of agreement of

sale, the petitioner was Managing Director of the Company and,

therefore, now he cannot claim that he has nothing to do with the said

Company.

12. The defence taken by the petitioner cannot be looked into

by this Court at this stage. The petitioner has to face trial and put forth

his defence before the trial Court. Instead of doing so, the petitioner

KL,J Crl.P. No.886 of 2018

filed the present petition seeking to quash the proceedings in the

aforesaid C.C. against him.

13. In this regard, it is apt to refer to the decision rendered by

the Hon'ble Supreme Court in Kamal Shivaji Pokarnekar v. The

State of Maharashtra3, wherein the Apex Court has categorically

held that quashing criminal proceedings was called for only in a case

where complaint did not disclose any offence, or was frivolous,

vexatious, or oppressive. If allegations set out in complaint did not

constitute offence of which cognizance had been taken by Magistrate,

it was open to High Court to quash same. It was not necessary that, a

meticulous analysis of case should be done before trial to find out

whether case would end in conviction or acquittal. If it appeared on a

reading of complaint and consideration of allegations therein, in light

of the statement made on oath that the ingredients of the offence are

disclosed, there would be no justification for High Court to interfere.

The defences that might be available, or facts/aspects which when

established during trial, might lead to acquittal, were not grounds for

quashing complaint at threshold. At that stage, only question relevant

was whether averments in complaint spell out ingredients of a

criminal offence or not. The Court has to consider whether complaint

discloses that prima facie, offences that were alleged against

Respondents. Correctness or otherwise of said allegations had to be

decided only in trial. At initial stage of issuance of process, it was not

. AIR 2019 SC 847

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open to Courts to stifle proceedings by entering into merits of the

contentions made on behalf of Accused. Criminal complaints could

not be quashed only on ground that, allegations made therein appear

to be of a civil nature. If ingredients of offence alleged against

Accused were prima facie made out in complaint, criminal proceeding

shall not be interdicted.

14. In view of the aforesaid discussion and the principle laid

down by the Apex Court in the above decision, the petitioner herein

has failed to establish any ground for quashing the proceedings by this

Court in exercise of its inherent power under Section - 482 of Cr.P.C.

and, therefore, the present petition fails and is liable to be dismissed.

15. The present Criminal Petition is accordingly dismissed.

As a sequel, miscellaneous petitions, if any, pending in the

Criminal Petition shall stand closed.

_________________ K. LAKSHMAN, J 22nd April, 2021 Mgr