2016 (12) TMI 1857 - HC - Indian Laws

Court quashes FIR alleging company directors' liability, finding no offense under specific Act

The court quashed the FIR under Sections 420 and 406 IPC, finding that the allegations did not constitute criminal offenses under the Haryana Development ... Registration of FIR - EDC+IDC rates - violation of Rules and specifically Clause 7 that they have given advertisement before the sanctioning of the plan - Sections 420 and 406 IPC - HELD THAT:- The dispute between the parties is squarely covered under the Haryana Development and Regulation of Urabn Areas Act, 1975. As there is specific Act dealing with the offences committed under the Act, therefore, offences under Sections 420 or 406 IPC are not made out in this case. Furthermore, there is nothing on the record to show that the intention of the accused was to cheat the complainant. Even, it is not the case of the complainant that money was taken but no work was done. As argued, flats were not constructed within time and possession was not handed over within time, for which, as per the above-said Act, the complainant is entitled to other remedies but in no way, offence under Section 420 or 406 IPC is made out. The copy of the agreement has been placed on the record. In the agreement, it is written that IDC shall mean Infrastructure Development Charges as recoverable under the Provisions of the Act and shall include interest thereon/carrying cost of the Company, at the rate charged by the DTCP or 18% per annum, whichever is higher. The registration of the FIR in the present case is nothing but abuse of process of law and amounts to miscarriage of justice - petition allowed. Issues:Petition under Section 482 Cr.P.C. for quashing FIR under Sections 420 and 406 IPC - Violation of Haryana Development and Regulation of Urban Areas Act, 1975 - Vicarious liability of Directors in a company.Analysis:The petitioners filed a petition under Section 482 Cr.P.C. seeking to quash FIR No.334 dated 27.07.2015 under Sections 420 and 406 IPC registered at Police Station Khadki Daula, District Gurgaon, against the State of Haryana and another individual. The main allegations in the FIR revolved around discrepancies in EDC+IDC rates and violations of rules by the company involved in a housing project. The complainant alleged that the company collected money before obtaining necessary approvals, leading to monetary losses for the complainant. The FIR highlighted violations of Clause 7 of the license and the Haryana Development and Regulation of Urban Areas Act, 1975.The court examined the provisions of the Haryana Development and Regulation of Urban Areas Act, 1975, which prohibit the advertisement and transfer of plots without the required license. Section 10 of the Act provides for penalties for contraventions, including imprisonment and fines. The court noted that the specific Act covers the offenses alleged in the FIR, indicating that Sections 420 or 406 IPC may not be applicable in this case. The court emphasized that there was no evidence to suggest fraudulent intent to cheat the complainant, and the delays in construction did not necessarily constitute criminal offenses under the Act or IPC.Regarding the vicarious liability of the company directors, the court observed that the petitioners, as directors, were not specifically implicated in the FIR, and the company itself was not named as an accused. The court reiterated that in criminal law, vicarious liability must be explicitly provided for in the Act, and without attributing a specific role to the directors, they cannot be held vicariously liable. The court also considered the terms of the agreement, which indicated that any offenses, if committed, fell under the Haryana Urban Development Laws requiring prior sanction for prosecution.Consequently, the court found the registration of the FIR to be an abuse of process of law and a miscarriage of justice. The court allowed the petition, quashing FIR No.334 dated 27.07.2015 under Sections 420 and 406 IPC, along with all subsequent proceedings, based on the lack of merit in the allegations and the specific legal framework governing the dispute.