2021 (11) TMI 1224 - HC - Indian Laws

Anticipatory bail granted to construction company petitioners; custodial interrogation unnecessary in commercial contract breach and money recovery dispute

HC granted anticipatory bail to the petitioners, holding custodial interrogation unnecessary in a commercial dispute between rival construction companies ... Seeking grant of anticipatory bail - huge fraud and repeated cheatings and causing loss of more than 5 Crores - dispute relates to the commercial transactions - necessity of custodial interrogation of the accused - HELD THAT:- This Court is of the opinion that dispute between the two rival construction companies relates to the agreement(s) entered into by them in June, 2018 and September, 2018 and both have laid their respective claims against each other for breach of contract and recovery of money. Though, the allegations in the FIR relate to deal regarding 20 flats agreed to be transferred by the accused company, but admittedly, only a sum of Rs. 3.20 crores was paid by the complainant in September, 2018 against a total sale consideration of Rs. 10.36 crores, who is still ready and willing to complete the contract, and is also ready to make the balance payment to the accused company. Admittedly, after execution of this contract in the year 2018 till the registration of the case, no steps were taken by the complainant seeking implementation of the said contract and the said deal is incomplete as far as transfer of title is concerned. The accused company has also expressed its intention to amicably conclude the deal, as according to it, the complainant is yet to make the balance payment of consideration towards their previous agreement relating to 'Affordable Group Housing Soceity', Sector-89, Gurugram. The grounds raised on behalf of the learned State counsel that custodial interrogation of the petitioners is necessary to recover the amount of Rs. 3.20 crores and also to recover the forged register maintained by the accused claiming the subject property to be free from any charge do not appear to be justified, as prima facie, the dispute between the two companies is regarding their respective rights flowing from the alleged agreements and the same is founded upon documentary material. The rights of the parties and issues regarding implementation of the contracts can only be raised before the civil Court, but none of the parties have filed any suit either for specific performance of the contract or for recovery of money. It has also not been disputed by learned State counsel that the agreement/mortgage documents of the flats have already been collected from the concerned banks. Thus, this Court has no hesitation in holding that the custodial interrogation of the petitioners is not necessary. Thus, without meaning any expression of opinion on the merits of the case, the petition is allowed. ISSUES PRESENTED AND CONSIDERED 1. Whether anticipatory bail under Section 438 Cr.P.C. should be granted to the accused who apprehend arrest in an FIR alleging cheating, criminal breach of trust and related offences arising from disputed commercial transactions. 2. Whether custodial interrogation of the accused is necessary for investigation, including recovery of money and documents alleged to have been forged or concealed. 3. Whether the subject-matter of the FIR is essentially a civil/commercial dispute founded on documentary evidence, affecting the appropriateness of criminal proceedings and custodial measures. 4. Whether offences subsequently added to the FIR (including those for forgery and criminal conspiracy) bear on the prayer for anticipatory bail when anticipatory bail was sought without explicit prayer in respect of all added offences. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Grant of anticipatory bail under Section 438 Cr.P.C. Legal framework: Section 438 Cr.P.C. permits anticipatory bail where a person apprehends arrest for non-bailable offences; court must weigh prima facie case, nature of allegations, likelihood of custodial interrogation, and necessity of detention for investigation. Precedent Treatment: The Court did not cite or rely on external judicial precedents in the text; determination was made on facts and legal principles as applied to the record. Interpretation and reasoning: The Court held that the allegations arise out of commercial agreements executed in 2018 and relate to competing claims for performance and recovery of money. The complainant had paid a part consideration and admitted willingness to complete the contract by paying balance consideration. Investigation was limited to the allegations in the FIR and had already secured certain bank documents. The accused had repeatedly cooperated with investigation and joined proceedings as directed by the Court. Given the documentary foundation of the dispute and absence of need for custodial interrogation (see Issue 2), the Court found no justification to refuse anticipatory bail. Ratio vs. Obiter: Ratio - where the dispute is predominantly contractual and documentary and the accused have cooperated with investigation, anticipatory bail may be granted; custodial interrogation not justified merely because recovery of money or documents is sought. Obiter - observations concerning the parties' commercial intentions and willingness to settle are factual and persuasive but not general pronouncements beyond the case facts. Conclusions: The Court allowed the anticipatory bail application and made absolute the prior interim protection order, without expressing any opinion on merits. Issue 2 - Necessity of custodial interrogation for recovery of money and documents Legal framework: Custodial interrogation is justified where it is necessary for effective investigation (e.g., to recover articles not otherwise available, to prevent tampering, or to elicit facts not obtainable by non-custodial means). When documentary evidence is available from third parties (banks, registers) or the accused have cooperated, custodial interrogation loses its force as a necessity. Precedent Treatment: No external precedent invoked; assessment based on scope of investigation and material already collected. Interpretation and reasoning: The Investigating Officer confined investigation to FIR allegations and had obtained agreement/mortgage documents from banks. There was no indication that the alleged 'register' or other material could be retrieved only through custodial interrogation. The accused had joined the investigation repeatedly and complied with Court directions. Consequently, custodial interrogation was found not necessary to recover the paid amount or the documentary material relied upon by the prosecution. Ratio vs. Obiter: Ratio - custodial interrogation is not necessary where documentary evidence is available from independent sources and the accused cooperate with investigation; mere contention that custody is needed to recover money or a register is insufficient absent specific justification. Obiter - commentary on non-initiation of civil suits by parties and implications for criminal inquiry is factual/contextual. Conclusions: Custodial interrogation was deemed unnecessary and refusal to grant protection on that ground was not warranted. Issue 3 - Characterization of the dispute as civil/commercial founded on documentary material Legal framework: Criminal proceedings are inappropriate where the core controversy is a civil contract dispute and allegations are primarily breaches of contract and recovery of money; where documents and contractual terms are central, issues of rights and obligations are for civil adjudication unless there is clear criminal intent or forgery not explainable as commercial disputes. Precedent Treatment: The Court's analysis proceeded without citing external authorities, relying on the factual matrix and principle that parties to commercial transactions ordinarily seek civil remedies. Interpretation and reasoning: The Court noted the agreements dated June and September 2018, partial payments made, admitted willingness of the complainant to pay balance consideration, and the lack of steps by the complainant to enforce the contract civilly prior to FIR. The complainant did not dispute the earlier transaction forming part of the broader commercial relationship. These factors led the Court to treat the core controversy as contractual and documentary in nature rather than prima facie bearing criminality requiring custodial measures. Ratio vs. Obiter: Ratio - where allegations stem from alleged breach of commercial agreements and the dispute is documentary and compensatory, criminal process should not be used as substitute for civil remedy absent clear nexus to criminality. Obiter - suggestion that the civil forum is the proper venue for rights and implementation of contracts. Conclusions: The dispute was characterized as essentially civil/commercial, reducing the necessity for criminal custodial steps and supporting grant of anticipatory bail. Issue 4 - Effect of addition of offences (forgery, conspiracy, etc.) on anticipatory bail Legal framework: Addition of non-bailable or serious offences can affect bail considerations; however, the nature and sufficiency of material supporting such additions, and whether the accused sought relief in respect of those added offences, are relevant to court's exercise under Section 438 Cr.P.C. Precedent Treatment: The Court did not rely on precedent; it considered the parties' pleadings and the scope of anticipatory bail sought. Interpretation and reasoning: The record showed that certain offences (Sections for forgery, conspiracy, etc.) were added after FIR registration. The petitioners had not sought anticipatory bail expressly in respect of these subsequently added offences. The Court nonetheless examined the factual matrix and investigative scope and found no prima facie justification for custodial interrogation even in light of the added allegations, particularly because documentary evidence had been collected and the investigation was confined to FIR allegations. The Court did not base its order on any blanket view about added offences but on the totality of facts and the lack of necessity for custody. Ratio vs. Obiter: Ratio - addition of offences does not automatically necessitate refusal of anticipatory bail if investigation does not justify custodial interrogation and the dispute remains documentary/commercial. Obiter - observations as to the procedural posture of bail applications concerning subsequently added charges. Conclusions: The Court granted anticipatory bail despite addition of offences, predicated on lack of necessity for custody and documentary nature of dispute; no expression of opinion on merits of added charges. Final Disposition Without expressing any view on merits, the Court made absolute its interim protective order, concluding that (i) the dispute is essentially contractual and documentary; (ii) accused have cooperated with investigation; (iii) custodial interrogation is not necessary for recovery of money or documents already obtained from banks; and (iv) anticipatory bail under Section 438 Cr.P.C. is therefore appropriate on the facts.