TaxTMI 
TaxTMI 
2021 (4) TMI 1113
X X X X Extracts X X X X
X X X X Extracts X X X X
....al Procedure (hereinafter being referred to as "CrPC") taking cognizance for the offence Under Sections 420, 406 and 34 Indian Penal Code quashed the orders and set aside the criminal proceedings against 2nd Respondent on the foundation that the allegations made in the complaint/FIR does not constitute offences under aforestated sections. Brief facts of the case 3. The factual matrix of the matter as reflected from the complaint as alleged are that the subject property in question, i.e., 37, Friends Colony (East), New Delhi is in the ownership of 2nd Respondent. The said property was mortgaged with State Bank of Patiala and the total legal liability payable to the Bank was Rs. 18 crores. That in order to clear the said dues, 2nd Respondent hatched a conspiracy with broker Ashok Kumar so as to cheat and defraud the Appellants/complainants and to further misappropriate the amounts paid by the complainants as part of the deal, the 2nd Respondent breached the trust of the Appellants/complainants deliberately and falsely stating to the Appellants/complainants that the 2nd Respondent would be liable to pay a sum of Rs. 25.50 crores to the complainant if the deal is not carried forw....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ndi of the 2nd Respondent was to cheat from the very inception when the agreement to sell was executed, nothing materialised. 6. In this regard, a private complaint was filed Under Section 200 read with Section 190 Code of Criminal Procedure on 23rd September, 2015 before the learned Magistrate for taking cognizance of the offence committed by the 2nd Respondent before Saket Court, Delhi wherein it was directed to the concerned Police Station to register the FIR Under Section 156(3) Code of Criminal Procedure vide Order dated 15th November, 2016 that came to be challenged by the 2nd Respondent by filing of a criminal revision but that came to be dismissed by the ASJ & Special Judge (NDPS), South East, Saket Courts, New Delhi vide Order dated 26th April, 2017 and thereafter FIR Under Section 156(3) Code of Criminal Procedure came to be registered against the 2nd Respondent and the broker Mr. Ashok Kumar Under Sections 420, 406 and 34 Indian Penal Code on 28th April, 2017. 7. The Investigation Officer conducted investigation and filed charge-sheet dated 5th October, 2018 Under Sections 420, 406 and 34 Indian Penal Code. It reveals from the charge-sheet that the property in ques....
X X X X Extracts X X X X
X X X X Extracts X X X X
....riminal proceedings, this according to the learned Judge, would be a sheer abuse of the process of the Court. In consequence thereof, quashed all the criminal proceedings and the orders under challenge therein dated 15th November, 2016 and 24th April, 2017 and further observed that the observations made shall not be construed to be expression on merits, in the arbitration proceedings by impugned judgment dated 15th March, 2019. 10. We have heard Mr. Mukul Rohatgi, learned Senior Counsel for the Appellants, Mr. P. Chidambaram, learned Senior Counsel for 2nd Respondent and Ms. Aishwarya Bhati, learned Additional Solicitor General for the State. 11. Mr. Mukul Rohatgi, learned Senior Counsel for the Appellants submitted that the charge-sheet filed by the Investigating Officer on 5th October, 2018 discloses that the offence Under Sections 406, 420 and 34 Indian Penal Code has been committed by the 2nd Respondent and pursuant to the order of the learned Judge of the High Court dated 9th October, 2018, copy of the charge-sheet was placed on record still no reference of the charge-sheet has been made by the learned Judge in the impugned judgment while quashing the criminal proceeding....
X X X X Extracts X X X X
X X X X Extracts X X X X
....run Bhandari v. State of Uttar Pradesh and Ors. 2013 (2) SCC 801; Anand Kumar Mohatta and Anr. v. State (NCT of Delhi), Department of Home and Anr. 2019 (11) SCC 706. 15. Per contra, Mr. P. Chidambaram, learned Senior Counsel for 2nd Respondent submits that agreement to sell dated 24th December, 2011 discloses all the facts about the ownership of the property, property being mortgaged with the State Bank of Patiala and after the payment, property to be redeemed after obtaining the original papers and no objection certificate from the Bank, thereafter further procedure to be carried out by the parties as per the terms and conditions of the agreement to sell dated 24th December, 2011. When the Appellant failed to carry out its obligation in compliance of the terms and conditions of the agreement to sell, the agreement to sell was terminated by letter dated 30th January, 2013 and that empowers the 2nd Respondent to forfeit the earnest money which was deposited in terms of the agreement and it was purely a civil dispute and as their being a Clause of arbitration, arbitral proceedings were initiated at the instance of the 1st Appellant and although during pendency of the proceedings ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Appellant, which would show that she had received the said letter. Since she did not respond to the letter dated 28th December, 2012, it was observed that she was not ready to perform her obligations in terms of the contract and consequently, the 2nd Respondent was well within her rights to terminate the contract by letter dated 30th January, 2013. 19. Learned Counsel has further tried to justify that all the three conditions of Clause 3 of agreement hammered by the Appellants were fulfilled, and there is documentary evidence placed on record in support thereof in the counter affidavit. 20. Learned Counsel for the 2nd Respondent has also placed reliance on various judgments of this Court which lays down the basic principles under which inherent powers Under Section 482 Code of Criminal Procedure to be exercised by the High Court and has set aside the criminal proceedings observing that when there are civil disputes, the initiation of criminal proceedings would be abuse of the process of the Court and placed reliance on the judgments in Rajabhai Abdul Rehman Munshi v. Vasudev Dhanjibhai Mody 1964 (3) SCR 480; G. Narayanaswamy Reddy (Dead) by LRs. and Anr. v. Govt. of Karnataka....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of the Constitution, or in the exercise of the inherent powers of the High Court Under Section 482 Code of Criminal Procedure. This has often been hotly debated before this Court and various High Courts. Though in a series of decisions, this question has been answered on several occasions by this Court, yet the same still comes up for consideration and is seriously debated. 25. In this backdrop, the scope and ambit of the inherent jurisdiction of the High Court Under Section 482 Code of Criminal Procedure has been examined in the judgment of this Court in State of Haryana and Ors. v. Bhajan Lal and Ors. (supra). The relevant para is mentioned hereunder: 102. In the backdrop of the interpretation of the various relevant provisions of the Code under Chapter XIV and of the principles of law enunciated by this Court in a series of decisions relating to the exercise of the extraordinary power Under Article 226 or the inherent powers Under Section 482 of the Code which we have extracted and reproduced above, we give the following categories of cases by way of illustration wherein such power could be exercised either to prevent abuse of the process of any court or otherw....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing inherent powers Under Section 482 Code of Criminal Procedure. The aforesaid principles laid down by this Court are illustrative and not exhaustive. Nevertheless, it throws light on the circumstances and the situation which is to be kept in mind when the High Court exercises its inherent powers Under Section 482 Code of Criminal Procedure. 27. It has been further elucidated recently by this Court in Arnab Manoranjan Goswami v. State of Maharashtra and Ors. where jurisdiction of the High Court Under Article 226 of the Constitution of India and Section 482 Code of Criminal Procedure has been analysed at great length. 28. It is thus settled that the exercise of inherent power of the High Court is an extraordinary power which has to be exercised with great care and circumspection before embarking to scrutinise the complaint/FIR/charge-sheet in deciding whether the case is the rarest of rare case, to scuttle the prosecution at its inception. 29. In the matter under consideration, if we try to analyse the guidelines of which a reference has been made, can it be said that the allegations in the complaint/FIR/charge-sheet do not make out a case against the 2nd Respondent or do ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....complaint/FIR/charge-sheet in exercise of its inherent jurisdiction. 32. In the instant case, on a careful reading of the complaint/FIR/charge-sheet, in our view, it cannot be said that the complaint does not disclose the commission of an offence. The ingredients of the offences Under Sections 406 and 420 Indian Penal Code cannot be said to be absent on the basis of the allegations in the complaint/FIR/charge-sheet. We would like to add that whether the allegations in the complaint are otherwise correct or not, has to be decided on the basis of the evidence to be led during the course of trial. Simply because there is a remedy provided for breach of contract or arbitral proceedings initiated at the instance of the Appellants, that does not by itself clothe the court to come to a conclusion that civil remedy is the only remedy, and the initiation of criminal proceedings, in any manner, will be an abuse of the process of the court for exercising inherent powers of the High Court Under Section 482 Code of Criminal Procedure for quashing such proceedings. 33. We have perused the pleadings of the parties, the complaint/FIR/charge-sheet and orders of the Courts below and have taken....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... that any criminal offence as stated is prima facie being made out and veracity of it indeed be examined in the course of criminal trial. 35. The submission made by Mr. P. Chidambaram, learned Senior Counsel for 2nd Respondent showing bonafides and taking us through the documentary evidence annexed to the counter affidavit on record to show that it was a simple case of termination because of breach of terms of the contract giving rise to a purely civil dispute or initiation of the arbitral proceedings would not attract the provisions Under Sections 406, 420, 34 Indian Penal Code may not hold good at this stage for the reason what is being suggested by the learned Counsel for the 2nd Respondent can be his defence during the course of trial but was not open to be examined by the High Court to take a judicial notice and for quashing of the criminal proceedings in exercise of its inherent powers Under Section 482 Code of Criminal Procedure. 36. So far as the further submission made by learned Counsel for the 2nd Respondent that if the High Court has failed to consider the charge-sheet and other material available on record, the matter be remitted back to the High Court for re-con....