TaxTMI 
TaxTMI 
2017 (11) TMI 1980
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....Premsai Chundur, the second respondent had entered into a construction agreement on 10.11.2014 for constructing a residential house at the rate of Rs. 4 Crores and accordingly, transferred a sum of Rs. 1.50 Crores from her savings bank account to the account of the first petitioner herein. Since the first petitioner had advised her that the proposed property to be purchased was not worth the money and that the market conditions were not stable, the second respondent had dropped the plan. According to the second respondent, the first petitioner has assured to transfer the advance amount of Rs. 1.50 Crores to her account. However, since the amount was not repaid, after repeated request, the first petitioner had paid a sum of Rs. 15 lakhs alone on various dates. Since the petitioners were evading payment of the balance amount, the second respondent had given a complaint on 13.07.2016, which came to be registered in Cr. No. 180 of 2017 for offences under Section 420 r/w.34 IPC. According to the prosecution, the petitioners herein had taken advantage of the second respondent's situation that she is a single woman and cheated her. The said investigation pending in Cr. No. 180 of 2016....
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....e same was utilised for settling certain personal bank dues of the petitioners, this overt act not only amounts to criminal breach of trust, but is also an offence of dishonest misappropriation of property as well as cheating. According to the learned Senior counsel, the first petitioner never disclosed that his account to which the amount was requested to be transferred, was an over draft account and that the amount was transferred to meet his own personal liabilities without the knowledge of the second respondent herein. In fine, it is the submission that the entire averments in the complaint does constitute a cognizable offence and since the matter requires a detailed investigation, this Court should not exercise its powers under Section 482 Cr.P.C., for quashing the FIR. 6. Mr. C. Iyyaparaj, learned Additional Public Prosecutor appearing for the first respondent (in both petitions) also submitted that the complaint prima facie reveals the commission of cognizable offences and therefore, the investigating officer was justified in registering the same. According to the learned Additional Public Prosecutor, the ingredients of the offence of cheating has been clearly spelt out in ....
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....intance with the second petitioner, she was introduced to the first petitioner also, who is the husband of the second petitioner. The second petitioner's earlier contract for the interior design was done to her satisfaction and thereby all of them became good friends. Subsequently, when the second petitioner intended to purchase a property, she had approached the petitioners and the other named person in the FIR for constructing a residential house at the rate of Rs. 4 Crores. From these facts, it is seen that when the second respondent had intended to construct a residential house, she had voluntarily engaged the services of the petitioners herein. 12. It is not the case of the second respondent that the petitioners had made a false or misleading representation for the purpose of entering into a construction agreement. When the decision to engage the services of the petitioners was taken by the second respondent, she had voluntarily entered into the construction agreement by way of contract and as per the terms of the contract, she had also paid the advance amount of Rs. 1.50 Crores. Till this stage, there were neither deception nor dishonest inducement on the part of the pet....
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.... advance amount of Rs. 1.5 Crores. What had transpired thereafter is that, on the request of the second respondent, the first petitioner had repaid a sum of Rs. 15 lakhs and subsequently, handed over the cheque for the balance amount of Rs. 1.35 Crores. Since the said cheque came to be dishonoured on 22.09.2015, the first petitioner had given four more cheques which also were dishonoured on 29.10.2015 and 30.10.2015. From these developments, it is seen that the transaction was purely a breach of the terms of the agreement, since the advance amount paid under the construction agreement was required to be refunded in view of the construction of proposed property is being dropped. Though the second respondent has made various allegations against the petitioners in her complaint, her main grievance was that the petitioners were evading and delaying the payments. However, the fact remains that the petitioners had indeed acknowledged their liability and handed over the aforesaid cheques for the amount claimed by the second respondent. Here again, the ingredients of offence of cheating is conspicuously absent. 16. The learned Senior counsel for the second respondent submitted that since ....
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....rms. As such, the ingredients of cheating as defined under Section 415 IPC is conspicuously absent in the complaint. In the result, it is held that the criminal offence of cheating under Section 420 has not been made out from the averments made in the complaint. 18. Mr. AR.L. Sundaresan, learned Senior counsel for the second respondent submitted that apart from the offence of cheating, there is also ingredients of the offences of criminal breach of trust and misappropriation. 19. For the sake of brevity, those sections are extracted hereunder: "403. Dishonest misappropriation of property: Whoever dishonestly misappropriates or converts to his own use any movable property, shall be punished with imprisonment of either description for a term which may extend to two years, or with fine, or with both. 405. Criminal breach of trust: Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, ....
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....'s complaint manifestly discloses the entire transaction to be purely civil in nature and the first respondent police may not be justified in investigating into a civil transaction. 23. I shall now discuss the various judgments referred to by the respective counsels. a) In one of the earliest judgments of the Hon'ble Supreme Court in Hari Prasad Chamaria V. Bishun Kumar Surekha and others reported in 1973 (2) SCC 823, had found that a mere breach of contract cannot give raise to criminal prosecution since the remedy is before the Civil Court. "3. The complaint came up for hearing before the Subdivisional Magistrate Samastipur and on August 6, 1968 he took cognizance of the offence under Section 420 Indian Penal Code. It was directed that the process should issue against the respondents. The respondents thereafter approached the High Court under Section 561A of the Code, of Criminal Procedure. The High Court was of the view that the case of the appellant was based upon contract. Mere breach of contract, in the opinion of the High Court, could not give rise to criminal prosecution. The appellant, it was further observed, had a remedy in the Civil Court and he could not b....
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....o hold a person guilty of cheating it is necessary to show that he had fraudulent or dishonest intention at the time of making the promise. From his mere failure to keep up promise subsequently such a culpable intention right at the beginning, that is, when he made the promise cannot be presumed." ii) In Alpic Finance Ltd., v. P. Sadasivan and another reported in 2001 (3) SCC 513, the relevant portion of the decision is as follows: "10. The facts in the present case have to be appreciated in the light of the various decisions of this Court. When somebody suffers injury to his person, property or reputation, he may have remedies both under civil and criminal law. The injury alleged may form basis of civil claim and may also constitute the ingredients of some crime punishable under criminal law. When there is dispute between the parties arising out of a transaction involving passing of valuable properties between them, the aggrieved person may have right to sue for damages or compensation and at the same time, law permits the victim to proceed against the wrongdoer for having committed an offence of criminal breach of trust or cheating. Here the main offence alleged by the appell....
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....has to exercise a great deal of caution. For the accused it is a serious matter. This Court has laid certain principles on the basis of which High Court is to exercise its jurisdiction under Section 482 of the Code. Jurisdiction under this Section has to be exercised to prevent abuse of the process of any court or otherwise to secure the ends of justice." 14. While no one with a legitimate cause or grievance should be prevented from seeking remedies available in criminal law, a complainant who initiates or persists with a prosecution, being fully aware that the criminal proceedings are unwarranted and his remedy lies only in civil law, should himself be made accountable, at the end of such misconceived criminal proceedings, in accordance with law. One positive step that can be taken by the courts, to curb unnecessary prosecutions and harassment of innocent parties, is to exercise their power under section 250 Cr.P.C. more frequently, where they discern malice or frivolousness or ulterior motives on the part of the complainant. Be that as it may. c) While refusing to interfere with the judgment in quashing an FIR, the Hon'ble Apex Court in R. Kalyani v. Janak C. Mehta and ot....
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.... and his failure to make to pay the entire amount will amount to mere failure to keep up his promise and nothing more, as such, the petitioners has no intention of cheating, which is manifest by the subsequent conduct of the parties in repaying the amount, as held by the learned brother judge of this Court in the decision reported in 2001 (1) MWN (Cr.) 191 (Dr. K. Jagadeesan and another v. Inspector of Police, Central Crime Branch, Egmore, Chennai-8). 12. Thus, considering the nature of the transactions between the parties and subsequent conduct of the parties, this Court is of the firm view that the allegations raised in the FIR would disclose that the dispute between the parties is more of civil in nature and there is no fraudulent or dishonest intention on the part of the petitioners to attract the offences under sections 420 and 406 IPC. e) In the well laid down judgment of the Hon'ble Apex Court in the State of Haryana v. Bhajan Lal and others [1992 Supp (1) SCC 335], it was held that the inherent powers under Section 482 Cr.P.C., is for the purpose of meeting the ends of justice. The learned Senior counsel for the respondent by relying on a judgment in Indian Oil Corp....
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.... Delhi, [1999 (3) SCC 259], Medchl Chemicals & Pharma (P) Ltd. v. Biological E. Ltd. [2000 (3) SCC 269], Hridaya Ranjan Prasad Verma v. State of Bihar [2000 (4) SCC 168], M. Krishnan v. Vijay Kumar [2001 (8) SCC 645], and Zandu Pharmaceutical Works Ltd. v. Mohd. Sharaful Haque [2005 (1) SCC 122]. The principles, relevant to our purpose are : (i) A complaint can be quashed where the allegations made in the complaint, even if they are taken at their face value and accepted in their entirety, do not prima facie constitute any offence or make out the case alleged against the accused. For this purpose, the complaint has to be examined as a whole, but without examining the merits of the allegations. Neither a detailed inquiry nor a meticulous analysis of the material nor an assessment of the reliability or genuineness of the allegations in the complaint, is warranted while examining prayer for quashing of a complaint. (ii) A complaint may also be quashed where it is a clear abuse of the process of the court, as when the criminal proceeding is found to have been initiated with malafides/malice for wreaking vengeance or to cause harm, or where the allegations are absurd and inherentl....