Arun Bhandari Vs State of U.P..

Page 1

Reportable

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO. 78 OF 2013 (Arising out of S.L.P. (Crl.) No. 2089 of 2011)

Arun Bhandari ... Appellant

Versus

State of U.P. and others ...Respondents

J U D G M E N T

Dipak Misra, J.

Leave granted.

2. Calling in question the legal pregnability of the order

dated 29.1.2011 passed by the High Court of

Judicature at Allahabad in Criminal Misc. Writ Petition

No. 69 of 2011 whereby the learned single Judge in

exercise of jurisdiction under Articles 226 and 227 of

the Constitution has quashed the order dated

Page 2

5.6.2010 passed by the learned Chief Judicial

Magistrate, Gautam Budh Nagar, taking cognizance

under Sections 406 and 420 of the Indian Penal Code

(for short “the IPC”) against the respondent No. 2 in

exercise of power under Section 190(1)(b) of the

Code of Criminal Procedure (for short “the CrPC”) and

the order dated 4.12.2010 passed by the learned

Sessions Judge, Gautam Budh Nagar affirming the

said order, on the foundation that the allegations

made neither in the FIR nor in the protest petition

constitute offences under the aforesaid sections, the

present appeal by special leave has been preferred.

3. The factual score as depicted are that the appellant

is a Non-Resident Indian (NRI) living in Germany and

while looking for a property in Greater Noida, he

came in contact with respondent No. 2 and her

husband, Raghuvinder Singh, who claimed to be the

owner of the property in question and offered to sell

the same. On 24.3.2008, as alleged, both the

husband and wife agreed to sell the residential plot

bearing No. 131, Block – (Cassia-Fastula Estate),

2

Page 3

Sector CHI-4, Greater Noida, U.P. for a consideration

of Rs.2,43,97,880/- and an agreement to that effect

was executed by the respondent No. 3, both the

husband and wife jointly received a sum of

Rs.1,05,00,000/- from the appellant towards part

payment of the sale consideration. It was further

agreed that the respondent Nos. 2 and 3 would

obtain permission from Greater Noida Authority to

transfer the property in his favour and execute the

deed of transfer within 45 days from the grant of

such permission.

4. As the factual antecedents would further reveal, the

said agreement was executed on the basis of a

registered agreement executed in favour of the

respondent No. 3 by the original allottee, Smt.

Vandana Bhardwaj to sell the said plot. After expiry

of a month or so, the appellant enquired from the

respondent No. 3 about the progress of delivery of

possession from the original allottee, but he received

conflicting and contradictory replies which created

doubt in his mind and impelled him to rush to Noida

3

Page 4

and find out the real facts from the Greater Noida

Authority. On due enquiry, he came to know that

there was a registered agreement in favour of the 3rd

respondent by Smt. Vandana Bhardwaj; that a power

of attorney had been executed by the original

allottee in favour of the respondent No. 2, the wife of

respondent No. 3; that the original allottee, to avoid

any kind of litigation, had also executed a will in

favour of the respondent No. 3; and that the

respondent No. 2 by virtue of the power of attorney,

executed in her favour by the original allottee, had

transferred the said property in favour of one Monika

Goel who had got her name mutated in the record of

Greater Noida Authority. Coming to know about the

aforesaid factual score, he demanded refund of the

money from the respondents, but a total indifferent

attitude was exhibited, which compelled him to lodge

an FIR at the Police Station, Kasna, which gave rise to

the Criminal Case No. 563 of 2009.

5. The Investigating Officer, after completing the

investigation, submitted the final report stating that

4

Page 5

the case was of a civil nature and no criminal offence

had been made out. The appellant filed a protest

petition before the learned Magistrate stating, inter

alia, that the accused persons had colluded with the

Investigating Officer and the Station House Officer as

a result of which the Investigation Officer, on

22.10.2009, had concluded the investigation

observing that the dispute was of the civil nature and

intended to submit the final report before the court.

The appellant coming to know about the same

submitted an application before the concerned Area

Officer, who, taking note of the same, handed over

the investigation to another S.S.I. of Police on

24.11.2009. The said Investigating Officer recorded

statements of the concerned Sub-Registrar, the Chief

Executive Officer of Greater Noida Authority, from

whose statements it was evident that the accused

persons were never the owners of the property in

question and the original allottee had not appeared

in the Greater Noida Authority and not transferred

any documents. He also recorded the statement of

5

Page 6

original allottee who had stated that the property

was allotted in her name in 2005 and on a proposal

being made by Raghuvinder Singh, a friend of her

husband, to sell the property she executed an

agreement to sell in his favour and a General Power

of Attorney in the name of his wife, Savita Singh, at

his instance but possession was not handed over to

them. He also examined one Sharad Kumar Sharma,

who was a witness to the agreement to sell and the

Power of Attorney executed by the original allottee,

and said Sharma had stated that the General Power

of Attorney was executed to implement the

agreement to sell executed in favour of Raghuvinder

Singh. The Investigating Officer obtained an affidavit

from the complainant which was kept in the case

diary, and on 25.2.2010 it was recorded in the case

diary that a criminal offence had been made out

against the accused persons. The case diary also

evinced that there was an effort for settlement

between the informant and the accused persons and

the accused persons were ready to return the

6

Page 7

amount of Rs.1,05,00,000/- to the appellant. On

10.3.2010, he made an entry to file the charge-sheet

against the respondents under Sections 420, 406,

567, 468 and 479 of the IPC. At this stage, the

accused persons again colluded with the previous

Investigating Officer and the Station House Officer

and got the investigation transferred to the previous

Investigating Officer. Coming to know about the said

development, the appellant submitted a petition

before the Senior Superintendent of Police, Gautam

Budh Nagar on 6.5.2010, but before any steps could

be taken by the higher authority, the said

Investigating Officer submitted a final report stating

that no offence under the IPC had been made out. In

the protest petition it was urged that the whole case

diary should be perused and appropriate orders may

be passed.

6. On the basis of the aforesaid protest petition the

Chief Judicial Magistrate, on 5.6.2010, perused the

final report submitted by the Investigating Officer,

the entire case diary, the protest petition and the

7

Page 8

statements recorded under Section 161 of the CrPC

by the previous Investigating Officer and came to

hold that even if a suit could be filed, the fact

situation prima facie revealed criminal culpability

and, accordingly, took cognizance under Sections

420 and 406 of the IPC against the respondents and

issued summons requiring them to appear before the

court on 9.7.2010.

7. Being dissatisfied with the said order, the

respondents preferred Criminal Revision No. 108 of

2010 before the learned Sessions Judge contending,

inter alia, that the FIR had been lodged with an

ulterior motive to pressurize the respondents to

return the earnest money and the complainant had,

in fact, committed breach of the terms of the

agreement; that the allegations made in the FIR

could only be ascertained on the basis of evidence

and documents by a civil court of competent

jurisdiction regard being had to the nature of the

dispute; that the learned Magistrate had taken

cognizance without any material in the case diary;

8

Page 9

and that the exercise of power under Section 190(1)

(b) of the CrPC was totally unwarranted in the case at

hand. The revisional court scanned the material

brought on record, perused the case diary in entirety,

took note of the conduct of the Investigating Officer

who had submitted the final report stating that the

allegations did not constitute any criminal offence

despite the material brought on record during the

course of investigation by the Investigating Officer,

who was appointed at the instance of the Area

Officer, scrutinized the substance of material

collected to the effect that Raghuvinder Singh had no

right, title and interest in the property and a General

Power of Attorney was executed in favour of his wife

to sell, transfer and convey all rights, title and

interest in the plot in question on behalf of the

original allottee and that the husband and wife had

concealed the material factum of execution of Power

of Attorney from the complainant and opined that

both the accused persons had fraudulent and

dishonest intention since the beginning of the

9

Page 10

negotiation with the complainant and, therefore, the

allegations prima facie constituted a criminal offence

and it could not be said that it was a pure and simple

dispute of civil nature. Being of this view he gave the

stamp of approval to the order passed by the learned

Magistrate.

8. The unsuccess in revision compelled the respondents

to approach the High Court in a writ petition and the

Writ Court came to hold that on the basis of the

allegations made in the FIR and the evidence

collected during investigation it could not be said

that the instant case is simpliciter a breach of

contract not attracting any criminal liability as far as

the husband was concerned and there was a prima

facie case triable for offences under Section 406 and

420 of the IPC. However, while dealing with the

allegations made against the wife, the High Court

observed that there being no entrustment of any

property by the complainant to her and further there

being no privity of contract between them, she was

under no legal obligation to disclose to the

10

Page 11

complainant that she held a registered Power of

Attorney from the original allottee to sell and alienate

the property in question and such non-disclosure of

facts could not be said to have constituted offence

either under Section 406 or Section 420 of the IPC.

Being of this view the High Court partly allowed the

writ petition and quashed the order taking

cognizance and summoning of the wife, the

respondent No. 2 herein.

9. We have heard Mr. Amit Khemka, learned counsel for

the appellant, and Mr. Chetan Sharma, learned senior

counsel appearing for the respondent Nos. 2 and 3.

10. It is submitted by Mr. Khemka learned counsel for the

appellant that the High Court could not have

scrutinized the material brought on record as if it was

sitting in appeal against the judgment of conviction

and also committed error in ignoring certain material

facts which make the order sensitively susceptible. It

is his further submission that the learned Sessions

Judge had considered the entire gamut of facts and

appositely opined that the order taking cognizance

11

Page 12

could not be flawed but the High Court by taking note

of the fact that there was no privity of contract and

the non-disclosure was not material has completely

erred in its conclusion and, hence, the order deserves

to be lancinated.

11. Mr. Chetan Sharma, learned senior counsel, resisting

the aforesaid contentions, canvassed that mere

presence of the respondent No. 2 at the time of

signing of the agreement to sell does not amount to

an offence under Section 420 of the IPC as she did

not sign the document nor did she endorse the same

as a witness. It is urged by him that no criminal

liability can be fastened on her, for the sine qua non

for attracting criminality is to show dishonest

intention right from the very inception which is non-

existent in the case at hand. It is submitted by him

that if the criminal action is allowed to continue

against her that would put a premium on a

commercial strategy adopted by the appellant in

roping a lady only to have more bargaining power in

the matter to arrive at a settlement despite the

12

Page 13

breach of contract by him. The learned senior

counsel would further contend that the appellant has

taken contradictory stands inasmuch as in one way

he had demanded the forfeited amount and the other

way lodged an FIR to set the criminal law in motion

which is impermissible. To bolster the said

contentions reliance has been placed on the

judgments rendered in Hridya Rajan Pd. Verma &

others v. State of Bihar and another1, Murari

Lal Gupta v. Gopi Singh2 and B. Suresh Yadav v.

Sharifa Bee and another3.

12. At the very outset, it is necessary to state that on a

perusal of the FIR, the protest petition and the order

passed by the learned Magistrate, it is demonstrable

that at various stages of the investigation different

views were expressed by the Investigating Officers

and the learned Magistrate has scrutinized the same

and taking note of the allegations had exercised the

power to reject the final report and take cognizance.

The court taking cognizance and the revisional court 1 AIR 2000 SC 2341 2 (2006) 2 SCC (Cri) 430 3 (2007) 13 SCC 107

13

Page 14

have expressed the view that both the respondents

had nurtured dishonest intentions from the very

beginning of making the negotiation with the

complainant and treated non-disclosure of execution

of Power of Attorney in favour of the respondent No.

2 herein by the original owner as a material omission

as a consequence of which damage had been caused

to the complainant. The learned counsel for the

appellant would submit that the High Court has

misguided itself by observing that there was no

entrustment of any property to the wife and further

there was no privity of contract and non-disclosure

on her part do not constitute an offence. The learned

senior counsel for the respondent has highlighted the

factum of absence of privity of contract. Regard

being had to the allegations brought on record, the

question that emerges for consideration is whether

the High Court is justified in exercising its

extraordinary jurisdiction to quash the order taking

cognizance against the respondent No. 2 herein.

14

Page 15

13. At this juncture, we may note that Raghuvinder

Singh, respondent No. 3, had filed SLP (Crl) No. 3894

of 2011 which has been dismissed on 13.5.2011.

14. As advised at present we are inclined to discuss the

decisions which have been commended to us by the

learned senior counsel for the respondent. In Hridya

Rajan Pd. Verma (supra) a complaint was filed that

the accused persons therein had deliberately and

intentionally diverted and induced the respondent

society and the complainant by suppressing certain

facts and giving false and concocted information and

assurances to the complainant so as to make him

believe that the deal was a fair one and free from

troubles. The further allegation was that the accused

person did so with the intention to acquire wrongful

gain for themselves and to cause wrongful loss to the

Society and the complainant and they had induced

the complainant to enter into negotiation and get

advance consideration money to them. The two-

Judge Bench referred to the judgment in State of

15

Page 16

Haryana v. Bhajan Lal4 wherein this Court has

enumerated certain categories of cases by way of

illustration wherein the extraordinary power under

Article 226 or the inherent powers under Section 482

of the CrPC could be exercised either to prevent

abuse of the process of the court or otherwise to

secure the ends of justice. The Bench also referred

to the decisions in Rupen Deol Bajaj (Mrs.) v.

Kanwar Pal Singh Gill5, Rajesh Bajaj v. State

NCT of Delhi6 and State of Kerala v. O.C. Kuttan7

wherein the principle laid down in Bhajan Lal

(supra) was reiterated. The Court posed the question

whether the case of the appellants therein came

under any of the categories enumerated in Bhajan

Lal (supra) and whether the allegations made in the

FIR or the complaint if accepted in entirety did make

out a case against the accused-appellants therein.

For the aforesaid purpose advertence was made to

offences alleged against the appellants, the

ingredients of the offences and the averments made 4 1992 Supp (1) SCC 335 5 AIR 1996 SC 309 6 (1999) 3 SCC 259 7 AIR 1999 SC 1044

16

Page 17

in the complaint. The Court took the view that main

offence alleged to have been committed by the

appellants is cheating punishable under Section 420

of the IPC. Scanning the definition of ‘cheating’ the

Court opined that there are two separate classes of

acts which the persons deceived may be induced to

do. In the first place he may be induced fraudulently

or dishonestly to deliver any property to any person.

The second class of acts set-forth in the section is the

doing or omitting to do anything which the person

deceived would not do or omit to do if he were not so

deceived. In the first class of cases the inducing

must be fraudulent or dishonest. In the second class

of acts, the inducing must be intentional but not

fraudulent or dishonest. Thereafter, the Bench

proceeded to state as follows: -

“16. In determining the question it has to be kept in mind that the distinction between mere breach of contract and the offence of cheating is a fine one. It depends upon the intention of the accused at the time of inducement which may be judged by his subsequent conduct but for this subsequent conduct is not the sole test. Mere breach of contract cannot give rise to criminal prosecution for cheating

17

Page 18

unless fraudulent or dishonest intention is shown right at the beginning of the transaction, that is the time when the offence is said to have been committed. Therefore, it is the intention which is the gist of the offence. To 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.”

15. After laying down the principle the Bench referred to

the complaint and opined that reading the averments

in the complaint in entirety and accepting the

allegations to be true, the ingredients of intentional

deception on the part of the accused right at the

beginning of the negotiations for the transaction had

neither been expressly stated nor indirectly

suggested in the complaint. All that the respondent

No. 2 had alleged against the appellants was that

they did not disclose to him that one of their brothers

had filed a partition suit which was pending. The

requirement that the information was not disclosed

by the appellants intentionally in order to make the

respondent No. 2 part with property was not alleged

18

Page 19

expressly or even impliedly in the complaint.

Therefore, the core postulate of dishonest intention

in order to deceive the complainant-respondent No. 2

was not made out even accepting all the averments

in the complaint on their face value and, accordingly,

ruled that in such a situation continuing the criminal

proceeding against the accused would be an abuse of

process of the Court.

16. From the aforesaid decision it is quite clear that this

Court recorded a finding that there was no averment

in the complaint that intention to deceive on the part

of the accused was absent right from the beginning

of the negotiation of the transaction as the said

allegation had neither been expressly made nor

indirectly suggested in the complaint. This Court

took note of the fact that only non-disclosure was

that one of their brothers had filed a partition suit

which was pending and the allegation that such a

disclosure was not made intentionally to deceive the

complainant was absent. It is worthy to note that

this Court referred to certain averments in the

19

Page 20

complaint petition and scrutinized the allegations and

recorded the aforesaid finding. The present case, as

we perceive, stands on a different factual matrix

altogether. The learned Sessions Judge has returned

a finding that there was intention to deceive from the

very beginning, namely, at the time of negotiation

but the High Court has dislodged the same on the

foundation that the respondent No. 2 was merely

present and there was no privity of contract between

the complainant and her. We will advert to the said

factual analysis at a later stage after discussing the

other authorities which have been placed reliance

upon by the learned senior counsel for the

respondents.

17. In Murari Lal Gupta (supra) a two-Judge Bench

quashed the criminal complaint instituted under

Sections 406 and 420 of the IPC on the following

analysis: -

“The complaint does not make any averment so as to infer any fraudulent or dishonest inducement having been made by the petitioner pursuant to which the respondent parted with the money. It is

20

Page 21

not the case of the respondent that the petitioner does not have the property or that the petitioner was not competent to enter into an agreement to sell or could not have transferred title in the property to the respondent. Merely because an agreement to sell was entered into which agreement the petitioner failed to honour, it cannot be said that the petitioner has cheated the respondent. No case for prosecution under Section 420 or Section 406 IPC is made out even prima facie. The complaint filed by the respondent and that too at Madhepura against the petitioner, who is a resident of Delhi, seems to be an attempt to pressurize the petitioner for coming to terms with the respondent.”

In our considered opinion the factual position in the

aforesaid case is demonstrably different and, hence, we

have no hesitation in stating that the said decision is not

applicable to the case at hand.

18. In B. Suresh Yadav (supra) the complainant, who

was defendant in the suit, had filed a written

statement from which it was manifest that she at all

material times was aware of the purported

demolition of the rooms standing on the suit

property. It was contended in the written statement

that the suit properties were different from the

subject-matter of the deed of sale. After filing the

21

Page 22

written statement the respondent had filed the

complaint under Section 420 of the IPC. The Court

took note of the fact that there existed a dispute as

to whether the property whereupon the said two

rooms were allegedly situated was the same property

forming the subject-matter of the deed of sale or not

and a civil suit had already been filed pertaining to

the said dispute. The Court also took note of the fact

that at the time of execution of the sale deed the

accused had not made any false or misleading

representation and there was no omission on his part

to do anything which he could have done. Under

these circumstances, the Court opined that the

dispute between the parties was basically a civil

dispute. It is apt to note here that the Court also

opined that when a stand had been taken in a

complaint petition which is contrary to or inconsistent

with the stand taken by him in a civil suit, the same

assumes significance and had there been an

allegation that the accused got the said two rooms

demolished and concealed the said fact at the time

22

Page 23

of execution of the deed of sale, the matter would

have been different. Being of this view, this Court

quashed the criminal proceeding as that did amount

to abuse of the process of the court. On an x-ray of

the factual score, it can safely be stated that the said

pronouncement renders no assistance to the lis in

question.

19. Before we proceed to scan and analyse the material

brought on record in the case at hand, it is seemly to

refer to certain authorities wherein the ingredients of

cheating have been highlighted. In State of Kerala

v. A. Pareed Pillai and another8, a two-Judge

Bench ruled that to hold a person guilty of the

offence of cheating, it has to be shown that his

intention was dishonest at the time of making the

promise and such a dishonest intention cannot be

inferred from a mere fact that he could not

subsequently fulfil the promise.

20. In G.V. Rao v. L.H.V. Prasad and others9, this

Court has held thus: -

8 AIR 1973 SC 326 9 (2000) 3 SCC 693

23

Page 24

“7. As mentioned above, Section 415 has two parts. While in the first part, the person must “dishonestly” or “fraudulently” induce the complainant to deliver any property; in the second part, the person should intentionally induce the complainant to do or omit to do a thing. That is to say, in the first part, inducement must be dishonest or fraudulent. In the second part, the inducement should be intentional. As observed by this Court in Jaswantrai Manilal Akhaney v. State of Bombay10 a guilty intention is an essential ingredient of the offence of cheating. In order, therefore, to secure conviction of a person for the offence of cheating, “mens rea” on the part of that person, must be established. It was also observed in Mahadeo Prasad v. State of W.B.11 that in order to constitute the offence of cheating, the intention to deceive should be in existence at the time when the inducement was offered.”

21. In S.N. Palanitkar and others v. State of Bihar

and another12, it has been laid down that in order

to constitute an offence of cheating, the intention to

deceive should be in existence at the time when the

inducement was made. It is necessary to show that

a person had fraudulent or dishonest intention at the

time of making the promise, to say that he

committed an act of cheating. A mere failure to 10 AIR 1956 SC 575 11 AIR 1954 SC 724 12 AIR 2001 SC 2960

24

Page 25

keep up promise subsequently cannot be presumed

as an act leading to cheating.

22. In the said case while dealing with the ingredients of

criminal breach of trust and cheating, the Bench observed

thus: -

“9. The ingredients in order to constitute a criminal breach of trust are: (i) entrusting a person with property or with any dominion over property (ii) that person entrusted (a) dishonestly misappropriating or converting that property to his own use; or (b) dishonestly using or disposing of that property or wilfully suffering any other person so to do in violation (i) of any direction of law prescribing the mode in which such trust is to be discharged, (ii) of any legal contract made, touching the discharge of such trust.

10. The ingredients of an offence of cheating are: (i) there should be fraudulent or dishonest inducement of a person by deceiving him, (ii)(a) the person so deceived should be induced to deliver any property to any person, or to consent that any person shall retain any property; or (b) the person so deceived should be intentionally induced to do or omit to do anything which he would not do or omit if he were not so deceived; and (iii) in cases covered by (ii)(b), the act of omission should be one which causes or is likely to cause damage or harm to the person induced in body, mind, reputation or property.”

25

Page 26

23. Coming to the facts of the present case, it is

luminicent from the FIR that the allegations against the

respondent No. 2 do not only pertain to her presence

but also about her total silence and connivance with

her husband and transfer of property using Power of

Attorney in favour of Monika Goel. It is also graphically

clear that the complainant had made allegations that

Raghuvinder Singh and his wife, Savita Singh, had met

him at the site, showed the registered agreement and

the cash and cheque were given to them at that time.

It is also mentioned in the FIR that on 28.7.2008, Savita

Singh had received the possession of the said plot and

on the same day it was transferred in the name of

Monika Goel. It is also reflectible that on 28.2.2007,

Raghuvinder Singh and Savita Singh had got prepared

and registered two documents in the office of the Sub-

Registrar consisting one agreement to sell in favour of

Raghuvinder Singh and another General Power of

Attorney in favour of the wife. The allegation of

collusion by the husband and wife has clearly been

stated. During the investigation, as has been stated

26

Page 27

earlier, many a fact emerged but the same were

ignored and a final report was submitted. In the

protest petition the complainant had asseverated

everything in detail about what emerged during the

course of investigation. The learned Chief Judicial

Magistrate after perusal of the case diary and the FIR

has expressed the view that a case under Sections 406

and 420 of the IPC had been made out against both the

accused persons. The learned Sessions Judge, after

referring to the ingredients and the role ascribed,

concurred with the same. The High Court declined to

accept the said analysis on the ground that it was mere

presence and further there was no privity of contract

between the complainant and the respondent No. 2.

24. At this stage, we may usefully note that some times

a case may apparently look to be of civil nature or may

involve a commercial transaction but such civil

disputes or commercial disputes in certain

circumstances may also contain ingredients of criminal

offences and such disputes have to be entertained

notwithstanding they are also civil disputes. In this

27

Page 28

context, we may reproduce a passage from

Mohammed Ibrahim and others v. State of Bihar

and another13: -

“8. This Court has time and again drawn attention to the growing tendency of the complainants attempting to give the cloak of a criminal offence to matters which are essentially and purely civil in nature, obviously either to apply pressure on the accused, or out of enmity towards the accused, or to subject the accused to harassment. Criminal courts should ensure that proceedings before it are not used for settling scores or to pressurize parties to settle civil disputes. But at the same time, it should be noted that several disputes of a civil nature may also contain the ingredients of criminal offences and if so, will have to be tried as criminal offences, even if they also amount to civil disputes. (See G. Sagar Suri v. State of U.P.14 and Indian Oil Corpn. v. NEPC India Ltd.15)”

25. In this context we may usefully refer to a paragraph

from All Cargo Movers (I) Pvt. Ltd. V. Dhanesh

Badarmal Jain & Anr.16

“…..Where a civil suit is pending and the complaint petition has been filed one year after filing of the civil suit, we may for the purpose of finding out as to whether the

13 (2009) 8 SCC 751 14 (2000) 2 SCC 636 15 (2006) 6 SCC 736 16 AIR 2008 SC 247

28

Page 29

said allegations are prima facie cannot notice the correspondence exchanged by the parties and other admitted documents. It is one thing to say that the Court at this juncture would not consider the defence of the accused but it is another thing to say that for exercising the inherent jurisdiction of this Court, it is impermissible also to look to the admitted documents. Criminal proceedings should not be encouraged, when it is found to be mala fide or otherwise an abuse of the process of the court. Superior Courts while exercising this power should also strive to serve the ends of justice.”

26. In Rajesh Bajaj v. State NCT of Delhi and

others17, while dealing with a case where the High

Court had quashed an F.I.R., this Court opined that the

facts narrated in the complaint petition may reveal a

commercial transaction or a money transaction, but

that is hardly a reason for holding that the offence of

cheating would elude from such a transaction.

Proceeding further, the Bench observed thus: -

“11. The crux of the postulate is the intention of the person who induces the victim of his representation and not the nature of the transaction which would become decisive in discerning whether there was commission of offence or not. The complainant has stated in the body of the complaint that he was induced to

17 AIR 1999 SC 1216

29

Page 30

believe that the respondent would honour payment on receipt of invoices, and that the complainant realised later that the intentions of the respondent were not clear. He also mentioned that the respondent after receiving the goods had sold them to others and still he did not pay the money. Such averments would prima facie make out a case for investigation by the authorities.”

27. We have referred to the aforesaid decisions in the

field to highlight about the role of the Court while

dealing with such issues. In our considered opinion the

present case falls in the category which cannot be

stated at this stage to be purely civil in nature on the

basis of the admitted documents or the allegations

made in the FIR or what has come out in the

investigation or for that matter what has been stated in

the protest petition. We are disposed to think that

prima facie there is allegation that there was a guilty

intention to induce the complainant to part with

money. We may hasten to clarify that it is not a case

where a promise initially made could not lived up to

subsequently. It is not a case where it could be said

that even if the allegations in entirety are accepted, no

case is made out. Needless to emphasise, the High

30

Page 31

Court, while exercising power under Article 226 of the

Constitution or Section 482 of the CrPC, has to adopt a

very cautious approach. In Central Bureau of

Investigation v. Ravi Shankar Srivastava, IAS and

another18, the Court, after referring to Janata Dal v.

H.S. Chowdhary19 and Raghubir Saran (Dr.) v.

State of Bihar20, has observed that the powers

possessed by the High Court under Section 482 of the

IPC are very wide and the very plentitude of the power

requires great caution in its exercise. The court must

be careful to see that its decision in exercise of this

power is based on sound principles and such inherent

powers should not be exercised to stifle a legitimate

prosecution. This Court has further stated that it is not

proper for the High Court to analyse the case of the

complainant in the light of all probabilities in order to

determine whether a conviction would be sustainable

and on such premises arrive at a conclusion that the

proceedings are to be quashed. It has been further

pronounced that it would be erroneous to assess the

18 (2006) 7 SCC 188 19 (1992) 4 SCC 305 20 AIR 1964 SC 1

31

Page 32

material before it and conclude that the complaint

could not be proceeded with. The Bench has opined

that the meticulous analysis of the case is not

necessary and the complaint has to be read as a whole

and if it appears that on consideration of the

allegations in the light of the statement made on oath

of the complainant that the ingredients of the offence

or offences are disclosed and there is no material to

show that the complaint is mala fide, frivolous or

vexatious, in that event there would be no justification

for interference by the High Court.

28. In R. Kalyani v. Janak C. Mehta and others21,

after referring to the decisions in Hamida v. Rashid22

and State of Orissa v. Saroj Kumar Sahoo23, this

Court eventually culled out the following propositions: -

“15. Propositions of law which emerge from the said decisions are:

a. The High Court ordinarily would not exercise its inherent jurisdiction to quash a criminal proceeding and, in particular, a first information report unless the allegations contained therein, even if given face value and taken to be

21 (2009) 1 SCC 516 22 (2008) 1 SCC 474 23 (2005) 13 SCC 540

32

Page 33

correct in their entirety, disclosed no cognizable offence.

b. For the said purpose the Court, save and except in very exceptional circumstances, would not look to any document relied upon by the defence.

c. Such a power should be exercised very sparingly. If the allegations made in the FIR disclose commission of an offence, the Court shall not go beyond the same and pass an order in favour of the accused to hold absence of any mens rea or actus reus.

d. If the allegation discloses a civil dispute, the same by itself may not be a ground to hold that the criminal proceedings should not be allowed to continue.”

29. It is worth noting that it was observed therein that

one of the paramount duties of the superior court is to

see that person who is absolutely innocent is not

subjected to prosecution and humiliation on the basis

of a false and wholly untenable complaint.

30. Recently in Gian Singh v. State of Punjab and

another24 a three-Judge Bench has observed that: -

“55. In the very nature of its constitution, it is the judicial obligation of the High Court to undo a wrong in course of administration of justice or to prevent continuation of unnecessary judicial

24 (2012) 10 SCC 303

33

Page 34

process. This is founded on the legal maxim quando lex aliquid alicui concedit, conceditur et id sine qua res ipsa esse non potest. The full import of which is whenever anything is authorised, and especially if, as a matter of duty, required to be done by law, it is found impossible to do that thing unless something else not authorised in express terms be also done, may also be done, then that something else will be supplied by necessary intendment. Ex debito justitiae is inbuilt in such exercise; the whole idea is to do real, complete and substantial justice for which it exists. The power possessed by the High Court under Section 482 of the Code is of wide amplitude but requires exercise with great caution and circumspection.”

31. Applying the aforesaid parameters we have no

hesitation in coming to hold that neither the FIR nor the

protest petition was mala fide, frivolous or vexatious. It

is also not a case where there is no substance in the

complaint. The manner in which the investigation was

conducted by the officer who eventually filed the final

report and the transfer of the investigation earlier to

another officer who had almost completed the

investigation and the entire case diary which has been

adverted to in detail in the protest petition prima facie

makes out a case against the husband and the wife

regarding collusion and the intention to cheat from the

34

Page 35

very beginning, inducing him to hand over a huge sum

of money to both of them. Their conduct of not stating

so many aspects, namely, the Power of Attorney

executed by the original owner, the will and also the

sale effected by the wife in the name of Monika Singh

on 28.7.2008 cannot be brushed aside at this stage.

Therefore, we are disposed to think that the High

Court, while exercising the extraordinary jurisdiction,

had not proceeded on the sound principles of law for

quashment of order taking cognizance. The High Court

and has been guided by the non-existence of privity of

contract and without appreciating the factual scenario

has observed that the wife was merely present. Be it

noted, if the wife had nothing to do with any of the

transactions with the original owner and was not aware

of the things, possibly the view of the High Court could

have gained acceptation, but when the wife had the

Power of Attorney in her favour and was aware of

execution of the will, had accepted the money along

with her husband from the complainant, it is extremely

difficulty to say that an innocent person is dragged to

35

Page 36

face a vexatious litigation or humiliation. The entire

conduct of the respondent Nos. 2 and 3 would show

that a prima facie case is made out and allegations are

there on record in this regard that they had the

intention to cheat from the stage of negotiation. That

being the position, the decision in Hridya Rajan Pd.

Verma & others (supra) which is commended to us by

Mr. Sharma, learned senior counsel, to which we have

adverted to earlier, does not really assist the

respondents and we say so after making the factual

analysis in detail.

32. In view of our aforesaid analysis we allow the appeal,

set aside the order passed by the High Court and direct

the Magistrate to proceed in accordance with law.

However, we may clarify that we may not be

understood to have expressed any opinion on the

merits of the case one way or the other and our

observations must be construed as limited to the order

taking cognizance and nothing more than that. The

learned Magistrate shall decide the case on its own

merit without being influenced by any of our

36

Page 37

observations as the same have been made only for the

purpose of holding that the order of cognizance is

prima facie valid and did not warrant interference by

the High Court.

……………………………….J. [K. S. Radhakrishnan]

……………………………….J. [Dipak Misra]

New Delhi; January 10, 2013

37

ARUN BHANDARI Vs STATE OF U.P..

ARUN BHANDARI Vs STATE OF U.P..