THE HON’BLE SRI JUSTICE N.RAVI SHANKAR CRIMINAL PETITION No.3437 of 2011 ORDER:- In this petition filed under Section 482 of the Code of Criminal Procedure, 1973 (for short Cr.P.C) the three petitioners herein are seeking quashing of the FIR in Crime No.83 of 2011 of Kachiguda Police Station. They are A-1 to A-3 in the said crime and it has been registered on the complaint of the second respondent herein. The offences alleged are those punishable under Sections 420 and 406 IPC. 2. The first petitioner is a private limited company dealing in building activity and the second petitioner is its managing director and the third petitioner is husband of the second petitioner. The second respondent entered appearance and is contesting the matter and he also filed a petition Crl.M.P.No.5166 of 2011 for vacating the stay. Under an agreement of sale-cum-General Power of Attorney dated 22.08.2009 the first petitioner represented by the second petitioner agreed to sell a flat to the second respondent in an apartment complex proposed to be built by the first petitioner. The total cost of the flat as per agreement is Rs.33 lakhs and the second respondent paid an amount of Rs.10 lakhs towards advance and the balance of Rs.23 lakhs was payable at the time of delivery of the flat. Conditions 3 and 4 of the above agreement stipulate that the construction has to be completed and the flat delivered within 12 months and on failing to do so the first petitioner has to return the amount of Rs.10 lakhs with 2% interest per month with a goodwill of Rs.30,000/- per month. 3. It may then be noted that condition No.6 of the agreement says that if the builder/vendor gets a better offer than this sale consideration of Rs.33 lakhs within the above stipulated 12 months period, the first petitioner would have every right to sell the flat to the purchaser but the first petitioner has to return the amount of Rs.10 lakhs with interest and goodwill. It is seen that the above agreement and the terms thereof are not in dispute between parties. 4. The case of the de facto complainant is that the first petitioner and the second petitioner did not abide by the terms of the above agreement but they unscrupulously sold away the flat in question on 18.02.2010 to one Smt.K.Parvathi for a consideration of Rs.11 lakhs. It is the allegation of the second respondent that the first and second petitioners not only failed to complete construction of flat and deliver it within the 12 months period prescribed in the agreement but they also violated condition No.6 and sold away the flat without informing him and his consent for Rs.11,06,000/- which is far less than the consideration of Rs.33 lakhs for which he agreed to buy the flat and that therefore the first and second petitioners cheated him and they even failed to repay the amount of Rs.10 lakhs with interest and other sums and that consequently they are guilty of the offences punishable under Sections 420 and 406 IPC. It is stated that the third petitioner who is husband of the second petitioner also helped both the first and second petitioners in committing the above offences. The complaint with the above allegations given by the second respondent was referred by the IV Additional Chief Metropolitan Magistrate, Hyderabad, before whom it was filed, to the Kachiguda police station which has jurisdiction over the matter for investigation and report. The said case is pending investigation and at that stage the petitioners have filed this petition for quashing of the FIR in the said case. 5. Based on the above admitted facts relating to the agreement of sale the learned counsel for the petitioners contended that even if the allegations in the complaint/FIR are believed to be true they only disclose a breach of the agreement of sale for which a civil remedy lies to the second respondent and they do not disclose any criminal offence much less those falling under cheating and the criminal breach of trust viz., Section 420 and 406 IPC. He also pointed out that the second petitioner as managing director of the first petitioner company also sent a letter dated 01.04.2010 to the second respondent informing him that they received a better offer for the flat in question and they offered to return back the amount due to the second respondent but despite the same he did not turn up to receive the amount and therefore he cannot now complain criminal offences. Petitioners also filed a copy of the said letter and a copy of the certificate of posting dated 01.04.2010 showing that they despatched the original of the above letter through post to the second respondent. 6. On the other hand, the learned counsel for the second respondent pointed out that the sale deed copy filed by the petitioners themselves the original of which was executed in favour of the aforesaid third party i.e. Parvathi would itself show that it is dated 18.02.2010 which is much prior to 01.04.2010 and this itself shows that they have executed the above sale deed in favour of the third party in violation of condition No.6 of the agreement without settling the amount due to him and this itself constitutes cheating. He also pointed out that the second respondent did not receive the letter dated 01.04.2010 and petitioners invented that letter for the purpose of this quash petition and they also did not return the amount due to him till now and these acts constitute offences of cheating and criminal breach of trust. He lastly pointed out that police should in the above circumstances be allowed to investigate the matter regarding the offences and therefore this is not a fit case for quashing the case at the FIR stage itself. 7. It is settled position that every breach of an agreement or contract under which an advance amount is received by the promisor would not give rise to an offence of cheating falling under Section 420 IPC unless it is further shown that there was deception on the part of that party at the very inception or the stage of the execution of the agreement. This principle equally applies to the offence of criminal breach of trust (falling under Section 406 IPC) in respect of the advance amount received under such an agreement. 8. In the present case what should be noted is that under condition No.6 of the agreement of sale-cum-GPA dated 22.08.2009 between the parties the petitioners 1 and 2 can sell the flat in question to a third party if they get a better offer of more than Rs.33 lakhs agreed to be paid by the second respondent. Now the copy of the sale deed dated 18.02.2010 filed by the petitioners themselves would show that they agreed to sell the flat in question for Rs.11,06,000/- and this is far less than the sale consideration of Rs.33 lakhs agreed to be paid by the second respondent. The learned counsel for the petitioners to wriggle out of this situation submitted across the bar that the consideration is more than Rs.33 lakhs but he is not able to justify that in the arguments and it thus follows that petitioners can prima facie be said to have violated the condition No.6. 9. It should also be noted that the above condition No.6 in the agreement further stipulates that petitioners 1 and 2 should inform the second respondent about the better offer and they should sell the flat for that higher price only after settling the amounts due to the second respondent. Then condition No.7 of the agreement says that if the builder enters into any agreement with a third party without settlement of the dues payable to the second respondent that would attract criminal offences also. The petitioners relied upon a copy of the letter dated 01.04.2010 by which they are said to have intimated the second respondent about the better offer. The sale deed with the third party is dated 18.02.2010 whereas the intimation letter is dated 01.04.2010 and it therefore follows that petitioners 1 and 2 even according to their version sent the intimation after executing the sale deed in favour of the third party on 18.02.2010 i.e. roughly one month 12 days after the sale deed. 10. It may be that the sale deed was subsequently registered after 01.04.2010 but according to the law of registration the sale deed begins to operate from 18.02.2010 itself on which date it was executed. Thus what emerges is that petitioners violated condition No.6 by selling the flat for a lesser consideration which was agreed to be paid by the second respondent and they did it without informing the second respondent. These are two minus points weighing against the petitioners 1 and 2. Of-course one argument is whether any builder would sell the flat for a lesser consideration than the one offered by a person in the position of the second respondent but it is not explained why petitioners 1 and 2 have done so. Not only this, the petitioners 1 and 2 failed to refund the amount. Normally in a case like this the persons in the position of the petitioners are expected to send the intimation or notice prior to 18.02.2010 which is the date of the sale deed in favour of the third party but they did not do so but they sold the flat to the third party for a lesser consideration and they are said to have given intimation by post after 18.02.2010. 11. The above factual position would prima facie show that this is a case where the matter requires further investigation to ascertain whether the petitioners 1 and 2 had an intention to deceive the second respondent right from the beginning when they entered into the agreement in question and further find out why they acted in the manner they acted and whether there was any element of deception coupled with an intention to commit breach of trust. Thus it can be said that this is not a case where even if the allegations are believed in the above fact situation they do not disclose the offences of cheating or criminal breach of trust. The police/the concerned investigating officer can ascertain all these aspects in the investigation to find out whether the dispute is of a civil nature or petitioners 1 and 2 have any criminal intention. Thus the pleas raised on behalf of petitioners 1 and 2 for quashing the FIR cannot be accepted. 12. Then coming to the case of the third petitioner, he is the husband of the second petitioner who is the managing director of the first petitioner company. The second respondent’s version is that he is the man behind this building activity and he is carrying on the business. It is also the version of the second respondent that at the time of entering into the agreement of sale-cum-GPA this third petitioner also came with his wife and requested him to enter into the agreement and that he also signed the agreement as a witness. In the above circumstances it follows that the conduct of this third petitioner should also be subjected to investigation. 13. Accordingly for the aforesaid reasons it follows that there are no grounds to quash the FIR and this petition is accordingly dismissed. 14. It is made clear that all the facts emanating from the agreement of sale, the pleadings of the parties and the date of the sale deed in favour of the third party and the date of the intimation said to have been given by the second petitioner to the second respondent are stated only for the purpose of ascertaining whether there is a ground for quashing the FIR and it is held that there is no such ground. It may be noted that ultimately whether petitioners have committed any offences or not and whether the matter involves only a civil dispute is ultimately for the police to decide in the course of investigation. Hence police are directed to investigate the matter without being influenced in any manner by this order. Regarding the necessity for the arrest of the petitioners the police may decide that aspect also keeping in view Section 41 of Cr.P.C as it stands today. _____________________ N.RAVI SHANKAR, J 7th July 2011 CVRK