THE HONOURABLE SRI JUSTICE RAJA ELANGO CRIMINAL PETITION No.1003 of 2009 ORDER: The petitioners-Accused approach this Court with a prayer to quash the proceedings against them in C.C.No.1874 of 2008 on the file of the III Additional Chief Metropolitan Magistrate, Hyderabad, arising out of Crime No.316 of 2007 of Banjara Hills Police Station, Hyderabad, registered for the offence punishable under Sections 420 and 406 IPC. The brief facts of the case are as follows: The complainant submits that he entered into an Agreement of sale with the accused on 29.07.2006 for the purchase of a Flat in ‘Hill Ridge Project’ bearing Flat Nos.303 and 403(Duplex), D- South, Tower-III, situated at Kancha, Gachibowli, Hyderabad, for total sale consideration of Rs.64,40,000/- @ Rs.2,500/- per sq. feet of plinth area consisting of 2576 sq.ft. The complainant paid an amount of Rs.5,00,000/- as advance and earnest money to the accused through a cheque bearing No.239031 dated 29.07.2006 drawn on ICICI Bank Limited, Hyderabad, in respect of the said flats, the receipt of which sum the accused acknowledged vide Receipt No.IVRPUDL/3066, dated 31.07.2006 and the accused agreed to execute regular Sale Deed duly registered before the Registrar, Rangareddy District. The complainant submits that he having paid the advance amount has taken all steps as are required for the purpose of obtaining loan from ICICI bank and accordingly processed the application and secure a loan of Rs.75,00,000/- duly sanctioned by the said bank vide its Sanction letter dated 03.08.2006. Having obtained the sanction letter from the concerned ICICI bank, the complainant communicated the said fact to the accused requesting them to execute registered sale deed before the concerned Registrar, Rangareddy District. The complainant also agreed to pay the balance sale consideration and other miscellaneous expenses if any to the accused persons. The accused have agreed to adjust by way of substraction and addition to the cost of the construction of the flats to customized modifications. Subsequently, the complainant also contacted the accused for the said purpose of completing the modifications and that was duly done by the Project Engineer. The complainant further submits that he having paid the advance and having secured the loan informed the accused to execute regular Registered sale deed, but the accused by postponing the same on one pretext or the other and finally when the complainant contacted them personally on 01.11.2006, the accused gave evasive reply. The accused No.2 and 3 simply denied to execute the registered Sale Deed stating that there is a hike in the market and if they sell the said flats to some other person they would have got more money, and the accused demanded the complainant to pay more than the agreed sale price. The complainant vexed with the attitude of the accused got issued a legal notice dated 03.11.2006 calling upon the accused to execute registered Sale Deed in his favour and also to deliver the possession of the said flats within one week, the accused having received the said notice on 10.11.2006 gave a false reply on 16.11.2006 denying the complainant’s claim stating that the complainant never entered into an Agreement of Sale with the accused in respect of the said flats and there was no concluded contract between the complainant and the accused. They also replied that the deposit amount of Rs.5 lakhs paid by the complainant would not create a concluded contract. The reply of the accused persons clearly shows that the intention of them is to appropriate the amount of Rs.5,00,000/- paid by the complainant to them. Heard the learned counsel for the petitioners and the learned counsel for the respondents. Learned counsel for the petitioners submitted that originally a complaint was lodged by the de facto complainant before the police and the same was investigated by the concerned police. After due investigation, the same was referred as civil in nature. Aggrieved over the same, the de facto complainant – respondent herein filed a protest petition. On filing of such petition, the learned Magistrate examined the de facto complainant on his oath and recorded his statement. After recording the statement of the complainant, the learned Magistrate taken cognizance for the said offence. Learned counsel for the petitioners submitted that taking into consideration the entire allegations are true, the said allegations do not disclose any offence under Section 420 and 406 of IPC. From the brief facts of the case, it is seen that the complainant entered into an agreement with the accused for purchase of a flat by paying a sum of Rs.5,00,000/-. The same was acknowledged by the accused herein. Subsequently, when the complainant informed the accused herein to execute the sale deed in favour of the de facto complainant, they refused to do so. Further, learned counsel for the petitioners submitted even as per the plaintiff also, he stated that the agreement is oral. Learned counsel for the petitioners submitted that the petitioners are not disputing the fact that there was an oral agreement between them and the de facto complainant and also admitted that they received a sum of Rs.5,00,000/- as advance. But, subsequently due to some unavoidable circumstances, the petitioners are not in a position to execute a sale deed, which will not attract an offence either under Section 420 or 406 of IPC. Section 420 IPC definition runs as follows: “420. Cheating and dishonestly inducing delivery of property: Whoever cheats and thereby dishonestly induces the person deceived to deliver any property to any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and which is capable of being converted into a valuable security, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine.” The definition of Section 406 of IPC is also runs as follows: “406. Punishment for criminal breach of trust: Whoever commits criminal breach of trust shall be punished with imprisonment of either description for a term which may extend to three years, or with fine, or with both.” The complainant wants to rests the services of the said provisions of law for the above said facts of the case. Learned counsel for the petitioners in support of his contentions relied on a judgment of the Supreme Court reported in RAJESH BAJAJ v. STATE NCT OF DELHI AND OTHERS[1], wherein it is held at para 10, as follows: “It may be that the facts narrated in the present complaint would as well reveal a commercial transaction or money transaction. But tht is hardly a reason for holding that the offence of cheating would elude from such a transaction. In fact, many a cheatings were committed in the course of commercial and also money transactions. One of the illustrations set out under Section 415 of the Indian Penal Code is worthy of notice now: “Illustration f: A intentionally deceives Z into a belief that A means to repay any money that Z may lend to him and thereby dishonestly induces Z to lend him money, A not intending to repay it. A cheats.” The said proposition laid down by the Supreme Court is not squarely applicable to the present case. The entire facts of the case are totally different in nature. It is evident from the record that there is an agreement between the parties for sale of the flats and subsequently, the same was not materialized. Further, from the record it is seen a civil suit also filed by the de facto complainant for the purpose of specific performance to direct the petitioners herein to execute sale deed in favour of the de facto complainant. Further, the learned counsel for the petitioners submitted when the petitioners received a notice from the de facto complainant, they have replied properly and also annexed the cheque for the said sum of Rs.5,00,000/- received by the petitioners herein. In view of the above said facts, this Court is of the view to attract an offence under Section 420 IPC, there should be an intention of deception at the inception. Here in this case there is nothing to say that there is an intention on the part of the petitioners to commit the offence under Section 420 IPC. As far as Section 406 of IPC is concerned, the deposit of money by way of advance for purchase of the said flat will not amount to entrustment of money. The explanation given in Section 406 IPC clearly says that there should be an entrustment and there should be a misappropriation with dishonest intention. Here, even though an entrustment is there, but the said entrustment should be followed by a dishonest intention of confronting into its own use. In the present case there is no such elements to show that the act of the petitioners herein attract an offence of criminal breach of trust. In view of the same, the proceedings in C.C.No.1874 of 2008 pending on the file of the III Additional Chief Metropolitan Magistrate, Hyderabad, are liable to be quashed, since on the face of the record, no offence made out against the petitioners are concerned. In view of the same, the proceedings in C.C.No.1874 of 2008 are hereby quashed. ___________________ JUSTICE RAJA ELANGO Date: 29.07.2010 Rns [1] (1999) 3 Supreme Court Cases 259