THE HONOURABLE SRI JUSTICE A.GOPAL REDDY Crl.P.No.7347/2007 Date of Order: 23-12-2010 Between: Vendoti Joshua ..Petitioner and 1.P.M.Subrahmanyam and another ..Respondents The Court made the following Order: THE HONOURABLE SRI JUSTICE A.GOPAL REDDY Crl.P.No.7347/2007 Oral order: This petition under Sec. 482 Cr.P.C., is filed to quash the proceedings initiated against the petitioner in CC No.663/2006 on the file of Chief Metropolitan Magistrate, Visakhapatnam for the offence punishable under Sec. 420 IPC. Sri C.Padmanabha Reddy, leaned Senior Counsel appearing for the petitioner-accused contends that before execution of the sale deed income tax clearance certificate under Section 230(A)(1) of the Income Tax Act, 1961 has been obtained by the petitioner-vendor disclosing the loan availed from the Life Insurance Corporation of India (LIC), but in the sale deed executed by the petitioner in favour of the daughter of the first respondent, he declared that the property conveyed is not subjected to any encumbrance, charge or attachment and the vendor shall indemnify the purchaser against all damages that may be caused, mere issuing notice by LIC to the daughter of the first respondent (purchaser) is not sufficient to establish that the petitioner cheated the purchaser with dishonest intention and executed the sale deed. Since there is no dishonest intention at the inception filing charge sheet for the alleged offence is an abuse of process of law and the same is liable to be quashed. Further, the purchaser ie., daughter of the first respondent-complainant has not been shown as prosecution witness and the first respondent, who is the father of the purchaser, cannot say that the petitioner-accused dishonestly induced and deceived her daughter to purchase the property. Per contra, Sri T. Pradyumna Kumar Reddy, learned counsel for the first respondent-complainant contends that informing the purchaser and executing the sale deed by mentioning that the property is not the subject matter of encumbrance, charge or attachment itself shows the dishonest intention at the inception when the sale deed was concluded. Subsequently, when the LIC has issued notice that the loan amount due, accused has not taken any steps and the property was attached under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as “the SARFAESI Act”) Admittedly, in the present case, the daughter of the first respondent-defacto complainant purchased the property from the petitioner-accused, which was the subject matter of mortgage with LIC. There is no mention in the sale deed about the encumbrance created on the property for availing loan from LIC by the petitioner-accused, but in the sale deed, it is categorically asserted in para 9 that the property conveyed is not subjected to any encumbrances, charge or attachment or lis pendens whatsoever and the vendor shall indemnify the purchaser against all damage that he may put to by reason of any encumbrance or reflect in title to the property conveyed. Remedy has been provided to claim damages on the basis of indemnity clause. No doubt, the petitioner made an application for a certificate under Sec. 230(A)(1) of the Income Tax Act,1961 for enabling him to sell the property to the Sethuraman Chitrabala for a consideration of Rs.7 lakhs and under column No.12-particulars of the source or sources from which the cost of acquisition or construction was met, salary savings was shown at Rs.3,68,570/- and LIC loan Rs.1,85,000/- , which do not indicate about the encumbrance continued as on the date when the application was considered or loan amount was discharged by the petitioner-accused. Had the petitioner made known to the respondent-purchaser that still amount is due to LIC, any prudent purchaser would not pay entire sale consideration and would pay only the balance sale consideration after paying the amount due to any financial institution. When the petitioner-accused categorically asserted that the property is not the subject matter of encumbrance, mere mentioning the indemnity clause itself is not sufficient to disown the criminal liability. Once the petitioner with a dishonest intention by suppressing the fact of availing loan with LIC and subsistence of loan amount as on the date of exaction of the sale deed induced the purchaser to part with the sale consideration, prima facie attracts an offence under Section 420 IPC. In view of the same, the complainant should be given an opportunity to establish that there was dishonest intention at the time of execution of sale deed by the petitioner/accused and acting on the said dishonest intention, she paid entire sale consideration and get the sale deed executed in her favour. The Criminal Petition is accordingly dismissed. _______________ A.GOPAL REDDY, J. Dt.23-12-2010 kmr