PRITI SARAF & ANR. versus STATE OF NCT OF DELHI & ANR.
[2021] 2 S.C.R. 577, Supreme Court of India, 2021
Outcome: Appeal(s) allowed (Granted)
Segment: Ratio
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PRITI SARAF & ANR.
v.
STATE OF NCT OF DELHI & ANR.
(Criminal Appeal No. 296 of 2021)
MARCH 10, 2021
[INDU MALHOTRA AND AJAY RASTOGI, JJ.]
Code of Criminal Procedure, 1973 – s.482 – Scope and ambit
of – Commercial transaction – FIR against respondent no.2 and
one more person u/ss.420, 406 and 34 IPC – High Court quashed
all the criminal proceedings – On appeal, held: To exercise powers
u/s.482, the complaint in its entirety shall have to be examined on
the basis of the allegation made in the complaint/FIR/charge-sheet
– At that stage, High Court not under an obligation to go into the
matter or examine its correctness – Whatever appears on the face
of the complaint/FIR/charge-sheet shall be taken into consideration
without any critical examination of the same – In the present case,
ingredients of the offences u/ss. 406 and 420, IPC cannot be said
to be absent on the basis of the allegations in the complaint/FIR/
charge-sheet – Sufficient material available to connect respondent
no.2 in the commission of crime – High Court not justified in
quashing the criminal proceedings – Penal Code, 1860- ss.420,
406 & 34.
Allowing the appeals, the Court
Held: 1.1 To exercise powers under Section 482 CrPC,
the complaint in its entirety shall have to be examined on the
basis of the allegation made in the complaint/FIR/charge-sheet
and the High Court at that stage was not under an obligation to
go into the matter or examine its correctness. Whatever appears
on the face of
the complaint/FIR/charge-sheet shall be taken into
consideration without any critical examination of the same. The
offence ought to appear ex facie on the complaint/FIR/charge-
sheet and other documentary evidence, if any, on record. [Para
23][588-D-E]
1.2 The exercise of inherent power of the High Court is an
extraordinary power which has to be exercised with great care
[2021] 2 S.C.R. 577
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and circumspection before embarking to scrutinise the complaint/
FIR/charge-sheet in deciding whether the case is the rarest of
rare case, to scuttle the prosecution at its inception. Whether
the allegations in the complaint were true is to be decided on the
basis of the evidence led at the stage of trial. [Paras 28, 30][590-
F-G; 591-C]
Nagpur Steel & Alloys Pvt. Ltd. v. P. Radhakrishna and
Others 1997 SCC(Cri) 1073 – relied on.
1.3 In the matter of exercise of inherent power by the High
Court, the only requirement is to see whether continuance of the
proceedings would be a total abuse of the process of the Court.
The Criminal Procedure Code contains a detailed procedure for
investigation, framing of charge and trial, and in the event when
the High Court is desirous of putting a halt to the known
procedure of law, it must use proper circumspection with great
care and caution to interfere in the complaint/FIR/charge-sheet
in exercise of its inherent jurisdiction. In the instant case, on a
careful reading of the complaint/FIR/charge-sheet, it cannot be
said that the complaint does not disclose the commission of an
offence. The ingredients of the offences under Sections 406 and
420 IPC cannot be said to be absent on the basis of the allegations
in the complaint/FIR/charge-sheet. Whether the allegations in
the complaint are otherwise correct or not, has to be decided on
the basis of the evidence to be led during the
course of trial.
Simply because there is a remedy provided for breach of contract
or arbitral proceedings initiated at the instance of the appellants,
that does not by itself clothe the court to come to a conclusion
that civil remedy is the only remedy, and the initiation of criminal
proceedings, in any manner, will be an abuse of the process of
the court for exercising inherent powers of the High Court under
Section 482 CrPC for quashing such proceedings. This Court
has perused the pleadings of the parties, the complaint/FIR/
charge-sheet and orders of the Courts below and have taken into
consideration the material on record. The issue involved in the
matter under consideration is not a case in which the criminal
trial should have been short-circuited. The High Court was not
justified in quashing the criminal proceedings in exercise of its
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inherent jurisdiction. The High Court has primarily adverted on
two circumstances, (i) that it was a case of termination of
agreement to sell on account of an alleged breach of the contract
and (ii) the fact that the arbitral proceedings have been initiated
at the instance of the appellants. Both the alleged circumstances
noticed by the High Court are unsustainable in law. The facts
narrated in the present complaint/FIR/charge-sheet indeed reveal
the commercial transaction but that is hardly a reason for holding
that the offence of cheating would elude from such transaction.
In fact, many a times, offence of cheating is committed in the
course of commercial transactions and the illustrations have been
set out under Sections 415, 418 and 420 IPC. So far as initiation
of arbitral proceedings is concerned, there is no correlation with
the criminal proceedings. That apart, the High Court has not even
looked into the charge-sheet filed against 2nd respondent which
was on record to reach at the conclusion that any criminal offence
as stated is prima facie being made out and veracity of it indeed
be examined in the course of criminal trial. [Paras 31-34][591-G-
H; 592-A-C; 592-D-G; 593-C-D]
Trisuns Chemical Industry v. Rajesh Agarwal and Ors.
(1999) 8 SCC 686 : [1999] 2 Suppl. SCR 686 – relied
on.
1.4 There was sufficient material available as manifests from
the record of criminal proceedings to connect the 2nd respondent
in the commission of crime. The judgment
of the High Court
impugned dated 15th March, 2019 is hereby set aside. [Paras
36, 38][593-G-H; 594-C]
State of Haryana and Ors. v. Bhajan Lal and Others
(1992) Suppl 1 SCC 335 : [1990] 3 Suppl. SCR 259 –
relied on.
R.P. Kapur v. State of Punjab [1960] 3 SCR 388; M.
Krishnan v. Vijay Singh & Anr. (2001) 8 SCC 645 :
[2001] 4 Suppl. SCR 45; Joseph Salvaraj A. v. State of
Gujarat and Ors. (2011) 7 SCC 59 : [2011] 8 SCR 815;
Arun Bhandari v. State of Uttar Pradesh and Ors. (2013)
2 SCC 801 : [2013] 3 SCR 961; Anand Kumar Mohatta
and Anr. v. State (NCT of Delhi), Department of Home
and Anr. (2019) 11 SCC 706 : [2018] 13 SCR 1028;
PRITI SARAF & ANR. v. STATE OF NCT OF DELHI & ANR.
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Rajabhai Abdul Rehman Munshi v. Vasudev Dhanjibhai
Mody [1964] 3 SCR 480; G. Narayanaswamy Reddy
(Dead) by LRs. & Anr. v. Govt. of Karnataka and Anr.
(1991) 3 SCC 261 : [1991] 2 SCR 563; G. Sagar Suri
& Anr. v. State of U.P. and Ors. (2000) 2 SCC 636 :
[2000] 1 SCR 417; Murari Lal Gupta v. Gopi Singh
(2005) 13 SCC 699; Indian Oil Corporation v. NEPC
India Ltd. and Ors. (2006) 6 SCC 736 : [2006] 3 Suppl.
SCR 704; Harmanpreet Singh Ahluwalia and Ors. v.
State of Punjab and Ors. (2009) 7 SCC 712 : [2009] 7
SCR 563; Chandran Ratnaswami v. K.C. Palanisamy
and Ors. (2013) 6 SCC 740 : [2013] 17 SCR 853; VESA
Holdings Private Limited and Anr. v. State of Kerala &
Ors. (2015) 8 SCC 293 : [2015] 4 SCR 27; K. Subba
Rao and Ors. v. State of Telangana Rep. by its Secretary,
Department of Home & Ors. (2018) 14 SCC 452; Arnab
Manoranjan Goswami v. State of Maharashtra and
Others 2020 SCC Online SC 964 – referred to.
Case Law Reference
[1960] 3 SCR 388
referred to
para 14
[1990] 3 Suppl. SCR 259
relied on
para 14
[1999] 2 Suppl. SCR 686
relied on
para 14
[2001] 4 Suppl. SCR 45
referred to
para 14
[2011] 8 SCR 815
referred to
para 14
[2013] 3 SCR 961
referred to
para 14
[2018] 13 SCR 1028
referred to
para 14
[1964] 3 SCR 480
referred to
para 20
[1991] 2 SCR 563
referred to
para 20
[2000] 1 SCR 417
referred to
para 20
(2005) 13 SCC 699
referred to
para 20
[2006] 3 Suppl. SCR 704
referred to
para 20
[2009] 7 SCR 563
referred to
para 20
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[2013] 17 SCR 853
referred to
para 20
[2015] 4 SCR 27
referred to
para 20
(2018) 14 SCC 452
referred to
para 20
1997 SCC(Cri) 1073
relied on
para 27
CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No.
296 of 2021
From the Judgment and Order dated 15.3.2019 of the High Court
of Delhi at New Delhi in Crl.Misc.(Main) No. 1718 of 2017.
Mukul Rohatgi, Sr. Adv., Ms. Nupur Kumar, Hemant Manjani,
M. Thangathurai, Sunil Fernandes, Ms. Nupur Kumar, Darpan Sachdeva,
Prastut Dalvi, Shubham Sharma, Advs. for the Appellants.
Ms. Aishwarya Bhati, ASG., P. Chidambaram, Vikas Singh, Sr.
Advs., Ms. Vijayshree Pattnaik, Ms. Rekha Pandey, Ms. Sansriti Pathak,
Ms. Ameyavikrama Thanvi, B. V. Balaram Das, Ankur Chawla, Abhishek
Puri, Ms. Aruna Gupta, Rohit Ranjan, Rakesh Kumar, Manish Kumar,
R. K. Mohit Gupta, Vinay Juneja, Advs. for the Respondents.
The Judgment of the Court was delivered by
RASTOGI, J.
1. Leave granted.
2. The appellants who are the de-facto complainants in FIR No.
132/2017 dated 28th April, 2017 are questioning the order of the High
Court dated 15th March, 2019 passed in Criminal Miscellaneous Case
Nos. 1718/2017 and 7009/2017 whereby the learned Single Judge in
exercise of its jurisdiction under Section 482 of the Code of Criminal
Procedure(hereinafter being referred to as “CrPC”) taking cognizance
for the offence under Sections 420, 406 and 34 IPC quashed the orders
and set aside the criminal proceedings against 2nd respondent on the
foundation that the
allegations made in the complaint/FIR does not
constitute offences under aforestated sections.
Brief facts of the case
3. The factual matrix of the matter as reflected from the complaint
as alleged are that the subject property in question, i.e., 37, Friends
Colony(East), New Delhi is in the ownership of 2nd respondent. The
said property was mortgaged with State Bank of Patiala and the total
PRITI SARAF & ANR. v. STATE OF NCT OF DELHI & ANR.
[AJAY RASTOGI, J.]
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legal liability payable to the Bank was Rs. 18 crores. That in order to
clear the said dues, 2nd respondent hatched a conspiracy with broker
Ashok Kumar so as to cheat and defraud the appellants/complainants
and to further misappropriate the amounts paid by the complainants as
part of the deal, the 2nd respondent breached the trust of the appellants/
complainants deliberately and falsely stating to the appellants/
complainants that the 2nd respondent would be liable to pay a sum of Rs.
25.50 crores to the complainant if the deal is not carried forward by the
2nd respondent. Keeping in view the overall scenario, agreement to sell
was executed on 24th December, 2011 between the 2nd respondent and
the 1st appellant. The 2nd respondent agreed to sell 1205.43 sq yds. of
the property in question for a total sale consideration of Rs. 63,28,50,750/
-. At the time of execution, 1st appellant paid a sum of Rs. 12.50 crores
vide cheque dated 24th December, 2011 drawn on HDFC Bank, New
Friends Colony, Delhi. As per clause 3 of the said agreement to sell, 2nd
respondent had to perform and complete three requirements which were
compulsory in nature. The said requirements were to be completed by
the 2nd respondent latest by 24th March, 2012 before any further amount
is to be received by her from the 1st appellant/complainant.
4. It was further alleged in the complaint that the three
requirements in terms of clause 3 of the agreement
to sell were not
fulfilled by the 2nd respondent and even after there being a delay in
obtaining sanction plans, still the 1st appellant on demand made a payment
of Rs. 5.40 crores by a cheque dated 23rd May, 2012 and to show her
bonafides, the 2nd respondent handed over post-dated cheques worth
Rs. 25.50 crores towards security for performance of agreement dated
24th December 2011. After the amount was received from the 1st
appellant/complainant, 2nd respondent immediately cleared her outstanding
legal liability of State Bank of Patiala and obtained NOC from the bank,
however, the fact of obtaining NOC was never divulged by the 2nd
respondent to the complainants deliberately. This fact for the first time
was disclosed by the 2nd respondent at the stage when post-dated cheques
of Rs.25.50 crores handed over as security to the complainant were
rendered invalid.
5. The intention of the 2nd respondent from the very inception to
cheat and deceive the complainants/appellants is made out from the fact
that the 2nd respondent had to complete the compulsory requirement on
or before 24th March, 2012 but the first two requirements were completed
on 11th May, 2012 and 2nd June, 2012 respectively and the third
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requirement was still not complete. At this stage, just to cheat the 1st
appellant/complainant, 2nd respondent illegally terminated the agreement
to sell vide communication dated 30th January, 2013. The 1st appellant
had tried her level best to get the matter settled but, the modus operandi
of the 2nd respondent was to cheat from the very inception when the
agreement to sell was executed, nothing materialised.
6. In this regard, a private complaint was filed under Section 200
read with Section 190 CrPC on 23rd September, 2015 before the learned
Magistrate for taking cognizance of the offence committed by the 2nd
respondent before Saket Court, Delhi wherein it was directed to the
concerned Police Station to register the FIR under Section 156(3) CrPC
vide Order dated 15th November, 2016 that came to be challenged by
the 2nd respondent by filing of a criminal revision but that came to be
dismissed by the ASJ & Special Judge(NDPS), South East, Saket Courts,
New Delhi vide Order dated 26th April, 2017 and thereafter FIR under
Section 156(3) CrPC came to be registered against the 2nd respondent
and the broker Mr. Ashok Kumar under Sections 420, 406 and 34 IPC
on 28th April, 2017.
7. The Investigation Officer conducted investigation and filed
charge-sheet dated 5th October, 2018 under Sections 420, 406 and 34
IPC. It reveals from the charge-sheet that the property in question, i.e.
1205.43 sq. yds was alleged to be sub-divided whereas the subject
property, i.e.
Plot No. 37 is admeasuring 3930 sq. yds. and sub-division
of the plot is not permitted to be sanctioned as per Clause 4.4.3(IV) of
the Master Plan Delhi, 2021. It also reveals from the charge-sheet that
prior to the present transaction which was executed pursuant to
agreement to sell dated 24th December, 2011, 2nd respondent under the
same modus operandi earlier in reference to self-same subject property
forfeited in the year 2007 a sum of Rs.18 crores from M/s. Shinestar
Buildcon Private Ltd. It further reveals that 2nd respondent never got
the site plan sanctioned for appellants nor the bifurcated & demarcated
area knowingly because of her malafide intentions. The role of husband
of 2nd respondent as a suspect is under pending investigation under Section
173(8) CrPC and if adverse material comes on record, the supplementary
charge-sheet may be filed against S.C. Goyal(husband of 2nd respondent)
at a later stage.
8. The 2nd respondent challenged the orders dated 15th November,
2016 and 26th April, 2017 passed in revision petition filed at her instance
before the High Court under Section 482 CrPC.
PRITI SARAF & ANR. v. STATE OF NCT OF DELHI & ANR.
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9. It reveals from the record that after this fact was brought to
the notice of the learned Judge of the High Court that the charge-sheet
has been filed, the learned Judge directed the Public Prosecutor by Order
dated 9th October, 2018 to place the charge-sheet on record. Even after
the charge-sheet came to be filed by the Public Prosecutor in compliance
of the Order of the Court, the learned Judge of the High Court while
noticing the facts has only taken note of the agreement to sell dated 24th
December, 2011, notice of termination dated 30th January, 2013 and
without examining the bare facts on record, what being transpired in the
complaint and so also during the investigation reflected from the charge-
sheet filed before the trial Court and which was part of the record still
proceeded on the premise and observed that the case is of a simple
breach of contract, which gives rise to purely civil dispute and cannot be
converted into a criminal offence, more so, when the arbitral proceedings
have been initiated, in the given circumstances, held that if such civil
disputes as alleged are being permitted to be prosecuted in the criminal
proceedings, this according to the learned Judge, would be a sheer abuse
of the process of the Court. In consequence thereof, quashed all the
criminal proceedings and the orders under challenge therein dated 15th
November, 2016 and 24th April, 2017 and further observed that the
observations made shall not be construed to be expression on merits, in
the arbitration proceedings by impugned judgment dated 15th March, 2019.
10. We have heard Mr. Mukul Rohatgi, learned senior counsel for
the appellants, Mr. P. Chidambaram, learned senior counsel for 2nd
respondent and Ms. Aishwarya Bhati, learned Additional Solicitor General
for the State.
11. Mr. Mukul Rohatgi, learned senior counsel for the appellants
submitted that the charge-sheet filed by the Investigating Officer on 5th
October, 2018 discloses that the offence under Sections 406, 420 and 34
IPC has been committed by the 2nd respondent and pursuant to the order
of the learned Judge of the High Court dated 9th October, 2018, copy of
the charge-sheet was placed on record still no reference of the charge-
sheet has been made by the learned Judge in the impugned judgment
while quashing the criminal proceedings.
12. Learned counsel further submits that the exercise of inherent
power of the High Court under Section 482 CrPC is an exceptional one.
Great care should be taken by the High Court before embarking to
scrutinise the complaint/FIR/charge-sheet in deciding whether the rarest
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of the rare case is made out to scuttle the prosecution in its inception. It
was expected from the High Court to prima facie consider the complaint,
charge-sheet and the statement of witness recorded in support thereof
which was recorded by the Investigating Officer in arriving at a conclusion
whether court could take cognizance of the offence, on that evidence
and proceed further with the trial. If it reaches a conclusion that no
cognizable offence is made out, no further act could be done except to
quash the FIR/charge-sheet. But only in exceptional cases, i.e., in rarest
of rare cases of mala fide initiation of the proceedings to wreak private
vengeance process is availed of in laying a complaint or FIR itself does
not disclose any cognizable offence.
13. Learned counsel submits that the High Court has committed a
manifest error in ignoring the material facts on record which make the
orders sensitively susceptible and further submits that the learned
Additional Sessions Judge had considered the entire gamut of facts and
appositely opined that the order taking cognizance could not be flawed
but the High Court has completely erred in its conclusion and has not
even looked into the bare facts available on record and has proceeded
on a premise that in case where there is an agreement to sell and its
subsequent termination for its alleged breach, such disputes are civil
disputes and more so where the arbitral proceedings are pending, criminal
proceedings
will be an abuse of the process of the Court, in the given
circumstances, what has been made to be a basis by the learned Judge
is unsustainable in law and hence the order deserves to be set aside.
14. In support of his submissions, learned counsel has placed
reliance on the judgments of this Court in R.P. Kapur Vs. State of
Punjab1; State of Haryana and Ors. Vs. Bhajan Lal and Others2;
Trisuns Chemical Industry Vs. Rajesh Agarwal and Ors.3; M.
Krishnan Vs. Vijay Singh & Anr.4; Joseph Salvaraj A. Vs. State of
Gujarat and Ors.5; Arun Bhandari Vs. State of Uttar Pradesh and
Ors.6; Anand Kumar Mohatta and Anr. Vs. State (NCT of Delhi),
Department of Home and Anr.7.
1 1960 (3) SCR 388
2 1992 Suppl (1) SCC 335
3 1999 (8) SCC 686
4 2001 (8) SCC 645
5 2011 (7) SCC 59
6 2013 (2) SCC 801
7 2019 (11) SCC 706
PRITI SARAF & ANR. v. STATE OF NCT OF DELHI & ANR.
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15. Per contra, Mr. P. Chidambaram, learned senior counsel for
2nd respondent submits that agreement to sell dated 24th December,
2011 discloses all the facts about the ownership of the property, property
being mortgaged with the State Bank of Patiala and after the payment,
property to be redeemed after obtaining the original papers and no
objection certificate from the Bank, thereafter further procedure to be
carried out by the parties as per the terms and conditions of the agreement
to sell dated 24th December, 2011. When the appellant failed to carry out
its obligation in compliance of the terms and conditions of the agreement
to sell,the agreement to sell was terminated by letter dated 30th January,
2013 and that empowers the 2nd respondent to forfeit the earnest money
which was deposited in terms of the agreement and it was purely a civil
dispute and as their being a clause of arbitration, arbitral proceedings
were initiated at the instance of the 1st appellant and although during
pendency of the proceedings in the Court, learned Arbitrator has passed
an award dated 8thMay, 2020 which has been challenged by the 2nd
respondent under Section 34 of the Arbitration and Conciliation Act,
1996 which is pending before the High Court of Delhi.
16. Learned counsel further submits that parties have entered
into an agreement to sell that does not amount to an offence under Section
420 IPC. Neither the complaint which was
initially instituted at the instance
of the appellants nor the charge-sheet dated 5th October, 2018 which
was later filed although remain unnoticed by the High Court in the
impugned judgment nowhere reveals even a prima facie case of a criminal
offence being committed by the 2nd respondent under Sections 420, 406
and 34 IPC and if the parties have entered into an agreement to sell
which is purely a commercial transaction, and if there is a breach of the
terms of agreement to sell, the party to the agreement in consequence
was justified to forfeit the earnest money, it is simply a civil dispute. As
there was a demand to refund the forfeited amount failing which FIR
was registered to set the criminal law into motion obviously to settle the
scores giving the colour of criminal proceedings which is impermissible
and this what has been observed by the High Court in the impugned
judgment supported by the factual matrix on record.
17. Learned counsel further submits that the present case is of
civil dispute as earnest money was forfeited by the 2nd respondent when
the 1st appellant was not ready to fulfil and perform the terms and
conditions of agreement to sell dated 24th December, 2011 and after the
arbitral proceedings were initiated, criminal proceedings were initiated
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just to harass the respondent with criminal charge under Sections 420,
406 and 34 IPC and further submits that no offence under Section 406 is
made out as the earnest money was paid in terms of the contract and
there was no restriction in the agreement as to how this money was to
be utilised therefore, there is no misappropriation.
18. Learned counsel further submits that the appellant has not
come with clean hands and she has suppressed the fact that she did not
receive the letter dated 28th February, 2012 sent by 2nd respondent. To
the contrary, there is sufficient documentary evidence, as well as his/her
admission to this effect by the 1st appellant, which would show that she
had received the said letter. Since she did not respond to the letter dated
28th December, 2012, it was observed that she was not ready to perform
her obligations in terms of the contract and consequently, the 2nd
respondent was well within her rights to terminate the contract by letter
dated 30th January, 2013.
19. Learned counsel has further tried to justify that all the three
conditions of clause 3 of agreement hammered by the appellants were
fulfilled, and there is documentary evidence placed on record in support
thereof in the counter affidavit.
20. Learned counsel for the 2nd respondent has also placed reliance
on various judgments of this Court which lays down the basic principles
under which inherent powers under Section 482 CrPC to be exercised
by the High Court and has
set aside the criminal proceedings observing
that when there are civil disputes, the initiation of criminal proceedings
would be abuse of the process of the Court and placed reliance on the
judgments in Rajabhai Abdul Rehman Munshi Vs. Vasudev Dhanjibhai
Mody8; G. Narayanaswamy Reddy (Dead) by LRs. & Anr. Vs. Govt.
of Karnataka and Anr.9; G. Sagar Suri & Anr. Vs. State of U.P. and
Ors.10; Murari Lal Gupta Vs. Gopi Singh11; Indian Oil Corporation
Vs. NEPC India Ltd. and Ors.12; Harmanpreet Singh Ahluwalia
and Ors. Vs. State of Punjab and Ors.13; Joseph Salvaraj A. Vs.
State of Gujarat and Ors.14; Chandran Ratnaswami Vs. K.C.
8 1964 (3) SCR 480
9 1991 (3) SCC 261
10 2000 (2) SCC 636
11 2005 (13) SCC 699
12 2006 (6) SCC 736
13 2009 (7) SCC 712
14 2011 (7) SCC 59
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Palanisamy and Ors.15; VESA Holdings Private Limited and Anr.
Vs. State of Kerala & Ors.16; K. Subba Rao and Ors. Vs. State of
Telangana Rep. by its Secretary, Department of Home & Ors.17.
21. Learned counsel has further submitted in his written submissions
that the High Court indeed has not referred to the charge-sheet of which
a reference has been made, this Court if considers it appropriate, in the
facts and circumstances, may remit the matter back to the High Court
for fresh consideration. It would be unjust if the 2nd respondent was
compelled to face criminal prosecution on the ground that the High Court
had not looked into the material available on record.
22. After the conclusion of the submissions, an IA has been filed
at the instance of the 2nd respondent for initiating proceedings under
Section 340 read with Section 195 CrPC, in which it has been alleged
that the appellants have not only concealed the documents but has made
false statement and it has been prayed that proceedings under Section
340 CrPC may be initiated against the appellants.
23. It being a settled principle of law that to exercise powers
under Section 482 CrPC, the complaint in its entirety shall have to be
examined on the basis of the allegation made in the complaint/FIR/charge-
sheet and the High Court at that stage was not under an obligation to go
into the matter or examine its correctness. Whatever appears on the
face of the
complaint/FIR/charge-sheet shall be taken into consideration
without any critical examination of the same. The offence ought to appear
ex facie on the complaint/FIR/charge-sheet and other documentary
evidence, if any, on record.
24. The question which is raised for consideration is that in what
circumstances and categories of cases, a criminal proceeding may be
quashed either in exercise of the extraordinary powers of the High Court
under Article 226 of the Constitution, or in the exercise of the inherent
powers of the High Court under Section 482 CrPC. This has often been
hotly debated before this Court and various High Courts. Though in a
series of decisions, this question has been answered on several occasions
by this Court, yet the same still comes up for consideration and is seriously
debated.
15 2013 (6) SCC 740
16 2015 (8) SCC 293
17 2018 (14) SCC 452
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25. In this backdrop, the scope and ambit of the inherent jurisdiction
of the High Court under Section 482 CrPC has been examined in the
judgment of this Court in State of Haryana and Others Vs. Bhajan
Lal and Others(supra). The relevant para is mentioned hereunder:-
“102. In the backdrop of the interpretation of the various relevant
provisions of the Code under Chapter XIV and of the principles
of law enunciated by this Court in a series of decisions relating to
the exercise of the extraordinary power under Article 226 or the
inherent powers under Section 482 of the Code which we have
extracted and reproduced above, we give the following categories
of cases by way of illustration wherein such power could be
exercised either to prevent abuse of the process of any court or
otherwise to secure the ends of justice, though it may not be possible
to lay down any precise, clearly defined and sufficiently
channelised and inflexible guidelines or rigid formulae and to give
an exhaustive list of myriad kinds of cases wherein such power
should be exercised.
(1)
Where the allegations made in the first information report or
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 a case against the accused.
(2)
Where the allegations in the first information report and other
materials, if any, accompanying the FIR do not disclose a
cognizable offence, justifying an investigation by
police
officers under Section 156(1) of the Code except under an
order of a Magistrate within the purview of Section 155(2)
of the Code.
(3)
Where the uncontroverted allegations made in the FIR or
complaint and the evidence collected in support of the same
do not disclose the commission of any offence and make out
a case against the accused.
(4)
Where, the allegations in the FIR do not constitute a
cognizable offence but constitute only a non-cognizable
offence, no investigation is permitted by a police officer without
an order of a Magistrate as contemplated under Section
155(2) of the Code.
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(5)
Where the allegations made in the FIR or complaint are so
absurd and inherently improbable on the basis of which no
prudent person can ever reach a just conclusion that there is
sufficient ground for proceeding against the accused.
(6)
Where there is an express legal bar engrafted in any of the
provisions of the Code or the concerned Act (under which a
criminal proceeding is instituted) to the institution and
continuance of the proceedings and/or where there is a
specific provision in the Code or the concerned Act, providing
efficacious redress for the grievance of the aggrieved party.
(7)
Where a criminal proceeding is manifestly attended with mala
fide and/or where the proceeding is maliciously instituted
with an ulterior motive for wreaking vengeance on the
accused and with a view to spite him due to private and
personal grudge.”
26. This Court has clarified the broad contours and parameters in
laying down the guidelines which have to be kept in mind by the High
Courts while exercising inherent powers under Section 482 CrPC. The
aforesaid principles laid down by this Court are illustrative and not
exhaustive. Nevertheless, it throws light on the circumstances and the
situation which is to be kept in mind when the High Court exercises its
inherent powers under Section 482 CrPC.
27. It has been further elucidated recently by this Court in Arnab
Manoranjan Goswami Vs. State of Maharashtra and Others18 where
jurisdiction of the High Court under Article 226 of the Constitution of
India and Section 482 CrPC has been analysed at great length.
28. It is thus settled that the exercise of inherent power of the
High Court is an extraordinary power which has to be exercised with
great care and circumspection before embarking to scrutinise the
complaint/FIR/charge-sheet in deciding whether the case is the rarest
of rare case, to scuttle the prosecution at its inception.
29. In the matter under consideration, if we try to analyse the
guidelines of which a reference has been made, can it be said that the
allegations in the complaint/FIR/charge-sheet do not make out a case
against the 2nd respondent or do they disclose the ingredients of an
18 2020 SCC Online SC 964
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offence alleged against the 2nd respondent or the allegations are patently
absurd and inherently improbable so that no prudent person can ever
reach to such a conclusion that there is sufficient ground for proceeding
against the 2nd respondent.
30. In the instant case, the complaint/FIR/charge-sheet as noticed
above, does, however, lend credence to the questions posed. It is settled
that one is not supposed to dilate on this score, or intend to present that
the allegations in the complaint will have to be accepted on the face of it
and the truth or falsity of which would not be gone into by the Court at
this stage, as noticed above, whether the allegations in the complaint
were true is to be decided on the basis of the evidence led at the stage of
trial and the observations on this score in the case of Nagpur Steel &
Alloys Pvt. Ltd. Vs. P. Radhakrishna and Others19 ought to be noticed.
In para 3, this Court observed:-
“3. We have perused the complaint carefully. In our opinion it
cannot be said that the complaint did not disclose the commission
of an offence. Merely because the offence was committed during
the course of a commercial transaction, would not be sufficient to
hold that the complaint did not warrant a trial. Whether or not the
allegations in the complaint were true was to be decided on the
basis of evidence to be led at the trial in the complaint case. It
certainly was not a case in which the criminal trial should have
been cut short. The
quashing of the complaint has resulted in
grave miscarriage of justice. We, therefore, without expressing
any opinion on the merits of the case, allow this appeal and set
aside the impugned order of the High Court and restore the
complaint. The learned trial Magistrate shall proceed with the
complaint and dispose of it in accordance with law expeditiously.”
31. Be it noted that in the matter of exercise of inherent power by
the High Court, the only requirement is to see whether continuance of
the proceedings would be a total abuse of the process of the Court. The
Criminal Procedure Code contains a detailed procedure for investigation,
framing of charge and trial, and in the event when the High Court is
desirous of putting a halt to the known procedure of law, it must use
proper circumspection with great care and caution to interfere in the
complaint/FIR/charge-sheet in exercise of its inherent jurisdiction.
19 1997 SCC(Cri) 1073
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32. In the instant case, on a careful reading of the complaint/FIR/
charge-sheet, in our view, it cannot be said that the complaint does not
disclose the commission of an offence. The ingredients of the offences
under Sections 406 and 420 IPC cannot be said to be absent on the basis
of the allegations in the complaint/FIR/charge-sheet. We would like to
add that whether the allegations in the complaint are otherwise correct
or not, has to be decided on the basis of the evidence to be led during the
course of trial. Simply because there is a remedy provided for breach of
contract or arbitral proceedings initiated at the instance of the appellants,
that does not by itself clothe the court to come to a conclusion that civil
remedy is the only remedy, and the initiation of criminal proceedings, in
any manner, will be an abuse of the process of the court for exercising
inherent powers of the High Court under Section 482 CrPC for quashing
such proceedings.
33. We have perused the pleadings of the parties, the complaint/
FIR/charge-sheet and orders of the Courts below and have taken into
consideration the material on record. After hearing learned counsel for
the parties, we are satisfied that the issue involved in the matter under
consideration is not a case in which the criminal trial should have been
short-circuited. The High Court was not justified in quashing the criminal
proceedings in exercise of its inherent
jurisdiction. The High Court has
primarily adverted on two circumstances, (i) that it was a case of
termination of agreement to sell on account of an alleged breach of the
contract and (ii) the fact that the arbitral proceedings have been initiated
at the instance of the appellants. Both the alleged circumstances noticed
by the High Court, in our view, are unsustainable in law. The facts
narrated in the present complaint/FIR/charge-sheet indeed reveal the
commercial transaction but that is hardly a reason for holding that the
offence of cheating would elude from such transaction. In fact, many a
times, offence of cheating is committed in the course of commercial
transactions and the illustrations have been set out under Sections 415,
418 and 420 IPC. Similar observations have been made by this Court in
Trisuns Chemical Industry Vs. Rajesh Agarwal and Ors.(supra) :-
“9. We are unable to appreciate the reasoning that the provision
incorporated in the agreement for referring the disputes to
arbitration is an effective substitute for a criminal prosecution when
the disputed act is an offence. Arbitration is a remedy for affording
reliefs to the party affected by breach of the agreement but the
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arbitrator cannot conduct a trial of any act which amounted to an
offence albeit the same act may be connected with the discharge
of any function under the agreement. Hence, those are not good
reasons for the High Court to axe down the complaint at the
threshold itself. The investigating agency should have had the
freedom to go into the whole gamut of the allegations and to reach
a conclusion of its own. Pre-emption of such investigation would
be justified only in very extreme cases as indicated in State of
Haryana v. Bhajan Lal [1992 Supp (1) SCC 335]”
34. So far as initiation of arbitral proceedings is concerned, there
is no correlation with the criminal proceedings. That apart, the High
Court has not even looked into the charge-sheet filed against 2nd
respondent which was on record to reach at the conclusion that any
criminal offence as stated is prima facie being made out and veracity of
it indeed be examined in the course of criminal trial.
35. The submission made by Mr. P. Chidambaram, learned senior
counsel for 2nd respondent showing bonafides and taking us through the
documentary evidence annexed to the counter affidavit on record to
show that it was a simple case of termination because of breach of
terms of the contract giving rise to a purely civil dispute or initiation of
the arbitral proceedings would not attract the provisions under Sections
406, 420, 34 IPC may not hold good at this stage for the reason what is
being suggested by the learned
counsel for the 2nd respondent can be his
defence during the course of trial but was not open to be examined by
the High Court to take a judicial notice and for quashing of the criminal
proceedings in exercise of its inherent powers under Section 482 CrPC.
36. So far as the further submission made by learned counsel for
the 2nd respondent that if the High Court has failed to consider the charge-
sheet and other material available on record, the matter be remitted
back to the High Court for re-consideration afresh in accordance with
law. There may be some substance in what being urged by learned
counsel for the 2nd respondent but for the reason that matter has been
argued threadbare before us, and learned counsel for the parties have
taken us through the record of criminal proceedings. After going through
the record, we are satisfied that there was sufficient material available
as manifests from the record of criminal proceedings to connect the 2nd
respondent in the commission of crime. Consequently, we do not consider
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it appropriate to remit the matter back at this stage, as it would be an
exercise in futility; on the contrary, it will just delay the proceedings, and
hold the criminal trial at bay, which deserves to be expedited.
37. At the time of conclusion of the proceedings, IA has been
filed at the instance of 2nd respondent initiating criminal proceedings
against the 1st appellant under Section 340 read with Section 195 CrPC.
We find that such applications are being filed for ulterior reasons which
we seriously deprecate. The said IA is accordingly dismissed.
38. Consequently, the appeal succeeds and is accordingly allowed.
The judgment of the High Court impugned dated 15th March, 2019 is
hereby set aside. We, however, make it clear that what has been observed
by us is only for the purpose of disposal of the present appeal. The trial
Court may proceed with the trial expeditiously without being influenced
by the observations made in this judgment or taken as an expression of
our opinion.
39. All pending IAs stand disposed of.
Divya Pandey
   Appeal allowed.