Case: M. Viswanathan Vs. M/s. S.K. Tiles &amp; Potteries P. Ltd. &amp; Others

. In the complaint essentially it was stated asThe first accused is M/s. Sri Krishna Tiles and Potteries (Madras) Pvt. Ltd., the second accused is A.R. Santhanakrishnan, Director of the first accused-company, the third accused is Mrs. Radhika Santhanakrishnan, yet another Director of the first accused-company and the - fourth accused is Chandrasekaran, working as Commercial Manager of M/s. Sai Sri Krishna Properties and Facilitators (P) Ltd.4. M/s. Sri Krishna Tiles and Potteries (Madras) Pvt. Ltd., is the owner of property to an extent of 34.04 acres in Thirumangalam Village, Anna Nagar (West), Chennai. The first accused-company entered into a Memorandum of Understanding with the complainant on 2.7.2001, as per which the first accused-company entrusted the land for development with the complainant. The complainant started developing the properties through his partnership firm ‘M/s. Sai Sri Krishna Properties. ‘M/s. Sai Sri Krishna Properties was converted to a private limited company, in which the complainant was the Managing Director and the third accused was the Director. An agreement was entered into between the said ‘M/s. Sai Sri Krishna Properties and ‘Sri Krishna Tiles and Potteries (Madras) Pvt. Ltd. on 24.6.2002. The newly floated ‘M/s. Sai Sri Krishna Properties was appointed as a Facilitator by the accused Nos. 1 to 3 for developing the properties after obtaining approval from Chennai Metropolitan Development Authority (C.M.D.A.). Since the accused Nos.1 to 3 were not in a position to obtain approval from C.M.D.A., the project could not be completed at the earliest.5. Pursuant to the, above agreements, the complainant entered into an agreement to sell and an agreement to construct with 146 purchasers and received a sum of Rs.2,54,67,091/- as sale advance. The complainant had invested a total sum of Rs.3 crores approximately including the said sum of Rs.2,54,67,091/- for the purpose of developing the project and maintaining the property. The complainant had returned a sum of Rs.21,71,360/- to 47 allottees out of the 146 allottees. A sum of Rs.2,29,71,775/- has to be refunded by the complainant to the remaining 99 allottees. The accused Nos.1 to 3 are also negotiating with the allottees for refunding the advance sale consideration received from them. The purchasers informed the complainant that the agreement between the accused Nos.1 to 3 and the complainants private limited company had been terminated by mutual consent. The complainant was shocked to see that the records and the accounts relating to the said private limited company were found missing at its office. The third accused had illegally taken away all the records and accounts relating to the said private limited company, including the originals of the aforesaid two agreements dated 24.6.2002. Refunds have also been made to few of the purchasers with a mala fide intention of cheating the complainant. The complainant never entered into any mutual agreement for termination of the aforesaid agreements. The accused Nos.1 to 3 have fabricated a termination agreement as if it had been signed by the complainant. On complainants enquiry, the accused Nos.1 to 3 are threatening to kill him.In seeking quashment of the proceedings stand of the respondents 1 to 4 was asThough the complainant committed as per Memorandum of Understanding that he will deposit Rs.2.5 crores for development of the project, he did not do so. As per the terms and conditions of the Memorandum of Understanding, it will get rescinded if the said amount was not deposited by the complainant within one month from the date of Memorandum of Understanding. The Memorandum of Understanding has become a void agreement as the said amount was not deposited. By way of abundant caution, the Memorandum of Understanding was terminated as on 4.8.2001. As the Board of M/s. Sai Sri Krishna Properties and Facilitators (P) Ltd, decided to remove the complainant from his office as Managing Director, a resolution to that effect was passed on 7.7.2005 in a board meeting conducted to the effect that the complainant was ousted from his office as Managing Director.(2) The accused with a good intention in order to avoid any unwanted complications, made arrangements for repayment of the funds collected by the complainant. The second and third accused also made arrangements by pledging their own personal properties and the advance received for allotment of flats was repaid. There cannot be a case of theft as against a partner or a director of the company with regard to its own property. The complainant will have to remedy his grievances invoking Sections 627 to 630 of the Companies Act. The allegations made by the complainant will not attract the penal provisions of the Indian Penal Code. Therefore the accused seek for quashment of the criminal proceedings.The Inspector of Police, inter alia, stated as follows in the counterinvestigation reveals that the complainant had spent nearly a sum of Rs.3 crores for the development of the property by doing enormous earthwork, laying of roads etc. After the complainant asked for the records of the company, the accused have taken away all the records, books of accounts, returns, statutory registers, agreements etc. The complainant filed a petition before the Company Law Board in C.P.No. 44 of 2005 praying to set aside the allotment of shares and appointment of Additional Director. The accused filed a counter along with two documents forging the signatures of the complainant and the Postal Authority. It is found that the postal seal on the document does not tally with the seal of the Postal Department. The Forensic Science Department has given a report that the writings of the complainant in the documents dated 29.1.2004 and 5.12.2004 are forged. The accused are also involved in several other cases pending before the Central Crime Branch (Economic Offences Wing), Chennai.Respondents 1 to 4 further submitted that the complainant was not a party to the termination agreement and his signature also did not find place in the agreement and, therefore, the question of manipulation of the said document does not arise. He was curious to allege that one of the directors of the company had taken away the original documents and records from the company. The amounts which had been received by the complainant from the intending purchasers had been completely accounted by the company. The complainants stand was that the complaint discloses commission of theft of document, forgery of certain records and criminal intimidation and, therefore, the police had rightly started the investigation.7. Learned counsel for the State also submitted that during the course of investigation it was found that the seal of the postal department found a particular document did not tally with the postal seal. It was also submitted that the alleged writing of the complainant in certain documents were not to be in his hand writing.8. The High Court noted in para 12 asthe complaint, four types of allegations have been made. The first allegation is that Mrs. Radhika Santhanakrishnan, the third accused in this case had illegally taken away all the records and accounts relating to M/s. Sai Sri Krishna Properties and Facilitators (P) Ltd. The Second allegation is that the accused have fabricated a termination agreement as if the same had been signed by the complainant. The third allegation is that the advance amount received from the prospective purchasers was returned behind the back of the complainant in order to cheat him and the last allegation is "on complainants enquiry, the accused 1 to 3 are threatening to kill him.After noticing the factual aspects the High Court referred to some judgments and came to an abrupt conclusion in the followingin this case, there is no forgery of documents referred to in the complaint. The first respondent invents certain documents to show that those documents were not in the handwriting of the complainant. Further, there is no allegation that by using such forged document, the accused has acquired gains. Therefore the above authority will not apply to the facts and circumstances of this case.Accordingly, the prosecution was quashed holding that the grievance, if any, of the complainant will have to be redressed through the Civil Forum or the Company Law Board. He cannot prosecute the respondents on the basis of bald allegation without any basis. Accordingly, prosecution has quashed.

Court's reasoning:
In the instant case the only conclusions arrived at by the High Court is in para 23 of the judgment which have been quoted above. The High Court has wrongly come to the conclusion that the matter in issue has to be decided by a Civil Court or the Company Law Board. The High Court had referred to the four types of allegations. Some of the allegations are certainly not adjudicable by the Civil Court or the Company Law Board. That being so the exercise of jurisdiction by the High Court in terms of Section 482 Cr.P.C. cannot be maintained. The impugned order is indefensible and is set aside.