TMI Blog2021 (4) TMI 1113X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 - 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. Appeal allowed. - CRIMINAL APPEAL NO(S).296 OF 2021 (Arising out of SLP(Crl.) No(s). 6364 of 2019) - - - Dated:- 10-3-2021 - INDU MALHOTRA AND AJAY RASTOGI, JJ. For the Appellant : Mr. Mukul Rohatgi, Sr. Adv., Ms. Nupur Kumar, AOR, Mr. Hemant Manjani, Adv., Mr. M. Thangathurai, Adv., Mr. Sunil Fernandes, Adv., Ms. Nupur Kumar, AOR, Mr. Darpan Sachdeva, Adv., Mr. Pras ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 5.40 crores by a cheque dated 23rd May, 2012 and to show her bonafides, the 2nd Respondent handed over post-dated cheques worth ₹ 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 ₹ 25.50 crores handed over as security ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 007 a sum of ₹ 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) Code of Criminal Procedure 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 Code of Criminal Procedure. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 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 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber, 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 Indian Penal Code 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 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bba Rao and Ors. v. State of Telangana Rep. by its Secretary, Department of Home and Ors. 2018 (14) SCC 452. 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 Code of Criminal Procedure, 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 Code of Criminal Procedure may be initiated against the Appellants. 23. It being a settled principle of law that to exercise powers Under Section 482 Code of Criminal Procedure, the complaint in its entirety shall have to be ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich 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. v. P. Radhakrishna and Ors. 1997 SCC (Cri) 1073 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 shal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lants. 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 Indian Penal Code. Similar observations have been made by this Court in Trisuns Chemical Industry v. 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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