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2014 DIGILAW 746 (JHR)

Dharma Nand Jha v. State of Jharkhand

2014-07-16

D.N.UPADHYAY

body2014
ORDER This writ petition (criminal) has been filed for quashing the F.I.R. including entire criminal prosecution arising out of Doranda (Argora) P.S. case No. 446 of 2011 dated 2.11.2011 corresponding to G.R. No. 5513 of 2011 registered u/s 420, 467, 468, 471/34 I.P.C. pending in the Court of learned S.D.J.M., Ranchi. 2. The facts in brief is that Minakshi Sahkari Grih Nirman Samiti Ltd. (hereinafter to be referred as the 'MSGNSL') had taken a loan of Rs. 1,50,00,000/-(Rupees one crore fifty lacs) from the Bihar State Housing Cooperative Federation Ltd., Patna (hereinafter to be referred as the 'Federation'), from its regional office situated at Indira Palace, Hinoo, Ranchi, P.S. Doranda against their project i.e. for construction of apartment at Kaju Bagan, West End Park, Hehal, Sukhdeo Nagar, Ranchi and the property was put under mortgage with the Federation. An agreement was also executed between the MSGNSL and the Federation and as per the agreement, the flats constructed can only be sold after seeking No Objection Certificate from the Federation. It was revealed that writ petitioners who are the President and the Secretary of MSGNSL, without seeking no objection certificate, sold the flats to different persons for their wrongful gain and loan amount was not repaid, as a result an outstanding of Rs. 4,21,28,611 has become due. Since the writ petitioners have committed forgery and misappropriated the property for their wrongful gain, a written report was lodged by the Assistant Manager (Law) of the Federation, Patna with Argora P.S., Ranchi and on the basis of written report, Doranda (Argora) P.S. case No. 446 of 2011 dated 2.11.2011 u/s 420, 467, 468, 471/34 I.P.C. has been registered. 3. The writ petitioners have prayed to quash the said F.I.R. and the criminal prosecution arising out of the same on the ground that it is a malicious prosecution launched with an intention to harass and humiliate the petitioners. It is admitted that the MSGNSL has taken loan against its project to construct flats on a piece of land situated at Kaju Bagan, Hehal and the MSGNSL has also put the property under equitable mortgage. Due to certain reason, the MSGNSL has failed to repay the loan and for recovery of the loan amount the Federation has filed Certificate Case No. 3/2004 which is pending before the District Cooperative Officer-cum-Certificate Officer, Ranchi. Due to certain reason, the MSGNSL has failed to repay the loan and for recovery of the loan amount the Federation has filed Certificate Case No. 3/2004 which is pending before the District Cooperative Officer-cum-Certificate Officer, Ranchi. In view of the provisions of section 48 of Bihar & Orissa Cooperative Society Act, the dispute, if any, is required to be referred before the Registrar and no criminal prosecution is required to be initiated. It is further contended that after construction of flats, application for issuance of No Objection Certificate was filed but the Federation has refused to provide No Objection Certificate by its letter dated 22.1.2003. Thereafter the MSGNSL had filed C.W.J.C. No. 1785 of 2003 to quash the said letter dated 22.1.2003. The Hon'ble Patna High Court vide order dated 12.8.2003 had been pleased to stay the operation of said letter. Thereafter flats were sold by the writ petitioners. C.W.J.C. No. 1785 of 2003 was stood withdrawn with a liberty to the writ petitioner to approach the Federation for resolving the dispute under 2005 Package. The Federation in spite of resolving the dispute lodged this criminal case for wreaking vengeance. As per the Bihar State Housing Cooperative Federation Ltd., Patna, Bye-Laws & Conditions for Loan, Clause 47, "Any dispute arising with regard to a loan sanctioned under these rules shall originally lie with court situated at Patna." It was submitted that the dispute arose is purely of civil in nature and therefore no criminal prosecution is permitted to be continued, if it is allowed, it would amount an abuse of process of law. The writ petitioners have also relied upon the judgments reported in (2013) 11 SCC 673 Paramjeet Batra v. State of Uttarakhand and others, (2013) 6 SCC 740 Chandran Ratnaswami v. K.C. Palanisamy and others and (2011) 7 SCC 59 Joseph Salvaraj A. v. State of Gujarat and others. 4. The writ petitioners have also relied upon the judgments reported in (2013) 11 SCC 673 Paramjeet Batra v. State of Uttarakhand and others, (2013) 6 SCC 740 Chandran Ratnaswami v. K.C. Palanisamy and others and (2011) 7 SCC 59 Joseph Salvaraj A. v. State of Gujarat and others. 4. On the other hand, learned counsel, appearing for the respondent Federation has submitted that it is not a case in which the borrowers have failed to repay the loan, but it is a case in which facts available indicate that the writ petitioners have intentionally with mens rea misappropriated the property for their wrongful gain and wrongful loss to the Federation and committed criminal breach of trust and sold the property which was under equitable mortgage with the Federation in utter violation of the terms and conditions mentioned in Para-1 of the agreement dated 24.5.1997 which is very clear that borrowing society (MSGNSL) shall not transfer the land and property furnished in security to any other persons till redemption of loan without written consent of Federation. It is apparent from the F.I.R. that the writ petitioners instead of depositing the sale proceeds in loan account, misappropriated the same. The agreement dated 24.5.1999 held between the parties was extended and supplemented by other agreements in order to help the borrowing society, but they were having deceptive intention from before in their mind and it would reveal from the facts available that the Federation on further occasion extended the loan amount but the writ petitioners cheated the Federation and committed criminal breach of trust and sold the flats constructed on the land which was under mortgage and misappropriated the sale proceeds. The law as well as the terms and conditions of the agreement are very clear on each and every point. When the writ petitioners failed to abide by the conditions laid down in the agreement and failed to repay the loan amount, the Federation, as per the terms of the agreement, lodged certificate case for recovery of the loan amount. When the writ petitioners by taking advantage of interim 4. order passed in C.W.J.C. No. 1785 of 2003, sold the property without seeking consent of the Federation, F.I.R. was lodged for proper action against them. When the writ petitioners by taking advantage of interim 4. order passed in C.W.J.C. No. 1785 of 2003, sold the property without seeking consent of the Federation, F.I.R. was lodged for proper action against them. The writ petitioners never approached the Federation for One Time Settlement under the Scheme, 2005 floated by the Federation, but in order to create defence, they had written letter No. 15 dated 18.10.2011 (Annexure-5 to the writ petition) after institution of the F.I.R. and the contention of the aforesaid letter is nothing but statement of untenable grievances. Lastly it was submitted that jurisdiction of the criminal courts in inquires and trials is envisaged under Chapter XIII of the Code of Criminal Procedure. 5. Before adverting opinion, certain admitted facts are to be indicated herein below:- (i) The writ petitioners are the President and the Secretary of Minakshi Sahkari Grih Nirman Samiti Ltd. and the Society had taken loan from the Federation against their project to construct flats to be sold to the members of their society and for that they shall purchase suitable land. The original agreement was executed by and between the parties on 24.5.1999 and supplementing to said agreement, further agreements on 10.6.2000, 6.12.2000 and 17.4.2001 were also executed. (ii) After execution of necessary documents and agreement loan, amount was disbursed by the Federation in favour of borrowing society and the writ petitioners availed the loan facility. (iii) When the borrowing society have failed to repay the loan amount as per the terms and conditions of the agreement, the Federation lodged a certificate case for recovery of the amount in the year 2004 vide Certificate case No. 3 of 2004 and accordingly the certificate officer issued notice vide letter No. 143 dated 14.3.2005. (iv) The writ petitioners preferred C.W.J.C. No. 1785 of 2003 in the High court of Judicature at Patna to quash the letter dated 22.1.2003 issued by the Federation preventing the borrowing society form selling the flats. Initially the operation of the said letter was stayed but the writ petitioners withdrew said writ petition with liberty to approach the Federation for default resolution. 6. I have gone through the averments made in the F.I.R. from which it appears that the writ petitioners have sold the property which was under equitable mortgage and misappropriated the sale proceeds. Initially the operation of the said letter was stayed but the writ petitioners withdrew said writ petition with liberty to approach the Federation for default resolution. 6. I have gone through the averments made in the F.I.R. from which it appears that the writ petitioners have sold the property which was under equitable mortgage and misappropriated the sale proceeds. Now it is to be decided whether launching a criminal prosecution against writ petitioners amounts to abuse of process of Court? Whether criminal prosecution has been launched for wreaking vengeance and to harass the writ petitioners? Whether the contention made in the F.I.R. on its face value constitute any criminal offence and whether the F.I.R. lodged by the Federation is liable to be quashed considering the dispute to be that of purely of civil in nature? 7. In most of the cases in which facts available suggest civil dispute as well as criminal dispute or in the cases in which petitions are being filed for quashing the F.I.R., almost all the High Courts as well as Hon'ble Supreme Court have placed reliance to the landmark judgment-State of Haryana and others v. Ch. Bhajan Lal and others, reported in AIR 1992 SC 602 and hence before adverting any opinion, I would also like to reproduce Para-108 and 109 of the said judgment which are as follows:- "108. 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. (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." "109. (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." "109. We also give a note of caution to the effect that the power of quashing a criminal proceeding should be exercised very sparingly and with circumspection and that too in the rarest of rare cases; that the Court will not be justified in embarking upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the F.I.R. or the complaint and that the extraordinary or inherent powers do not confer an arbitrary jurisdiction on the Court to act according to its whim or caprice. " 8. In every case of breach of contract the grievances can be redressed in a civil suit, but there are cases of breach of contract which also attract ingredients of criminal breach of trust punishable u/s 406 I.P.C. Therefore, the facts available in each case is required to be assessed whether breach of contract remains only to the extent of civil dispute or it exceeds attracting ingredients of offence punishable u/s 419, 420, 406, 468, 471 of the I.P.C. Now coming to the fact of the case in hand, it reveals that the writ petitioners have formed a society under the name and style of Minakshi Sahkari Grih Nirman Samiti Ltd. and got it registered under the Societies Registration Act. In order to fulfill object of the society, the writ petitioners had approached the Bihar State Housing Cooperative Federation Ltd., Patna for advancement of loan. The request for loan made by borrowing society was acceded on certain terms and conditions which was reproduced into writing, whereafter the borrowing society availed the loan facility. From the loan amount land was purchased and the borrowing society proceeded further to construct flats thereon to sell it. There was a condition in the agreement between the parties that flats so constructed on the land which was put under equitable mortgage with the Federation, can only be sold after seeking no objection from the Federation and the percentage of the sale proceeds shall be deposited with the Federation towards redemption of loan. There was a condition in the agreement between the parties that flats so constructed on the land which was put under equitable mortgage with the Federation, can only be sold after seeking no objection from the Federation and the percentage of the sale proceeds shall be deposited with the Federation towards redemption of loan. Since the borrowing society had violated the terms and conditions, the Federation issued direction not to sell the flats without seeking no objection and the aforesaid letter was challenged by the borrowing society vide C.W.J.C. No. 1785 of 2003. In the said writ petition, interim relief was granted to the borrowing society vide order dated 12.8.2003 passed in C.W.J.C. No. 1785 of 2003 and the operation of the said letter, by which objection was raised by the Federation, was stayed. I would like to quote the submissions advanced by the counsel appearing for the borrowing society in the said writ petition, which is as follows:- "Learned counsel for the petitioner says that order be passed that if the petitioner would pay Rs. 5 Lac on sale of each Flat then only the respondent would issue N.O.C." I have quoted aforesaid submissions only with a view to bring on record that the writ petitioners themselves admit that after having that interim order in said C.W.J.C. No. 1785 of 2003, they sold out the flats but it is not indicated whether the undertaking which they had given was fulfilled by them and by deposited Rs. 5 Lacs against sale of each flat with the Federation or not. The C.W.J.C. No. 1785 of 2003 stood withdrawn on the ground that the borrowing society shall go for one time settlement under the package floated by the Federation, but there is no document on record to show that the borrowing society ever took any step to settle the matter. Contrary to that facts available on record suggest that the writ petitioners instead of depositing the sale amount with the Federation appears to have misappropriated the same. It is also apparent from the F.I.R. that the writ petitioners had hurled threat to the officers of Federation whenever they approached them for redemption of loan amount or for any settlement. Contrary to that facts available on record suggest that the writ petitioners instead of depositing the sale amount with the Federation appears to have misappropriated the same. It is also apparent from the F.I.R. that the writ petitioners had hurled threat to the officers of Federation whenever they approached them for redemption of loan amount or for any settlement. The facts indicated in the F.I.R. are that the writ petitioners sold the flats with the proportionate land to different purchasers even the properties were put under equitable mortgage and also violating the terms and conditions of the agreement held between the Federation and the borrowing society, and the sale proceeds were misappropriated. Therefore, averments made in the F.I.R. appears to have attracted ingredients of criminal breach of trust and misappropriation of the properties. In such circumstances, the criminal prosecution cannot be thwarted only on the ground that it is a matter of civil dispute between the parties and the financier Federation had lodged a certificate case for recovery of the loan against the borrowing society. 9. Learned counsel for the writ petitioners, by referring the agreements held between the parties, has submitted that if any dispute arises between the parties, the jurisdiction of Patna courts will be invoked and therefore institution of criminal case at Doranda (Argora) P.S. is unwarranted and that cannot be allowed to be proceeded further. In this context the submission advanced by the learned counsel appearing for Federation appears more convincing. Chapter XIII of the Code of Criminal Procedure deals with the jurisdiction of the criminal court in inquires and trials. Section 177 reads as follows:- "177. Ordinary place of inquiry and trial.-Every offence shall ordinarily be inquired into and tried by a Court within whose local jurisdiction it was committed. Thus it is clear that the property for which loan by the 9. borrowing society has been taken situates within the jurisdiction of District of Ranchi and those properties were sold to different purchasers by the writ petitioners and the allegation against them is that they have misappropriated the property by creating forged documents and incorrect declaration and thereby committed fraud. Since the criminal offence alleged to have committed within the jurisdiction of District of Ranchi, Section 177 of the Cr.P.C. shall be applicable. Since the criminal offence alleged to have committed within the jurisdiction of District of Ranchi, Section 177 of the Cr.P.C. shall be applicable. So far as the civil dispute is concerned as per the agreement, the jurisdiction may be that of courts within the District of Patna. 10. The judgments relied upon by the parties are very clear where the breach of contract shall be limited to the extent of civil remedy, no criminal prosecution shall be permitted to continue, but where the mens rea showing criminal intent and ingredients of criminal breach of trust shall be available in a breach of contract, the aggrieved shall not be prevented from instituting civil suit as well as criminal case. The judgments relied upon by the parties have been considered in that perspective and mainly on the judgment reported in AIR 1992 SC 604 State of Haryana and others v. Ch. Bhajan Lal and others, I do not find that any of the seven conditions on which F.I.R. can be quashed, is available in the case at hand. Since the contentions made in the F.I.R. prima facie attract ingredients of criminal offence, it cannot be quashed at the initial stage and the investigation cannot be stopped. The aggrieved cannot be restrained from adducing evidence oral and documentary to substantiate the allegation raised against accused. 11. In the aforesaid facts and circumstances and discussions made above, I do not find any merit in this writ petition and the same sands dismissed. Consequently, the interim protection granted to the petitioner vide order dated 9.5.2012 stands vacated.