JUDGMENT : (Common Prayer: Criminal Original Petitions filed under Section 482 of Cr.P.C., praying to call for records relating to C.C.No.2645 of 2019 on the file of the learned XXII Metropolitan Magistrate, Saidapet, Chennai and quash the same.) 1. These petitions have been filed to quash the proceedings in C.C.No.2645 of 2019 on the file of the learned XXII Metropolitan Magistrate, Saidapet, Chennai, thereby taken cognizance for the offences under Sections 406 & 420 of I.P.C., as against the petitioners. 2. The respondent filed private complaint as against the petitioners and others alleging that the respondent has involved in various business including production and distribution of movies. In the field of production, the respondent is a reputed production house and film studio involved in the business of production, acquisition, co-production, promotion, marketing and distribution of various cinematographic films and audio-visual content in various Indian languages, in multiple formats worldwide including but not limited to theatrical, television syndication, digital and internet connected platform. While being so, in the year 2018, the respondent produced a film called “Sarkar” and the first accused being a proprietorship who is in the business of film distribution, approached for acquiring license for distributing the said film in theatres. Accordingly, the respondent entered into a theatrical distribution agreement dated 26.10.2018 with the first accused for exhibiting the said film in prominent and reputed theatres. 3. As per Clause 3.1.1 of the said agreement, in consideration of licence to exploit, exhibit the said film in prominent and reputed theatres, the first accused has to pay the respondent a sum of Rs.79,50,00,000/- as minimum guarantee exclusive of all applicable taxes and the revenue. As per the agreement, a sum of Rs.16,00,00,000/- has been paid as advance on 29.10.2018 and the balance amount of Rs.53,50,00,000/- to be paid five days prior to the release date viz., 06.11.2018. 4. The respondent also entered into assignment agreement for Telugu language dubbing rights for sole and exclusive theatrical exploitation in 35 mm format only for a period of one year, with respect to the said film on 29.10.2018 with the first accused for a consideration of Rs.50,00,000/-. Accordingly, the first accused is liable to pay total sum of Rs.80 crores/-. As per the agreement, if the net profit is generated over and above the minimum guarantee amount, the same shall be equally shared by the respondent and the first accused. Accordingly, the first accused is liable to pay total sum of Rs.80 crores/-. As per the agreement, if the net profit is generated over and above the minimum guarantee amount, the same shall be equally shared by the respondent and the first accused. But the first accused failed and neglected to keep up with the terms of the said agreement and not paid the minimum guarantee of Rs.80 crores to the respondent five days before the release of the said movie. 5. When the respondent refused to release the QUBE keys for the release of the said film, the accused pleaded with the respondent and promised to repay the same within three days of the release of the said film. The other accused had also given a written undertaking of guarantee that they would pay the balance amount and also issued six post dated cheques each for Rs.10 crores. Believing the said representation of the accused, the respondent provided with the QUBE keys and pursuant to the same, the first accused had released, exhibited and exploited the said film in all prominent theatres. 6. When the respondent approached the first accused for payment of balance minimum guarantee amount of Rs.51 crores, the second accused in his individual capacity and as the proprietor of the first accused had given a letter of undertaking dated 09.11.2018 accepting and admitting its liability and also had given by way of security certain properties for the admitted liability as per the said agreement. Since the second accused having failed to fulfil the terms of the agreement, the third and fourth accused viz., the petitioners in Crl.O.P.No.553 of 2020, had given a written undertaking of security of certain immovable properties towards the agreement. 7. Further alleged that the said movie was released on 06.11.2018 and is huge box office success and the first accused had enriched itself in abundance but failed and neglected to pay the amount due to the respondent as per the agreement and also failed to share the net profits. Therefore, the respondent filed applications under 8(5) of the Arbitration and Conciliation Act for interim measure before this Court in Appl.Nos.8786 & 8787 of 2019. Therefore, the respondent filed applications under 8(5) of the Arbitration and Conciliation Act for interim measure before this Court in Appl.Nos.8786 & 8787 of 2019. At the time of hearing the said applications, the accused persons entered into a compromise by the agreement dated 16.11.2018, thereby they agreed to transfer the immovable properties, which were given as security in favour of the respondent in lieu of money due. This Court recorded the said compromise memo and ordered the said applications by an order dated 16.11.2018. However, the accused persons failed to transfer any of the property as agreed by them in the joint compromise memo. Therefore, they committed the offence punishable under Sections 406 & 420 of IPC. 8. The learned counsel appearing for the petitioner would submit that by way of joint compromise memo dated 16.11.2018, the disputes which had arisen out of the agreements dated 26.10.2018, 05.11.2018 & 09.11.2018 have been settled between parties. If at all any dispute arises on the said issue between the parties in further, it is open to the parties to approach the Arbitrator for settlement of disputes. In fact, the respondent already approached this Court for execution of the said order in E.P.No.67 of 2019 and it is still pending. Therefore, no offence is made out as against the petitioners, since all the issues are business transaction and all the allegations are civil in nature. He further submitted that even according to the respondent, the first accused had paid a sum of Rs.29 crores as advance and subsequently, some of the properties were registered in their favour. Further there was a dispute while executing the said joint compromise memo by one of the sister of the second accused. Therefore, it was not acted upon and as such, the respondent filed Arbitration Original Petition in O.P.No.253 of 2022 before this Court. 8.1. He further submitted that in the mean while, on 23.09.2021 again all the parties have entered into a Memorandum of Compromise. The respondent is the first part to the said memorandum of compromise and the accused persons in the present impugned complaint are shown as second to sixth part. Accordingly, the parties are agreed to proceed with the arbitration in respect of the balance amount of Rs.33,74,90,090/- together with interest at the rate of 12% per annum. The respondent is the first part to the said memorandum of compromise and the accused persons in the present impugned complaint are shown as second to sixth part. Accordingly, the parties are agreed to proceed with the arbitration in respect of the balance amount of Rs.33,74,90,090/- together with interest at the rate of 12% per annum. In pursuant to the compromise, the respondent undertakes to withdraw all the legal proceedings as against the petitioners herein before any Court of law or forum or any investigating authority with regard to the present dispute. It was acted upon and on the basis of the Memorandum of Compromise, this Court by an order dated 28.06.2022 appointed a former Hon'ble Judge of this Court as sole arbitrator and dispose the Arbitration Original Petition. Therefore, after having been agreed to withdraw all the proceedings as against the accused persons including the criminal complaint, the respondent refused to withdraw the present criminal complaint initiated as against the petitioners. Hence, he prayed for quashment of the present proceedings. 9. Per contra, the learned counsel appearing for the respondent submitted that the offence under Section 406 and 420 of I.P.C., are clearly attracted as against the petitioners, since the petitioners had agreed to pay the entire amount five days prior to the release of movie. Admittedly, they failed to pay the entire amount and subsequently, they entered into Joint Compromise Memo with the respondent. It was not acted upon, since one of the accused signature was fabricated by other accused. On her objection, this Court contempt their action and the accused expressed their unconditional apology to the Court. Though, this Court appointed the Arbitrator, the petitioners are liable to be punished for the offences committed by them and the arbitration proceeding is never impediment for the initiation of the criminal proceedings as against the petitioners. 9.1. In support of his contention, he relied upon the judgment reported in 2021 SCC Online 206 in the case of Priti Saraf and Anr. Vs. State of NCT of Delhi & Anr., in which the Hon'ble Supreme Court of India held as follows:- “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. Vs. State of NCT of Delhi & Anr., in which the Hon'ble Supreme Court of India held as follows:- “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. 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 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. 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.” The learned counsel appearing for the respondent vehemently contended that the accused persons failed to fulfil the other conditions and after fulfilling the other conditions, the respondent is bound to withdraw all the proceedings. Hence, he prayed for dismissal of this present petition. 10. Heard Mr. S. Karthikei Balan, learned counsel appearing for the petitioner and Mr. Jose John, learned counsel appearing for the respondent. 11. There are totally five accused persons in which, the petitioners are arrayed as A2 to A4. The first accused is the proprietorship firm and the second accused is the sole proprietor. The petitioners and the respondent had entered into an agreement dated 26.10.2018 for exhibiting the film titled “Sarkar” in all prominent and reputed theatres, for which the first accused has to pay a sum of Rs.79,50,00,000/-. They also entered into an assignment agreement for Telugu dubbing rights for the said film for the consideration of Rs.50 lakhs, as such the first accused is liable to pay total sum of Rs.80 crores. Further the first accused had paid a sum of Rs.29 crores as advance and as per the agreement, the first accused owed to pay the balance amount five days prior to the release of the said film viz., prior to 06.11.2018. Further the first accused had paid a sum of Rs.29 crores as advance and as per the agreement, the first accused owed to pay the balance amount five days prior to the release of the said film viz., prior to 06.11.2018. However, the accused persons could not able to pay and requested for time. It was also agreed by the respondent and extended time for payment within three days from the release of the said film. 12. Further, the accused persons failed to pay the said amount as such, the respondent filed applications before this Court under Section 8(5) of the Arbitration and Conciliation Act, in Appl. Nos.8786 & 8787 of 2019 for recovery of the said amount through Arbitration proceedings. While pending the said applications, both the parties entered into a Joint Compromise Memo dated 16.11.2018. However, it was disputed by one of the accused and again the parties entered into Memorandum of Compromise dated 23.09.2021. Accordingly, the respondent undertakes to withdraw all the legal proceeding against the accused persons subject to abiding by the terms therein and executed all corresponding sale deed. Further they agreed to proceed with the Arbitration proceedings for the balance amount of Rs. 33,74,90,090/- together with interest at the rate of 12% per annum. 13. Based on which, this Court by an order dated 28.06.2022, disposed the arbitration petition in ARB.OP. No.253 of 2022 filed by the respondent herein, by appointing a former Hon'ble Judge of this Court as sole Arbitrator. Therefore, the said Memorandum of compromise is acted upon and this Court appointed an Arbitrator in respect of the balance amount. Though, the respondent vehemently contended that after fulfilling the other conditions by the accused persons, the respondent is bound to withdraw all the proceedings, now the Arbitrator is appointed for the balance amount. 14. That apart, the entire proceeding is a commercial transaction between the petitioners and the respondent herein. In fact, the petitioners had paid a sum of Rs.29 crores as advance at the time of entering into agreements to the respondent herein. Further, the property worth about Rs.60 crores already entrusted with the respondent herein. 14. That apart, the entire proceeding is a commercial transaction between the petitioners and the respondent herein. In fact, the petitioners had paid a sum of Rs.29 crores as advance at the time of entering into agreements to the respondent herein. Further, the property worth about Rs.60 crores already entrusted with the respondent herein. The Hon'ble Supreme Court of India held that simply because there is a remedy provided for breach of contract or arbitral proceedings initiated at the instance of the parties, 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 this Court under Section 482 of Cr.P.C., for quashing such proceedings. 15. The respondent has alleged in the complaint that the petitioners have committed offences under Sections 406 and 420 of IPC. It would thus be necessary to examine the ingredients of the above offences and whether the allegations made in the complaint, read on their face, attract those offences under the Penal Code. Section 405 of Penal Code reads thus:- 405. Criminal breach of trust — Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or wilfully suffers any other person so to do, commits "criminal breach of trust". A careful reading of Section 405 of IPC shows that the ingredients of a criminal breach of trust are as follows:- (i) A person should have been entrusted with property, or entrusted with dominion over property; (ii) That person should dishonestly misappropriate or convert to their own use that property, or dishonestly use or dispose of that property or willfully suffer any other person to do so; and (iii) That such misappropriation, conversion, use or disposal should be in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract which the person has made, touching the discharge of such trust. Entrustment is an essential ingredient of the offence. A person who dishonestly misappropriates property entrusted to them contrary to the terms of an obligation imposed is liable for a criminal breach of trust and is punished under Section 406 of the Penal Code. 16. It is relevant to extract the provisions under Section 420 of the Penal Code as follows :- 420. Cheating and dishonestly inducing delivery of property — Whoever cheats and thereby dishonestly induces the person deceived to deliver any property to any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and which is capable of being converted into a valuable security, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine. The ingredients to constitute an offence under Section 420 of IPC are as follows :- (i) A person must commit the offence of cheating under Section 415 and (ii) The person cheated must be dishonestly induced to (a) deliver property to any person or (b) make, alter or destroy valuable security or anything signed or sealed and capable of being converted into valuable security. Cheating is an essential ingredient for an act to constitute an offence under Section 420. 17. It is relevant to rely upon the judgment made by the Honourable Supreme Court of India in the case of M/s. Indian Oil Corporation Vs. NEPC India Limited and others reported in (2006) 6 SCC 736 , held that the civil liability cannot be converted into criminal liability and it is necessary to take notice of a growing tendency in business circle to convert purely civil dispute in criminal case. This is obviously on account of prevalent impression that civil law remedies are time consuming and do not adequately protect the interest of lender/creditors. Such a tendency is seen in several family disputes also, leading to irretrievable breakdown of marriages/families. There is also an impression that if a person could somehow be entangled in a criminal prosecution, there is a likelihood of imminent settlement. Any effort to settle civil disputes and claim which do not involve any criminal offence by applying pressure through criminal prosecution should be deprecated and dishonoured. 18. In the case of G. Sagar Suri Vs. There is also an impression that if a person could somehow be entangled in a criminal prosecution, there is a likelihood of imminent settlement. Any effort to settle civil disputes and claim which do not involve any criminal offence by applying pressure through criminal prosecution should be deprecated and dishonoured. 18. In the case of G. Sagar Suri Vs. State of Uttar Pradesh reported in 2000 (2) SCC 636 , the Honourable Supreme Court of India held as follows:- “It is to be seen if a matter, which is essentially of civil nature, has been given a cloak of criminal offence, criminal proceedings are not a short cut of other remedies available in law. Before issuing process a criminal Court has to exercise a great deal of caution. For the accused it is a serious matter. This Court has laid certain principles on the basis of which High Court is to exercise its jurisdiction under Section 482 of the Code. Jurisdiction under this Section has to be exercised to prevent abuse of the process of any Court or otherwise to secure the ends of justice.” 19. It is relevant to rely upon the land mark Judgment of the Honourable Supreme Court of India in the case of State of Haryana and others Vs. Jurisdiction under this Section has to be exercised to prevent abuse of the process of any Court or otherwise to secure the ends of justice.” 19. It is relevant to rely upon the land mark Judgment of the Honourable Supreme Court of India in the case of State of Haryana and others Vs. Bhajanlal and others reported in 1992 Supp (1) SCC 335, in which, the Honourable Supreme Court of India has laid down the following categories of instances wherein inherent powers can be exercised in order to secure the ends of justice as follows:- “(a) 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; (b) where the allegations in the First Information Report and other materials, if any, accompanying the F.I.R. 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; (c) 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; (d) 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; (e) 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; (f) 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; (g) 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.” 20. It has to see that, whether a matter which is essentially of a civil nature has been given a cloak of a criminal offence. Where the ingredients required to constitute a criminal offence are not made out from a bare reading of the complaint, the continuation of the criminal proceeding will constitute an abuse of the process of the Court. In the present case, the averments in the complaint, read on its face, do not disclose the ingredients necessary to constitute offences under the Penal Code. An attempt has been made by the respondent to cloak a civil dispute with a criminal nature despite the absence of the ingredients necessary to constitute a criminal offence. The complaint filed by the respondent against the petitioners constitutes an abuse of process of Court and is liable to be quashed. 21. In the case on hand, there was a Memorandum of compromise between the parties and accordingly, an Arbitrator has been appointed to deal with the issues. That apart, in the present case it is a commercial transaction between the parties as such, the offences under Sections 406 & 420 of IPC are not at all made out as against the accused persons. Therefore, the judgment cited by the learned counsel appearing for the respondent is not helpful to the case on hand. The entire dispute is civil in nature which is tried to be converted into crime and the present complaint is nothing but clear abuse of process of law for settling the civil dispute. Therefore, the impugned complaint cannot be sustained as against the accused persons and it is liable to be quashed. 22. Accordingly, the proceedings in C.C.No.2645 of 2019 on the file of the learned XXII Metropolitan Magistrate, Saidapet, Chennai, is hereby quashed and both the Criminal Original Petitions stand allowed. Consequently, connected Miscellaneous Petitions are also closed.