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2023 DIGILAW 220 (HP)

Pardeep Gupta v. State of H. P.

2023-04-18

SATYEN VAIDYA

body2023
JUDGMENT : Satyen Vaidya, J. Petitioner has prayed for the following relief: “Quash the impugned FIR No.0072 dated 29.03.2022, Annexure P-9, under Sections 420 and 34 of Indian Penal Code, registered at Police Station, Baddi, District Solan, H.P. and further proceedings in lieu thereof, in view of the facts and circumstances of the case.” 2. The facts as narrated by the petitioner are that he is a partner in Super Rugs India LLP to the extent of 50%. An agreement to sell the land and structure measuring 9 bighas 10 biswas situate at Baddi, District Solan, H.P. was executed on 05.08.2018 between the partners of Super Rugs India LLP (hereinafter referred to as sellers) with Sh. Ram Chand, Smt. Sudesh Kumari and Sh. Ketan Kumar, all residents of Panchkulla (Haryana) [hereinafter referred to as purchasers]. Total sale consideration was agreed at Rs.3,51,00,000/- (Rs. Three Crores and Fifty-One lacs). At the time of execution of the agreement, the purchasers paid a sum of Rs.51 lacs as earnest money to the sellers, out of which a sum of Rs.21 lacs was paid through cheque and Rs.30 lacs was paid in cash. On 31.12.2019, the purchasers paid another sum of Rs.48 lacs in cash to the sellers. It is specifically averred by the petitioner that a sum of Rs.21 lacs received from purchasers through cheque was duly invested by way of Fixed Deposit Receipt and the cash was accepted on the assurance of purchasers that the same would be converted to cheques on signing of a fresh agreement at the time of making application for permission under Section 118 of the Himachal Pradesh Tenancy and Land Reforms Act, 1972. The purchasers had agreed that the statutory permission under Section 118 of the Act ibid would be processed by their CA/agent by 10th of January, 2020. 3. It is further the case of petitioner that despite multiple reminders and requests made to the purchasers for initiating formalities to obtain permission under Section 118 of the H.P. Tenancy and Land Reforms Act, the purchasers failed to discharge their liability. Consequently, the sellers suffered a lot of agony. The amount given in cash by purchasers to the sellers was lying with them without being used. The interest money earned upon the Fixed Deposit Receipt of Rs.21 lacs was regularly credited to the account of the purchasers after deduction of TDS. 4. Consequently, the sellers suffered a lot of agony. The amount given in cash by purchasers to the sellers was lying with them without being used. The interest money earned upon the Fixed Deposit Receipt of Rs.21 lacs was regularly credited to the account of the purchasers after deduction of TDS. 4. The sellers, lastly, had no option but to invoke Clause No.19 of the agreement and in pursuance thereof a legal notice was issued to purchasers on 01.09.2021. The earnest money was forfeited. Despite all this, sellers had been trying to settle the dispute with the purchasers and were willing to return their money. A meeting between the parties was arranged on 30.10.2021, cancellation agreement was mutually prepared and a bankers’ cheque for Rs.24,25,405/- dated 29.10.2021 favouring the purchasers was prepared. The purchasers, however, backed out. 5. Respondents 2 and 3 herein (hereinafter referred to as complainants) i.e. two of the purchasers, about five months thereafter, lodged a false and frivolous complaint with the Police Station, Baddi, District Solan against sellers which resulted in registration of impugned FIR No.0072 dated 29.3.2022 under Sections 420 and 34 of IPC. 6. A civil suit bearing No. 1449 of 2022, is stated to have been filed by the petitioner on 11.7.2022 against the purchasers at Chandigarh. The purchasers are also stated to have filed a civil suit bearing No. 110 of 2022 before this Court for specific performance of agreement dated 5.8.2018. The subject matter of both above noted suits is alleged to be the civil liabilities arising out of agreement to sell dated 5.8.2018. 7. Petitioner, by way of instant petition, has sought the quashing of FIR No. 72 dated 29.3.2022 registered at Police Station, Baddi, District Solan on the following grounds: (i) The dispute between the parties is purely civil in nature. The complaint lacks any allegation of cheating at the time of execution of agreement dated 5.8.2018. (ii) The fact that the purchasers paid additional sum of Rs. 48 lacs in cash to the sellers after about 17 months from the date of execution of agreement itself suggests that there was no dispute till such date regarding truthfulness and integrity of sellers. (iii) The intention of petitioner was never dishonest and the performance of agreement had been frustrated by the acts of omission and commission on part of purchasers. (iii) The intention of petitioner was never dishonest and the performance of agreement had been frustrated by the acts of omission and commission on part of purchasers. (iv) On the face of it, the allegations in the complaint do not suggest the facts necessary to constitute commission of offence under Section 420 IPC 8. Learned counsel for the private respondents (complainants) have contested the claim of the petitioner on the grounds that the sellers are guilty of civil as well as criminal wrongs and they cannot escape from the criminal liability merely by asserting that the dispute has civil overtones only. It is further submitted that the intention of sellers had been fraudulent and dishonest from the beginning and in such view of the matter, petitioner is not entitled for any relief. 9. I have heard learned counsel for the parties and have also gone through the records of the case carefully. 10. The contents of FIR No. 72 of 2022 dated 29.3.2022 registered at Police Station, Baddi reveal the allegations levelled by respondents No. 2 and 3 as under: (a) The petitioner had approached the complainants (respondents No.2 and 3) through property dealer named Sh. Gurnam Singh and had expressed his interest in selling the immoveable property measuring 9 bighas 10 biswas comprised in Khasra Nos. 139, 140 and 177 alongwith structure built thereon, situated at Village Judhi Kalan and Judhi Khurd in Tehsil Baddi, District Solan. Petitioner entered into an agreement to sell the aforesaid property with the sellers. The deal was finalized at Rs. 3,51,00,000/-. (b) Rs. 51 lacs and Rs.48 lacs were paid to the sellers by the purchasers. The amount in cash was paid at the insistence of petitioner. (c) Petitioner alongwith other partners of Super Rugs India LLP were to get the ownership of the property, agreed to be sold, changed in the revenue records in the name of Super Rugs India LLP in place of Super Rugs India Private Ltd. and also to obtain necessary permission to sell as required from the competent authority. The purchasers had suggested the name of Sh. Mehandiratta as an experienced consultant to facilitate the requisite permissions. The professional fee to the consultant to the tune of Rs.8 lacs was initially to be paid by the purchasers and was subject to the adjustment by the petitioner at the time of registration of sale deed. The purchasers had suggested the name of Sh. Mehandiratta as an experienced consultant to facilitate the requisite permissions. The professional fee to the consultant to the tune of Rs.8 lacs was initially to be paid by the purchasers and was subject to the adjustment by the petitioner at the time of registration of sale deed. (d) On 17.9.2019, the petitioner got the ownership of the land converted in the name of Super Rugs India LLP and the purchasers at that stage paid half of the fee i.e. Rs.4 lacs to the consultant. (e) The sellers thereafter failed to apply and obtain the permission to sell the property in question as required by law despite repeated requests by the purchasers. (f) The petitioner and other partners of Super Rugs India LLP always came up with flimsy excuses for not obtaining the requisite permission for sale of land. Petitioner had dishonest intention and hidden agenda to prolong the matter as long as possible and to use the hard-earned money of purchasers for commercial purposes. (g) On getting suspicious, the purchasers made inquiries and found that the price of the land in the area in question had gone up and thus the petitioner and his partners had resiled from their commitment with a dishonest intention to usurp the amount of Rs.99 lacs received by them as earnest money. (h) The purchasers tried to contact other partners of the petitioner but they also sidetracked the issue by putting the blame on petitioner. 11. Thus, there is not much dispute regarding the material facts. The execution of agreement to sell dated 5.8.2018 is admitted by both the parties. The payment and receipt of earnest money of Rs. 51 lacs in the first instance and Rs.48 lacs at subsequent stage is also not denied. However, the rival parties have blamed each other for failure to perform their respective parts of agreement. Petitioner alleges that the purchasers were liable to seek permission under Section 118 of the H.P. Tenancy and Land Reforms Act, 1972, however, in contrast, the purchasers allege this part to be performed by the petitioner and other partners of Super Rugs India LLP. 12. The FIR, of which quashing has been sought, has been registered under section 420 read with section 34 IPC. 12. The FIR, of which quashing has been sought, has been registered under section 420 read with section 34 IPC. In Vijay Kumar Ghai and others vs. State of West Bengal and others (2022) 7 SCC 124 , the Hon’ble Supreme Court has held as under : “35. To establish the offence of Cheating in inducing the delivery of property, the following ingredients need to be proved: - (i). The representation made by the person was false. (ii). The accused had prior knowledge that the representation he made was false. (iii). The accused made false representation with dishonest intention in order to deceive the person to whom it was made. (iv). The act where the accused induced the person to deliver the property or to perform or to abstain from any act which the person would have not done or had otherwise committed. 36. As observed and held by this Court in R.K. Vijayasarathy & Anr. Vs. Sudha Seetharam & Anr. (2019) 16 SCC 739 , the ingredients to constitute an offence under Section 420 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. Thus, cheating is an essential ingredient for an act to constitute an offence under Section 420 IPC.” 13. Noticeably, the fact that the purchasers had paid an additional amount of Rs.48 lacs in cash to the sellers on 31.12.2019 has not been specifically denied by the private respondents. There is a clear gap of about 16 months between the execution of agreement to sell dated 5.8.2018 and payment of additional amount as earnest money on 31.12.2019. There is no allegation in the complaint of the purchasers that they were induced to pay additional amount of Rs.48 lacs towards earnest money under some deceit. In this background, the contention of petitioner to the effect that there was no dispute inter se the parties till 31.12.2019 gets prima-facie credence. 14. The contents of complaint, which culminated in registration of FIR No. 72 of 2022 against petitioner and others, do not reveal any allegation that the petitioner and other sellers were not having the intent to sell their property from the very inception. 14. The contents of complaint, which culminated in registration of FIR No. 72 of 2022 against petitioner and others, do not reveal any allegation that the petitioner and other sellers were not having the intent to sell their property from the very inception. The complainants have not specifically made any allegation that the sellers had any latent or hidden intent to cheat the purchasers from the very beginning. The fact that the purchasers had paid additional amount of Rs.48 lacs after more than one year of the execution of the agreement itself is sufficient to infer that there was no such material available with the purchasers to have entertained any such suspicion against the sellers. Even, after the payment of amount of Rs.48 lacs, except for the fact that the performance of agreement dated 5.8.2018 had failed, no specific overt act of omission or commission has been attributed to the sellers from which inference regarding intent to cheat can be drawn. 15. In Sushil Sethi and another vs. State of Arunachal Pradesh and others (2020) 3 SCC 240 , the Hon’ble Supreme Court has held as under: “7.1. In State of Haryana vs. Bhajan Lal (1992) Supp (1) SCC 335, in paragraph 102, this Court has categorised the cases by way of illustration wherein the powers under Article 226 or the inherent powers under Section 482 Cr.P.C. could be exercised either to prevent the abuse of the process of any court or otherwise to secure the ends of justice. In paragraph 102, it is observed and held as under: (SCC pp. 378-79) “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) to (6). xxx xxx xxx (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.” The aforesaid decision of this Court has been followed subsequently by this Court in catena of decisions. 7.2 In Vesa Holdings Private Limited vs. State of Kerala (2015) 8 SCC 293 , it is observed and held by this Court that every breach of contract would not give rise to an offence of cheating and only in those cases breach of contract would amount to cheating where there was any deception played at the very inception. It is further observed and held that for the purpose of constituting an offence of cheating, the complainant is required to show that the accused had fraudulent or dishonest intention at the time of making promise or representation. It is further observed and held that even in a case where allegations are made in regard to failure on the part of the accused to keep his promise, in the absence of a culpable intention at the time of making initial promise being absent, no offence under Section 420 IPC can be said to have been made out. It is further observed and held that the real test is whether the allegations in the complaint disclose the criminal offence of cheating or not. 7.3 In Hira Lal Hari Lal Bhagwati vs. CBI (2003) 5 SCC 257 , in para 40, this Court has observed and held as under: (SCC p. 280) “40. It is settled law, by a catena of decisions, that for establishing the offence of cheating, the complainant is required to show that the accused had fraudulent or dishonest intention at the time of making promise or representation. From his making failure to keep promise subsequently, such a culpable intention right at the beginning that is at the time when the promise was made cannot be presumed. From his making failure to keep promise subsequently, such a culpable intention right at the beginning that is at the time when the promise was made cannot be presumed. It is seen from the records that the exemption certificate contained necessary conditions which were required to be complied with after importation of the machine. Since the GCS could not comply with it, therefore, it rightly paid the necessary duties without taking advantage of the exemption certificate. The conduct of the GCS clearly indicates that there was no fraudulent or dishonest intention of either the GCS or the appellants in their capacities as office bearers right at the time of making application for exemption. As there was absence of dishonest and fraudulent intention, the question of committing offence under Section 420 of the Penal Code, 1860 does not arise. We have read the charge sheet as a whole. There is no allegation in the first information report or the charge sheet indicating expressly or impliedly any intentional deception or fraudulent/ dishonest intention on the part of the appellants right from the time of making the promise or misrepresentation. Nothing has been said on what those misrepresentations were and how the Ministry of Health was duped and what were the roles played by the appellants in the alleged offence. The appellants, in our view, could not be attributed any mens rea of evasion of customs duty or cheating the Government of India as the Cancer Society is a nonprofit organisation and, therefore, the allegations against the appellants levelled by the prosecution are unsustainable. The Kar Vivad Samadhan Scheme certificate along with Duncan [ (1996) 5 SCC 591 and Sushila Rani [ (2002) 2 SCC 697 judgments clearly absolve the appellants herein from all charges and allegations under any other law once the duty so demanded has been paid and the alleged offence has been compounded. It is also settled law that once a civil case has been compromised and the alleged offence has been compounded, to continue the criminal proceedings thereafter would be an abuse of the judicial process.” It is further observed and held by this Court in the aforesaid decision that to bring home the charge of conspiracy within the ambit of Section 120B of the IPC, it is necessary to establish that there was an agreement between the parties for doing an unlawful act. It is further observed and held that it is difficult to establish conspiracy by direct evidence. 7.4 xxx xxx xxx 7.5 xxx xxx xxx 7.6 In Joseph Salvaraj A vs. State of Gujarat (2011) 7 SCC 59 , it is observed and held by this Court that when dispute between the parties constitute only a civil wrong and not a criminal wrong, the courts would not permit a person to be harassed although no case for taking cognizance of the offence has been made out. 7.7 In Inder Mohan Goswami vs. State of Uttaranchal, (2007) 12 SCC 1 , it is observed and held by this Court that the Court must ensure that criminal prosecution is not used as an instrument of harassment or for seeking private vendetta or with an ulterior motive to pressurise the accused. It is further observed and held by this Court that it is neither possible nor desirable to law down an inflexible rule that would govern the exercise of inherent jurisdiction. It is further observed and held that inherent jurisdiction of the High Courts under Section 482 Cr.P.C. though wide has to be exercised sparingly, carefully and with caution and only when it is justified by the tests specifically laid down in the statute itself. 8. xxx xxx xxx 8.1. As observed hereinabove, the chargesheet has been filed against the appellants for the offences under Section 420 read with Section 120B of the IPC. However, it is required to be noted that there are no specific allegations and averments in the FIR and/or even in the chargesheet that fraudulent and dishonest intention of the accused was from the very beginning of the transaction. It is also required to be noted that contract between M/s SPML Infra Limited and the Government was for supply and commissioning of the Nurang Hydel Power Project including three power generating units. The appellants purchased the turbines for the project from another manufacturer. The company used the said turbines in the power project. The contract was in the year 1993. Thereafter in the year 1996 the project was commissioned. In the year 1997, the Department of Power issued a certificate certifying satisfaction over the execution of the project. Even the defect liability period ended/expired in January, 1998. In the year 2000, there was some defect found with respect to three turbines. Immediately, the turbines were replaced. Thereafter in the year 1996 the project was commissioned. In the year 1997, the Department of Power issued a certificate certifying satisfaction over the execution of the project. Even the defect liability period ended/expired in January, 1998. In the year 2000, there was some defect found with respect to three turbines. Immediately, the turbines were replaced. The power project started functioning right from the very beginning – 1996 onwards. If the intention of the company/appellants was to cheat the Government of Arunachal Pradesh, they would not have replaced the turbines which were found to be defective. In any case, there are no specific allegations and averments in the complaint that the accused had fraudulent or dishonest intention at the time of entering into the contract. Therefore, applying the law laid down by this Court in the aforesaid decisions, it cannot be said that even a prima facie case for the offence under Section 420 IPC has been made out. 8.2. xxx xxx xxx.” 16. Further, the contents of complaint also do not suggest that the sellers were not the owners of the property agreed to be sold by them to the purchasers. It is also not in dispute that the sellers were competent to sell the property and were also competent to enter into an agreement to sell. Admittedly, both the parties have initiated civil litigation against each other arising out of the non-performance of agreement to sell dated 5.8.2018. The fact that the purchasers have filed a suit for specific performance against sellers is also not denied. In this view of the matter, the allegations of cheating and fraud are not established and the dispute is simply a civil dispute without any criminal overtones attached to it. 17. In Murari Lal Gupta vs. Gopi Singh (2005) 13 SCC 699 , the Hon’ble Supreme Court has held as under: “6. We have perused the pleadings of the parties, the complaint and the orders of the learned Magistrate and the Sessions Judge. Having taken into consideration all the material made available on record by the parties and after hearing the learned counsel for the parties, we are satisfied that the criminal proceedings initiated by the respondent against the petitioner are wholly unwarranted. The complaint is an abuse of the process of the court and the proceedings are, therefore, liable to be quashed. Having taken into consideration all the material made available on record by the parties and after hearing the learned counsel for the parties, we are satisfied that the criminal proceedings initiated by the respondent against the petitioner are wholly unwarranted. The complaint is an abuse of the process of the court and the proceedings are, therefore, liable to be quashed. Even if all the averments made in the complaint are taken to be correct, yet the case for prosecution under Section 420 or Section 406 of the Penal Code is not made out. The complaint does not make any averment so as to infer any fraudulent or dishonest inducement having been made by the petitioner pursuant to which the respondent parted with the money. It is not the case of the respondent that the petitioner does not have the property or that the petitioner was not competent to enter into an agreement to sell or could not have transferred title in the property to the respondent. Merely because an agreement to sell was entered into which agreement the petitioner failed to honour, it cannot be said that the petitioner has cheated the respondent. No case for prosecution under Section 420 or Section 406 IPC is made out even prima facie. The complaint filed by the respondent and that too at Madhepura against the petitioner, who is a resident of Delhi, seems to be an attempt to pressurize the petitioner for coming to terms with the respondent.” 18. In Joseph Salvaraj A. vs. State of Gujarat and others (2011) 7 SCC 59 , the Hon’ble Supreme Court has held as under: “16. Thus, from the general conspectus of the various sections under which the Appellant is being charged and is to be prosecuted would show that the same are not made out even prima facie from the Complainant's FIR. Even if the charge sheet had been filed, the learned Single Judge could have still examined whether the offences alleged to have been committed by the Appellant were prima facie made out from the complainant's FIR, charge sheet, documents etc. or not. 17. In our opinion, the matter appears to be purely civil in nature. There appears to be no cheating or a dishonest inducement for the delivery of property or breach of trust by the Appellant. The present FIR is an abuse of process of law. or not. 17. In our opinion, the matter appears to be purely civil in nature. There appears to be no cheating or a dishonest inducement for the delivery of property or breach of trust by the Appellant. The present FIR is an abuse of process of law. The purely civil dispute, is sought to be given a colour of a criminal offence to wreak vengeance against the Appellant. It does not meet the strict standard of proof required to sustain a criminal accusation. In such type of cases, it is necessary to draw a distinction between civil wrong and criminal wrong as has been succinctly held by this Court in Devendra Vs. State of U.P., (2009) 7 SCC 495 , relevant part thereof is reproduced hereinbelow: (SCC p.505, para 27) “27. .…A distinction must be made between a civil wrong and a criminal wrong. When dispute between the parties constitute only a civil wrong and not a criminal wrong, the courts would not permit a person to be harassed although no case for taking cognizance of the offence has been made out." 18. In fact, all these questions have been elaborately discussed by this Court in the most oft quoted judgment in State of Haryana vs. Bhajan Lal (supra) where seven cardinal principles have been carved out before cognizance of offences, said to have been committed, by the accused is taken. The case in hand unfortunately does not fall in that category where cognizance of the offence could have been taken by the court, at least after having gone through the F.I.R., which discloses only a civil dispute. 19. The Appellant cannot be allowed to go through the rigmarole of a criminal prosecution for long number of years, even when admittedly a civil suit has already been filed against the Appellant and Complainant-Respondent No. 4, and is still subjudice. In the said suit, the Appellant is at liberty to contest the same on grounds available to him in accordance with law as per the leave granted by Trial Court. It may also be pertinent to mention here that the complainant has not been able to show that at any material point of time there was any contract, much less any privity of contract between the Appellant and Respondent No. 4 -the Complainant. It may also be pertinent to mention here that the complainant has not been able to show that at any material point of time there was any contract, much less any privity of contract between the Appellant and Respondent No. 4 -the Complainant. There was no cause of action to even lodge an FIR against the Appellant as neither the Complainant had to receive the money nor he was in any way instrumental to telecast "GOD TV" in the central areas of Ahmedabad. He appears to be totally a stranger to the same. Appellant's prosecution would only lead to his harassment and humiliation, which cannot be permitted in accordance with the principles of law.” 19. In light of exposition of law as discussed above and its applicability to the facts of the case, I am of the considered view that the facts of the case on the face of it are not sufficient to disclose commission of offence under Sections 420 read with Section 34 IPC by the petitioner and other partners of Super Rugs India LLP. 20. In result, the petition succeeds. FIR No. 0072 dated 29.03.2022, Annexure P-9, under Sections 420 and 34 of Indian Penal Code, registered at Police Station, Baddi, District Solan, H.P. is ordered to be quashed. 21. The petition is disposed of in the aforesaid terms, so also the pending miscellaneous applications, if any.