Read Judgment: Mitesh Kumar J. Sha vs. State of Karnataka & Ors

Pankaj Bajpai

New Delhi, October 27, 2021: Applying the dictum laid down in the judgment of Hridaya Ranjan Prasad Verma & Ors Vs. State of Bihar & Anr , the Supreme Court has exercised its inherent powers u/s 482 of CrPC and quashed the proceedings against Rajarajeshwari Buildcon Private Ltd. (appellant-Builder) for offences u/s 406, 419, 420 r/w/s 34 of IPC, observing that no case of dishonest or fraudulent intent was made out against the appellants. 

A Division Bench of Justice S.Abdul Nazeer and Justice Krishna Murari expressed their disapproval for imparting criminal color to a civil dispute, made merely to take advantage of a relatively quick relief granted in a criminal case in contrast to a civil dispute. 

Such an exercise is nothing but an abuse of the process of law which must be discouraged in its entirety, added the Bench. 

The central point of dispute made by the appellant was that, it was specifically agreed between the parties that the appellants would be entitled to sell additional flats beyond their share, as adjustments for payment made to Religare Finvest Ltd on behalf of second respondent. It was also contended that the second respondent had also agreed to execute a ratification deed to the JDA and GPA eventually, which would have formally authorized the appellants to sell additional apartments.

The Top Court found that the complaint levelled against the appellant was one which involved commission of offences of criminal breach of trust and cheating. 

While a criminal breach of trust as postulated u/s 405 of IPC entails misappropriation or conversion of another’s property for one’s own use, with a dishonest intention, cheating too on the other hand as an offence defined u/s 415 of IPC involves an ingredient of having a dishonest or fraudulent intention which is aimed at inducing the other party to deliver any property to a specific person. Both the sections clearly prescribed ‘dishonest intention’, as a pre-condition for even prima facie establishing the commission of said offences, added the Court. 

Thus, the Division Bench of the Apex Court observed that in order to assess the relevant contentions made by the parties, the question whether actions of the appellants were committed in furtherance of a dishonest or fraudulent scheme is one which requires scrutiny.

Coming to the facts of the case at hand, the contested contention between the parties is that the builder company had sold four excess flats beyond its share, in terms of the JDA and supplementary agreement entered into between the parties. Respondent No. 2 contends that builder company which was entitled to sell only 9 flats in its favour, has instead executed sale deed for 13 flats in total. Thus, the company simply could not have sold the flats beyond 9 flats for which it was authorized and resultantly cannot evade criminal liability on a mere premise that a civil dispute is already pending between the parties”, observed the Bench.  

The Apex Court refused to accept that the appellants had deceptively or intentionally tried to sell excess flats if any, as subsequent to the revocation of General Power of Attorney (GPA), it was the appellants who had first resorted to arbitration proceedings for redressal of dispute between the parties. 

Moreover, it was the second respondent who had withdrawn his prayer with respect to selling of four excess flats by the appellants, only to pursue the same in civil proceedings, added the Court. 

The Top Court said that a singular factual premise can give rise to a dispute which is both, of a civil as well as criminal nature, each of which could be pursued regardless of the other, and the dispute between the parties, could at best be termed as one involving a mere breach of contract. 

Speaking for the Bench, Justice Murari opined that existence of dishonest or fraudulent intention has not been made out against the appellants, as though the instant dispute certainly involves determination of issues which are of civil nature, pursuant to which second respondent has even instituted multiple civil suits, one can by no means stretch the dispute to an extent, so as to impart it a criminal colour.

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