SC dismisses State’s appeal in commercial dispute where FIR was quashed by Rajasthan HC, says State of Arunachal Pradesh ought to have been happy getting rid of an unnecessary criminal case
Justices Vikram Nath & K.V. Viswanathan [18-04-2024]

Read Order: THE STATE OF ARUNACHAL PRADESH & ORS v. KAMAL AGARWAL & ORS. ETC [SC- CRIMINAL APPEAL NOS. 2136-2138 OF 2024]

LE Correspondent

New Delhi, April 22, 2024: The Supreme Court has dismissed an appeal filed by the State of Arunachal Pradesh in a case alleging that the accused persons were not willing to execute the sale deed for which they had taken the sale consideration of Rs 1 crore. The Top Court opined that the matter at hand was not a case of cheating and the Rajasthan High Court had rightly proceeded to quash the proceedings on the ground that no part of the cause of action had arisen in the State of Arunachal Pradesh.

The facts of the case were such that M/s Shiv Bhandar, the proprietorship concerned transferred an amount of Rs.1 Crore in the year 2016 in the account of Chandra Mohan Badaya, two of his proprietorships concerned and Rajesh Natani in four equal transactions of 25 lakhs each. According to the appellant Chandra Mohan Badaya, the amount was transferred as a loan, however, according to the complainant the said payments were made for purchase of land/building situated in Jaipur, Rajasthan. There was no written agreement with respect to the purpose of the transfer of said amount, whether it was a loan or an advance towards purchase of land/building referred to above.

According to Chandra Mohan Badaya, out of Rs.75 lakhs received by him and his two concerns, he repaid Rs.37 lakhs to the complainant from his personal and proprietorship accounts by way of bank transfer. This amount was repaid in 2016-2017. Further, according to Chandra Mohan Badaya, he executed two sale deeds with respect to two properties in favour of wife, sister-in-law and Power of Attorney holder of the complainant proprietor. Although the total sale consideration for both the sale deeds was Rs.1.08 Crores out of which an amount of Rs.27 lakhs each i.e. total Rs.54 lakhs only was received by the petitioner. These sale deeds were of the year 2016. It was much after all these transactions that the FIR in question was lodged in 2017 and chargesheet was submitted against eight persons.

On the basis of the said chargesheet, cognizance was taken by the Chief Judicial Magistrate and a case was registered. Thereafter, two sets of petitions were filed before two different High Courts namely Gauhati High Court and Rajasthan High Court.

The Gauhati High Court dismissed the petitions for quashing on the finding that no exceptional circumstances existed calling for quashing of the proceedings. Whereas, the Rajasthan High Court proceeded to quash the proceedings on the ground that no part of the cause of action had arisen in the State of Arunachal Pradesh rather entire cause of action was in the state of Rajasthan, hence, the Police/Court in Arunachal Pradesh lacked territorial jurisdiction to entertain the FIR and all subsequent proceedings.

The appeals before the Top Court arose out of the First Information Report (FIR) under section 420/120B/34 Indian Penal Code, 1860 (IPC) lodged by Anil Agarwal attorney holder for Okep Tayeng, the proprietor of M/s Shiv Bhandar. The complainant M/s Shiv Bhandar had not come forward to challenge the order of the Rajasthan High Court. It was the State of Arunachal Pradesh which had challenged the order of the Rajasthan High Court.

The Division Bench of Justice Vikram Nath & Justice K.V. Viswanathan took note of the fact that the reason for lodging the FIR was that the accused persons were not willing to execute the sale deed for which they had taken the sale consideration of Rs.1 Crore.

The Bench opined that the matter was purely civil in nature. It was a case of money advancing for which no written document was executed to indicate its purpose or import as such whether it was a loan advance or an advance payment for transfer of property being land/building situated in Jaipur, was not borne out from any records. Such claim of the complainant that it was for transfer of property for land/building prescribed above, would be a matter of evidence to be led and established in the Court of law rather than the police investigating the same and finding out, the Bench added.

It was not the case of the complainant as stated in FIR that the plot/land as alleged by them which was to be transferred to them did not exist or had been sold or transferred to somebody else and therefore, there was an element of cheating by the accused persons. The Bench was of the view that if the accused persons were not transferring the land and if the complainant could establish an agreement/contract with respect to the same in a Court of law, it ought to have filed a civil suit for appropriate relief. 

Noting that the Appellant Chandra Mohan Badaya had already explained as to how he had already repaid Rs.37 lakh through bank transaction and also transferred two properties worth more than Rupees One Crore. All these aspects could be thrashed out before a competent Civil Court. As per the Bench, it could not be said to be a case of cheating.

“The High Court of Rajasthan had rightly found as a matter of fact considering all aspects of the matter that the offence, if any, although according to us, no offence is made out, would be within the territorial jurisdiction of Rajasthan and not Arunachal Pradesh. The State of Arunachal Pradesh ought to have been happy getting rid of an unnecessary Criminal Case being registered and tried in Arunachal Pradesh Why the State of Arunachal Pradesh has approached this Court is also a question to be answered by the said State when the complainant in a matter relating to civil/commercial dispute is not coming forward to defend its FIR which has been quashed by the Rajasthan High Court”, it asserted.

Thus, the Bench quashed the entire FIR and the consequential proceedings thereto.The Rajasthan High Court, in the subsequent petition moved by Pawan Agarwal, has after noticing the proceedings initiated in Gauhati High Court had given relief to Pawan Agarwal and other respondents on the ground that no cause of action arose in Arunachal Pradesh. 

Finding the dispute to be of a civil nature and having quashed the FIR, the Bench held, “Hence, in exercise of the power under Article 136 of the Constitution of India we are not inclined to disturb the findings in favour of Pawan Agarwal in SB Criminal Writ Petition No. 989/2022 by Rajasthan High Court. Once proceedings are being quashed against all the other accused named in the FIR and in the chargesheet and considering the nature of findings we have recorded, proceedings against Pawan Agarwal cannot alone continue.”