Criminal proceedings need not be quashed merely because a civil remedy is available: SC

Priti Saraf & Anr. V. State of NCT of Delhi & Anr.

CRIMINAL APPEAL NO(S).296 OF 2021 (Arising out of SLP(Crl.) No(s). 6364 of 2019)

Decided on March 10th, 2021.

The present case was decided by a division bench of the Supreme Court consisting of Hon'ble Justice Indu Malhotra and Hon'ble Justice Ajay Rastogi.

The facts of the aforementioned case revolve around the property in question, namely, 37, Friends Colony (East), New Delhi which is in ownership of the 2nd Respondents. The said property was mortgaged with the State Bank of Patiala for a sum of Rupees 18 crores. It has been alleged that in order to clear these dues the 2nd respondent defrauded the appellants through a partnership with the broker, Ashok Kumar, so as to misappropriate the amount paid by the appellants. 2nd Respondent is alleged to have additionally breached the trust of the appellants by falsely promising to be liable to pay the amount of 25.50 crores to the latter if the deal was not executed. At the time of execution, appellants paid a sum of Rupees 12.5 crores. The 2nd Respondent have been alleged of intending to defraud from the beginning of the agreement as there is a failure to fulfill the 3 conditions entailed within clause 3 of the agreement.

The compulsory requirements were to be completed on 22.03.2011, but only two of them were completed respectively by 11.05.2011 and 2.06.2011, while the third requirement was still outstanding.

On 23.09.2015, a private complaint was filed by the appellants under Section 200 read with section 190 of the CrPC before the learned Magistrate with regard to the alleged crimes committed by the 2nd Respondent before the Saket Court in New Delhi. It was then sent to the Police Station in order to file an FIR under section 156(3) dated 15.11.2016 which was challenged by the respondents through the usage of a criminal revision but was subsequently dismissed by the ASJ & Special Judge (NDPS), South East, Saket Courts, New Delhi on the 26.04.2017. The FIR was filed against the 2nd Respondent and Mr. Ashok Kumar under sections 420, 406 and 34 of the IPC dated 28.04.2017.

A charge sheet was filed by the I.O on 05.10.2018 revealing that the 2nd respondent never got site plans sanctioned for the appellants. The Learned judge of the High Court, however, only paid credence to the agreement to sell (24.12.2011) along with the notice of termination (30.01.2011) without examining other key facts and events that had transpired during the course of this case. The Justice came to the conclusion that this transgression by the 2nd respondent amounted to a simple breach of contract and thus quashed all criminal proceedings, thus invoking exercise of inherent power under section 482 of the CrPC.

The Learned Counsel for the appellants based their argument around the fact that inherent power exercised by the High Court u/s 482 CrPC is an exceptional one, invoked only in the rarest of rare cases. The Counsel vehemently disagreed with the High Court’s decision to disregard the material facts of the case, confining the case as purely civil in nature and not taking into consideration the criminal aspects involved is unsustainable in law and should be reversed by the divisional bench. On the contrary, the Learned counsel for the 2nd Respondent argued that the case was purely civil in nature as the earnest money was forfeited by the aforementioned only when the appellants failed to fulfill and perform the terms of agreement to sell dated 24.12.2011. Further claimed that all 3 conditions were in fact fulfilled by the respondent pointing towards documentary evidence as proof.

The distinguished bench first and fore-mostly held –

It being a settled principle of law that to exercise powers under Section 482 CrPC, the complaint in its entirety shall have to be examined on the basis of the allegation made in the complaint/FIR/charge-sheet and the High Court at that stage was not under an obligation to go into the matter or examine its correctness. Whatever appears on the face of the complaint/FIR/charge-sheet shall be taken into consideration without any critical examination of the same. The offence ought to appear ex facie on the complaint/FIR/charge-sheet and other documentary evidence, if any, on record. (Para 23)

The court clarified the ambit and scope of section 482 of CrPC using the judgment provided in the case of State of Haryana and Others Vs. Bhajan Lal and Others, highlighting key areas necessary for a case to be quashed by the High Court.

Furthermore, the court took the aid of the judgment provided in the case of Nagpur Steel & Alloys Pvt. Ltd. Vs. P. Radhakrishna and Others, specifically para 3 where it was observed:

We have perused the complaint carefully. In our opinion it cannot be said that the complaint did not disclose the commission of an offence. Merely because the offence was committed during the course of a commercial transaction, would not be sufficient to hold that the complaint did not warrant a trial. Whether or not the allegations in the complaint were true was to be decided on the basis of evidence to be led at the trial in the complaint case. It certainly was not a case in which the criminal trial should have been cut short. The quashing of the complaint has resulted in grave miscarriage of justice. We, therefore, without expressing any opinion on the merits of the case, allow this appeal and set aside the impugned order of the High Court and restore the complaint. The learned trial Magistrate shall proceed with the complaint and dispose of it in accordance with law expeditiously.” (Para 30)

Crucially the court held:

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. (Para 32)

The divisional bench quashed the pending Interlocutory Applications finding them to be filed with malafide intentions under sections 340 read with 195 of the CrPC.

In conclusion the Court held that the decision to quash the judgment by the High Court was incorrect and accordingly set aside. Thus, the appeal was successful.

View/Download judgment: Priti Saraf & Anr. V. State of NCT of Delhi & Anr.

- Rahul Kamath, IndicLegal