SUPREME COURT QUASHES CRIMINAL PROCEEDINGS AGAINST APPELLANT-ACCUSED DUE TO LACK OF EVIDENCE OF DISHONEST INDUCEMENT AND CHEATING

INTRODUCTION

A three-Judge Bench of the Supreme Court comprising of Justice B. R. Gavai, Justice Rajesh Bindal and Justice Sandeep Mehta passed an Order dated 20.03.2024 in Criminal Appeal No. Of 2024 (Arising Out Of SLP(Criminal) No. 9598 Of 2022) in A.M. Mohan Vs. The State Represented By SHO And Another and held that the continuation of the criminal proceedings against the Appellant would amount to abuse of process of law resulting in miscarriage of justice, as there was no evidence to support the FIR registered against the Appellant and thereby quashed the charges levelled against the Appellant in the FIR.

FACTS

i) The case of the Prosecution was that, during the year 2016, the Accused No. 2, Suresh Prathaban, being a college friend of the Complainant-Karthick Krishnamurthy, approached him for some help to clear his hand loan. The Accused No. 2 further told that he had business with the Accused No. 1, Lakshmanan, who was running a hotel and had a real estate business.

ii) Upon the insistence of the Accused No. 2, the Complainant had to agree to extend financial help to Accused No. 1 to the tune of Rs. 1,60,00,000/- for the business projects at Oragadam and around Kancheepuram District with condition to repay the same within 20 months with 100% profit.

iii) Accordingly, the Complainant transferred a sum of Rs. 49,25,000/- on 18.03.2016, Rs. 20,01,000/- on 31.05.2016, Rs. 36,25,000/- on 13.06.2016, Rs.30,24,166/- on 08.07.2016 through RTGS and Rs. 24,25,834/- in cash to Accused Nos. 1 and 2, totaling to the tune of Rs.1,60,01,000/- (though mentioned in Complaint as Rs.1,60,00,000/-).

iv) To secure the same, Accused No. 1 had executed a registered simple Mortgage Deed dated 18.03.2016 in favour of the Complainant relating to 100 plots at Sumangali Village, Thiruvannamalai District, registered vide Document No.768 of 2016 for Rs.1,00,00,000.

v) Thereafter, at the insistence of Accused Nos. 1 and 2, the Complainant entered into an unregistered Memorandum of Understanding and paid a sum of Rs.1,50,00,000/- and a further sum of Rs.50,00,000/- by RTGS and cheque to Accused No. 1. In the said amount, the Complainant directly transferred a sum of Rs.20,00,000/- in favour of the present Appellant-A.M. Mohan (Accused No.3). Further, Accused No.1 also transferred a sum of Rs.1,80,00,000/- to the present Appellant for the purchase of the land admeasuring 9.80 acres situated at Chittoor Village, Sriperumbudur Taluk. To secure the said payment of Rs.2,00,00,000/- with returns of Rs.10,00,00,000/-, Accused No. 1 executed a registered General Power of Attorney (“GPA”) dated 03.02.2017, in favour of the Complainant, vide Document No.3733/2017, in respect of the above said land and also executed a registered Sale Deed relating to the land admeasuring 2.52 acres situated at Vellarai Village, Kancheepuram District vide document No.386/2017 dated 09.02.2017 in favour of the Complainant.

vi) The Accused No. 1 also executed a Mortgage Deed for land admeasuring 2.14 acres at Sunguvarchatram Village (though mentioned in the Complaint as ‘a registered Agreement to Sell land admeasuring 1.64½ acres’) in favour of the Complainant registered vide Document No. 373/2017 dated 27.02.2017. Thereafter, Accused Nos. 1 and 2 had received an amount of Rs.49,85,500/- and executed unregistered Loan Agreement dated 05.03.2017, in favour of the Complainant and agreed to repay with interest quantified at Rs.60,000/- per month. For repayment of the said amount along with interest, Accused No. 1 had given a cheque for Rs.58,50,000/- and the same was returned dishonoured due to insufficient funds.

vii) Further, apart from all these transactions, on insistence of Accused Nos. 1 and 2, the Complainant joined in the “gold chit business” conducted by Accused No. 1 and paid a sum of Rs.1,20,000/- per month, from March 2016 to August 2017, totalling to the tune of Rs.21,60,000/-. The Accused persons swindled all the amounts and cheated the Complainant. The Accused No. 1 had disposed of about 58 plots on his own and failed to return the mortgaged amount of Rs.1,00,00,000/- with interest. He also cancelled the Power of Attorney standing in favour of the Complainant relating to 9.80 acres of land at Chittoor Village and without notice to the Complainant, he sold out the same to third parties. Accordingly, the Appellant and other Accused persons cheated the Complainant to the tune of Rs.16,01,00,000/- by their willful and intentional action of fraud, cheating and criminal breach of trust.

viii) On the strength of the Complaint filed before the Judicial Magistrate, a FIR being Crime No. 21 of 2020 was registered on 07.11.2020, at District Crime Branch, Kancheepuram District, against Accused Nos. 1, 2 and 3, for the offences punishable under Section 415 of the Indian Penal Code, 1860 (IPC) (Cheating), Section 420 IPC (Cheating and dishonestly inducing delivery of property) read with Section 34 of the IPC (Acts done by several persons in furtherance of common intention).

ix) Aggrieved by the registration of FIR, the Appellant filed a Criminal O.P. No. 20716 of 2020 before the High Court of Madras, under Section 482 of the Code of Criminal Procedure, 1973 (Cr.P.C.) (Saving of inherent powers of High Court), to call for the records and to quash the said FIR.

x) Further, the Ld. Single Judge of the High Court, vide Order dated 15.07.2022, held that the FIR prima facie disclosed commission of a cognizable offence and as such, the High Court cannot interfere with the investigation. As a result, the High Court rejected the Petition under Section 482 of Cr.P.C. for quashing of the FIR, but directed the investigating agency to complete the investigation and file a final report within a period of twelve weeks.

xi) Aggrieved by the High Court Order dated 15.07.2022, the Appellant filed Criminal Appeal No. Of 2024 (Arising Out Of SLP(Criminal) No. 9598 Of 2022) before the Supreme Court and the notice was issued to the Parties, vide Order dated 21.10.2022.

SUPREME COURT ANALYSIS

The Apex Court vide Order dated 20.03.2024, made the following observations:

1) The Bench observed that the law with regard to exercise of jurisdiction under Section 482 of Cr.P.C. to quash FIR and criminal proceedings arsing therefrom, had been summarized by the Supreme Court in the case of Indian Oil Corporation v. NEPC India Limited and Others (2006) 6 SCC 736: 2006 INSC 452 after taking into consideration the earlier precedents. The observations of the said case were as follows:

“12. The principles relating to exercise of jurisdiction under Section 482 of the Code of Criminal Procedure to quash complaints and criminal proceedings have been stated and reiterated by this Court in several decisions. To mention a few—Madhavrao Jiwajirao Scindia v. Sambhajirao Chandrojirao Angre [(1988) 1 SCC 692 : 1988 SCC (Cri) 234] , State of Haryana v. Bhajan Lal [1992 Supp (1) SCC 335 : 1992 SCC (Cri) 426] , Rupan Deol Bajaj v. Kanwar Pal Singh Gill [(1995) 6 SCC 194 : 1995 SCC (Cri) 1059] , Central Bureau of Investigation v. Duncans Agro Industries Ltd. [(1996) 5 SCC 591 : 1996 SCC (Cri) 1045] , State of Bihar v. Rajendra Agrawalla [(1996) 8 SCC 164 : 1996 SCC (Cri) 628] , Rajesh Bajaj v. State NCT of Delhi [(1999) 3 SCC 259 : 1999 SCC (Cri) 401] , Medchl Chemicals & Pharma (P) Ltd. v. Biological E. Ltd. [(2000) 3 SCC 269 : 2000 SCC (Cri) 615] , Hridaya Ranjan Prasad Verma v. State of Bihar [(2000) 4 SCC 168 : 2000 SCC (Cri) 786] , M. Krishnan v. Vijay Singh [(2001) 8 SCC 645 : 2002 SCC (Cri) 19] and Zandu Pharmaceutical Works Ltd. v. Mohd. Sharaful Haque [(2005) 1 SCC 122 : 2005 SCC (Cri) 283] . The principles, relevant to our purpose are: (i) A complaint can be quashed where the allegations made in 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 the case alleged against the accused.

2) The Apex Court further stated that, if a person could somehow be entangled in a criminal prosecution, there is a likelihood of imminent settlement. The Court, relying on the law laid down by it in the case of Sagar Suri and Another v. State of U.P. and Others (2000) 2 SCC 636 : 2000 INSC 34 held that any effort to settle civil disputes and claims, which do not involve any criminal offence, by applying pressure through criminal prosecution should be deprecated and discouraged.

3) The Court also observed that though no one with a legitimate cause or grievance should be prevented from seeking remedies available in criminal law, a complainant who initiates or persists with a prosecution, being fully aware that the criminal proceedings are unwarranted and his remedy lies only in civil law, should himself be made accountable, at the end of such misconceived criminal proceedings, in accordance with law.

4) The Bench further observed that, all the allegations were against Accused Nos. 1 and 2 only and the only allegation against Accused No. 3 in the FIR was as follows;

“At the instance of the said Lakshmanan (accused No.1), I (complainant) paid directly Rs. 20,00,000/- to one Mohan (appellant-accused No. 3) and the said Lakshmanan (accused No.1) transferred the remaining sale consideration of over 18 odd crores to Mohan for the purchase of his lands at Sunguvarchatram. But suppressed the execution of sale deed dated 03.02.2017 by the appellant/accused No.3.”

5) Further, it could thus be seen that the only allegation against the present Appellant was that Accused No. 1 executed the GPA in favour of the Complainant in respect of the land which is purchased from the present Appellant-Accused No.3. The other allegation was that upon instructions of Accused No. 1 to transfer Rs. 20,00,000/- to Accused No. 3’s Tamil Nadu Mercantile Bank Account towards sale of the land made by the Appellant to Accused No.1, the Complainant had transferred a sum of Rs .20,00,000/-.

6) It was undisputed that upon receipt of the said amount of Rs.20,00,000/-, the present Appellant had transferred the land in question by Sale Deed in favour of Accused No.1. It was also undisputed that thereafter Accused No. 1 executed the GPA in favour of the Complainant on the same day. After the Sale Deed was executed in favour of Accused No.1 by the Appellant-Accused No.3, though the Complaint narrated various instances thereafter, no role was attributed to the present Appellant.

ORDER

Thus, the Supreme Court held that dishonest inducement is the sine qua non to attract the provisions of Sections 415 and 420 of IPC and the same was totally lacking qua the present Appellant. Hence, the Bench held that the continuation of the criminal proceedings against the present Appellant would amount to abuse of process of law resulting in miscarriage of justice. As a result, the Supreme Court allowed the Appeal filed by the Appellant-Accused No. 3 and thereby, quashed and set aside the Order dated 15.07.2022 of the High Court in Criminal O.P. No.20716 of 2020 and Criminal M.P. No. 8763 of 2020. Further, the FIR in Crime No.21 of 2020 and the consequential Charge-Sheet filed against the present Appellant was also quashed and set aside by the Apex Court.

 

Kartik Khandekar

Associate

Hansen International Law Firm and Allied Services