Code of Criminal Procedure, 1973: s.482 – Complaint by respondent no.2 against appellant alleging that the appellant-builder company had sold four excess flats beyond its share, in terms of the agreements entered into between them – Appellant filed s.482 application before High Court which was dismissed – Hence instant appeal – Held: The facts did not show that appellants deceptively or intentionally tried to sell excess flats as contended by respondent No. 2 – Although, there is no doubt 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 – In the instant case, the actual question which required consideration was not whether a criminal case could be pursued in the presence of a civil suit, but whether the relevant ingredients for a criminal case were even prima facie made out – Based on the facts, clearly no cogent case regarding a criminal breach of trust or cheating was made out – Dispute could at best be termed as one involving breach of contract – Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction, that is the time when the offence is said to have been committed – Therefore, it is the intention which is the gist of the offence – Applying this dictum to the instant factual matrix, the key ingredient of having a dishonest or fraudulent intent under ss.405, 419 and 420 was not made out – Criminal proceedings initiated against appellant quashed – Penal Code, 1860 – ss.405, 419 and 420.
Abuse of the process of law: 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 – Code of Criminal Procedure, 1973 – s.482.
Allowing the appeal, the Court
HELD: 1.1 The complaint levelled against the appellants is one which involves commission of offences of criminal breach of trust and cheating. While a criminal breach of trust as postulated under section 405 of the Indian Penal Code, 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 under section 415 of the Indian Penal Code, 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. Thus, 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. [Para 28][888-C-E]
1.2 Upon a careful assessment of such facts, by no stretch can it be concluded that the Appellants have deceptively or intentionally tried to sell excess flats if any, as contended by Respondent No. 2. Subsequent to the revocation of GPA, it was the Appellants who had first resorted to arbitration proceedings on 02.03.16 for redressal of dispute between the parties, to which Respondent No 2 had accordingly filed his statement of objections dated 09.03.16. It was only on 29.03.16 that Respondent No. 2 had filed the FIR in question bearing Crime No. 185/2016 against the Appellants. Moreover, it was Respondent No. 2 who had withdrawn his prayer with respect to selling of four excess flats by the Appellants, only to pursue the same in civil proceedings. [Para 35][889-F-H]
1.3 Although, there is perhaps not even an iota of doubt 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. In the instant case, the actual question which requires consideration is not whether a criminal case could be pursued in the presence of a civil suit, but whether the relevant ingredients for a criminal case are even prima facie made out. Relying on the facts clearly no cogent case regarding a criminal breach of trust or cheating is made out. The dispute between the parties, could at best be termed as one involving a mere breach of contract. [Paras 37, 38][890-B-D]
2. This Court in the case of Hridaya Ranjan Prasad Verma & Ors. v. State of Bihar has observed that mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction, that is the time when the offence is said to have been committed. Therefore it is the intention which is the gist of the offence. Applying this dictum to the instant factual matrix where the key ingredient of having a dishonest or fraudulent intent under sections 405, 419 and 420 is not made out, the case at hand, is a suitable case necessitating intervention of this Court. [Paras 39, 40][890-E-H; 891-A-B]
*Hridaya Ranjan Prasad Verma & Ors. v. State of Bihar & Anr. (2000) 4 SCC 168 : [2000] 2 SCR 859 – relied on
3. Existence of dishonest or fraudulent intention has not been made out against the Appellants. Though the instant dispute certainly involves determination of issues which are of civil nature, pursuant to which Respondent No. 2 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. There has been attempt to stretch the contours of a civil dispute and thereby essentially impart a criminal color to it. This Court has at innumerable instances expressed its 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. [Paras 41, 45, 47][891-B-C; 893-F; 894-C-D]
M/s Indian Oil Corporation v. M/s. NEPC India Ltd & Ors. (2006) 6 SCC 736 : [2006] 3 Suppl. SCR 704; G. Sagar Suri and Anr. v. State of UP and Ors. (2000) 2 SCC 636 : [2000] 1 SCR 417; State of Haryana & Ors. v. Ch. Bhajan Lal and Ors. (1992) SCC (Cri) 426; Randheer Singh v. The State of U.P. & Ors. 2021(12) SCALE 55 – relied on.
Prof. R. K. Vijayasarathy & Anr. v. Sudha Seetharam & Anr. (2019) SCC Online SC 208; State of Karnataka v. M. Devendrappa & Anr. (2002) 3 SCC 89 : [2002] 1 SCR 27; Priti Saraf & Anr. v. State of NCT of Delhi & Anr. 2021 SCC Online SC 206; Sri Krishna Agencies v. State of Andhra Pradesh & Anr. (2009) 1 SCC 69 : [2008] 16 SCR 20 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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