ANAND KUMAR MOHATTA AND ANR. versus STATE (GOVT. OF NCT OF DELHI) DEPARTMENT OF HOME AND ANR.

[2018] 13 S.C.R.

AANAND KUMAR MOHATTA AND ANR.

STATE (GOVT. OF NCT OF DELHI) DEPARTMENT OF HOMEAND ANR.

(Criminal Appeal No. 1395 of 2018)

NOVEMBER 15, 2018

[S. A. BOBDE AND L. NAGESWARA RAO, JJ.]

Penal Code, 1860:

Cs.406 – Criminal Breach of Trust – Development agreementbetween appellant No. 1 and respondent No. 2 (Developer) –Security amount of Rs. One crore was deposited by developer withappellant No. 1 – As per the agreement the amount was liable to berefunded when the developer would handover possession of theareas of the owner’s share to the owner – Agreement could not beDfulfilled in view of new building regulations – Appellant No. 1conveyed to the developer that he did not wish to develop theproperty – FIR lodged by developer against appellant No. 1 allegingcriminal breach of trust for having not refunded security amountand for having transferred the subject property in the name of hisEwife i.e. appellant No. 2 – Petition by appellants u/s.482 Cr.P.C. forquashing the FIR – High Court dismissed the petition as pre-matureand directed the investigation to proceed – Appeal to Supreme Court– During pendency of appeal, on completion of investigation charge-sheet filed – Plea of appellants also for quashing the charge-sheet– Held: The essence of offence of Criminal Breach of Trust lies inFthe use of the property entrusted to person, by that person, inviolation of any direction of law or any legal contract which he hasmade during the discharge of such trust – Payment of Rs. one croreby the developer was security amount which was required to berefunded when developer would hand-over the possession of theGarea of the owner’s share to the owner – It is not entrustment ofproperty which was dishonestly converted by appellant No. 1 to hisown use or was disposed of in violation of any direction of law orcontract – Developer had also not made any attempt for recoveryof the money – The dispute has the contours of dispute of civilnature and does not constitute criminal offence – Transfer of

property by appellant No. 1 in the name of his wife also did notamount to commission of offence of Criminal Beach of Trust –Therefore, the prosecution is mala fide, untenable and solely intendedto harass the appellants – FIR and charge-sheet are liable to bequashed – High Court erred in dismissing the petition under s. 482Cr.P.C.

Code of Criminal Procedure, 1973:

s.482 – Petition under – For quashing of FIR –Maintainability of, when in the meantime charge-sheet is filed –Held: The inherent power u/s. 482 is conferred to prevent abuse ofprocess of court – The provision does not restrict the exercise ofits inherent power to prevent abuse of process of the court only tothe stage of FIR.

Allowing the appeal, the Court

HELD: 1. It cannot be said that once the charge sheet isfiled, petition for quashing of FIR is untenable. There is nothingin the words of Section 482 Cr.P.C. which restricts the exerciseof the power of the Court to prevent the abuse of process ofcourt or miscarriage of justice only to the stage of the FIR. It issettled principle of law that the High court can exercisejurisdiction under Section 482 of Cr.P.C even when the dischargeapplication is pending with the trial court. It would be travestyto hold that proceedings initiated against person can beinterfered with, at the stage of FIR but not if it has advanced, andthe allegations have materialized into charge sheet. On thecontrary, it could be said that the abuse of process caused by FIRstands aggravated if the FIR has taken the form of charge sheetafter investigation. The power is undoubtedly conferred to preventabuse of process of power of any court. [Paras 15 and 17][1035-G-H; 1036-A-B, F-G]Joseph Salvaraj A. v. State of Gujarat (2011) 7 SCC59 : [2011] 8 SCR 815; G. Sagar Suri and Anr. v. Stateof U.P and Others (2000) 2 SCC 636 : [2000] 1 SCR417; Umesh Kumar v. State of Andhra Pradesh and Anr.(2013) 10 SCC 591: [2013] 14 SCR 213 – relied on.

2. The charge that appellant No.1 has fraudulentlytransferred the property which is the subject matter of the

DEF

Aagreement dated 03.06.1993 to his wife and has therebycommitted criminal breach of trust, is wholly untenable and ratherextraordinary since the alleged fraudulent transfer of propertyby appellant No.1 to his wife, assuming it to be illegal, by nostretch of imagination can constitute the offence of criminalbreach of trust, since the property was not entrusted byBrespondent No.2 to the appellants. The property belonged toappellant No.1 and there was therefore no question of appellantshaving been entrusted with their own property, and that too bythe complainant, who had merely entered into developmentagreement in respect of the property. [Para 18][1037-B-C]

3. The essence of the offence of criminal Breach of Trustlies in the use of the property entrusted to person by that person,in violation of any direction of law or any legal contract which hehas made during the discharge of such trust. In the present case,the amount of Rs. One crore was paid by the complainant-Drespondent to the appellants as an interest free deposit on thesigning of the agreement. It was liable to be refunded to thecomplainant simultaneously on handing over of possession of thearea of the owner’s share to the owner in the group housingcomplex vide Clause 30 (b) of the agreement dated 03.06.1993.[Para 21][1038-G]E

4. The amount has been retained by appellant No.1 as asecurity because not only is there any handing over of constructedportion, the complainant has also got into part possession of theproperty and has not handed it back. Also, the complainant hasfailed to get the property vacated from the tenant’s possession.FThus, it is not possible to hold that the amount of Rs. One crorewhich was paid along with the development agreement as adeposit, can be said to have been entrustment of property whichhas been dishonestly converted to his own use or disposed of inviolation of any direction of law or contract by the appellant. TheGappellants have not used the amount nor misappropriated itcontrary to any direction of law or contract which prescribes howthe amount has to be dealt with. [Paras 22 and 23][1039-A-D]

5. Respondent No.2 has also not demanded the return ofthe amount at any point of time. In fact, it is the specific contention

ANAND KUMAR MOHATTA v. STATE (GOVT. OF NCT OFDELHI) DEPARTMENT OF HOME

of the Respondent No.2 that he has not demanded the amountbecause the agreement is still in subsistence. Therefore, it cannotbe said that the appellants have misappropriated the amount ordishonestly used the amount contrary to any law or contract. Thedispute has the contours of dispute of civil nature and does notconstitute criminal offence. [Para 23][1039-F]

6. Any effort to settle civil disputes and claims, which donot involve any criminal offence, by applying pressure throughcriminal prosecution should be deprecated and discouraged.[Para 25][1040-A]

Indian Oil Corporation v. NEPC India Ltd. and others(2006) 6 SCC 736 : [ 2006] 3 Suppl. SCR 704 – reliedon.

7. The High Court erred in dismissing the petition of theappellants filed under Section 482 of Cr.P.C. This was fit casefor the High Court to exercise its inherent power under Section482 of Cr.P.C. to quash the FIR. [Paras 27][1041-F-G]

State of Haryana and Ors. v. Bhajan Lal and Ors. (1992)Supp (1) SCC 335 : [1990] 3 Suppl. SCR 259 – reliedon.

8. The prosecution is mala fide, untenable and solelyintended to harass the appellants. The FIR and the charge-sheetfiled against the appellants are liable to be quashed. [Paras 29and 30][1042-D-E]

State of Karnataka v. L. Muniswamy and others (1977)2 SCC 699 : [1977] 3 SCR 113 – relied on.

New Delhi Municipal Council v. Tanvi Trading andCredit Private Limited (2008) 8 SCC 765 : [2008] 12 SCR 867 – referred to.

A[2006] 3 Suppl. SCR 704relied onPara 25[1990] 3 Suppl. SCR 259relied onPara 26[1977] 3 SCR 113relied onPara 28

CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No.B1395 of 2018

From the Judgment and Order dated 02.02.2016 of the High Courtof Delhi at New Delhi in Criminal Misc. Case No. 4763 of 2014.

Mahesh Jethmalani, Basant R., Sr. Advs., Sandeep Kapur,Debmalya Banerjee, Ravi Sharma, Vivek Suri, Mayank Datta, ManishCSharma, A. S. Aman, Kartik Bhatnagar, Aviral Kapoor, Ms. I. Khalid,Mrs. Manik Karanjawala, Rohin Oza, Himanshu, Sandeepan Pathak,Tushar Thakur, Ayush Jain for M/S. Karanjawala & Co., Advs. for theAppellants.

Sanjiv Sen, Ajit Kr. Sinha, Sr. Advs., Chetan Dutt, Sanjay Jain,DSayan Ray, Soumo Palit, Abhay Kumar, T. A. Khan for B. V. BalaramDas, Advs. for the Respondents.

The Judgment of the Court was delivered by

S. A. BOBDE, J. 1. Leave granted.E2. This Criminal Appeal is filed by Appellants challenging the finaljudgment and order dated 02.02.2016 of the High Court of Delhi. TheHigh Court vide the above dated final judgment and order dismissed thepetition filed by the Appellants under Section 482 of Criminal ProcedureCode and refused to quash FIR No.0139/2014 dated 20.08.2014. Duringthe pendency of the appeal in this Court, Respondent No.1 filed chargeFsheet dated 03.08.2018 in the Court of Metropolitan Magistrate, PatialaHouse Court, Delhi against the Appellants herein. Thus, by way ofamendment to the main prayer in the appeal, Appellants have also prayedfor quashing of charge sheet dated 03.08.2018. Appellants seek quashingof the FIR dated 20.08.2014 and the charge sheet dated 03.08.2018.

Facts

3. This appeal is by an accused against whom FIR was lodgedon 20.08.2014, in respect of disputes arising out of the agreement dated03.06.1993 entered into between the Appellant No.1 i.e. Mr. AnandKumar Mohatta and the complainant i.e. Ansal Properties &

Infrastructure Ltd. The FIR was lodged about 21 years after theagreement. Initially, the FIR was also lodged against the wife of theAppellant No.1 i.e. Mrs. Shobha Anand Mohatta, but no offence hasbeen made out against her after investigation.

4. The agreement entered into by the two parties is with regard tothe development of the property owned by the Appellants. This propertyis situated at 20, Feroz Shah Road, New Delhi, which falls under LutyensZone. The property was initially owned by the Appellant No.1 and lateron ownership of the property was transferred to Appellant No.2 i.e.wife of Appellant No. 1. Desirous of developing the property, theAppellant No.1 entered into development agreement dated 03.06.1993with Respondent No.2 M/s Ansal Properties & Infrastructure Ltd. Theparties agreed to develop the said property by constructing high-risebuilding comprising of flats. Respondent No.2 paid sum of Rs. Onecrore as contemplated by clause 38 of the agreement. The agreementcould not be fulfilled as the new building regulations which wereintroduced prohibited the construction of high-rise building in the LutyensBungalow Zone, where the property is situated. (See New DelhiMunicipal Council v. Tanvi Trading and Credit Private Limited)[1].

5. Thereafter, on 14.03.2011, the Appellant No.1 wrote letterstating that he does not wish to develop the property. The Appellants didnot take any further action neither did they return the amount advancedby the Respondent No.2.

6. Apparently, since the Appellant had declined all alternate offersmade by the complainant but ostensibly on the ground that this securityamount of Rs. One crore had not been refunded, Respondent No.2 on19.11.2011 filed Criminal Complaint before the SHO, Police StationBarakhamba Road, New Delhi complaining of offences under Section406 and 420 followed by complaint dated 10.09.2012 with the AdditionalCommissioner of Police. On refusal of police authorities to register FIRagainst the Appellants, the Respondent-complainant invoked powers ofthe Court under Section 156 (3) of the Cr. P.C on 03.11.2012. Thereafter,on 11.11.2013 Respondent No. 2 withdrew the complaint filed underSection 156 (3). The FIR with which we are concerned was lodged on20.08.2014 against the Appellants for offence under Section 406 of IPCon fresh complaint filed by the Respondent No.2.

1 2008 (8) SCC 765

A7. Following which, the Appellants approached the High Courtunder Section 482 of the Cr. P.C seeking to quash FIR dated 20.08.2014.According to the Appellants, the FIR was completely untenable in thefacts and circumstances of the case. Mainly, the amount of Rs. Onecrore was rightfully retained by them and there was no question of suchretention constituting criminal breach of trust. Moreover, assumingBthat the Respondent No. 2 had grievance only about the retention ofmoney, the redressal ought to have been sought before Civil Court.Therefore, the lodging of the FIR was mala fide in nature and done withthe intention to pressurize the Appellants to agree to certain new termsand conditions of the agreement to which the Appellants did not want toCproceed with.

8. It is the case of the complainant-Respondent No.2 that theAppellant No.1 is guilty of the offence under Section 406 since he hadclandestinely and surreptitiously transferred the subject property in thename of his wife i.e. Appellant No.2. This was done to defeat theDagreement dated 03.06.1993. It is also said that the Appellants are guiltyof abusing the process of Court by undervaluing the property in collusivesuit before the Bombay High Court and thus wrongly transferred theproperty.

9. The High Court, however, disposed of the Appellants’ petitionEfiled under Section 482 on the ground that the petition has been filed pre-maturely as the case is still at the stage of investigation. The High Courtdirected the investigation to proceed and further directed the Appellantsto join the investigation. Appellants thereafter preferred the present appealby way of Special Leave Petition in this Court. In the present appeal,this Court on the prima facie view of the matter protected the AppellantsFfrom arrest and directed that the investigation be continued. Accordingly,the Respondent No. 1 carried out investigation and has filed reportunder Section 173 of the Cr. P.C in the Court of Metropolitan Magistrate,Patiala House Court, Delhi. Since, the police have now submitted acharge sheet, Appellants have additionally filed amendment applicationGseeking to incorporate prayer for quashing of charge sheet in addition toprayer for quashing of the FIR.

Contentions

10. Shri Mahesh Jethmalani, Senior Counsel appearing for theAppellants submitted that the transactions in the present case which are

set to constitute the offence under Section 406 cannot under anycircumstances be said to constitute an offence under that section.Assuming that the Respondent No.2 have grievance about the allegedwrongful retention of the amount of Rs. One crore, the dispute could atbest be civil dispute.

11. The learned counsel further submitted that the amount of Rs.One crore advanced to the Appellants was liable to be refunded underClause 30 (b) which is as follows: -

“Developer handing over possession of the areas of theOwner’s share to the Owner in the said Group HousingComplex”.

Since this contingency did not arise the amount has not beenrefunded. In addition, the counsel submitted that the Appellants retainedthe amount because the developer i.e. Respondent No.2 is in partpossession of some of the subject property and has also not compliedwith the obligation of having tenant vacated from the property.

12. Shri Sanjiv Sen, learned Senior Counsel for the RespondentNo.2 submitted that the petition for quashing of FIR was untenable sincethe proceedings have gone past the stage of FIR and have resulted in acharge sheet.

13. Shri Sanjiv Sen, vehemently submitted that the charge underSection 406 against the Appellant No.1 arises from the fact that theAppellant No.1 has fraudulently transferred the property which is thesubject matter of the development agreement dated 03.06.1993 to hiswife i.e Appellant No.2.

14. Shri Ajit Kumar Sinha, Learned Senior Counsel, appearing forthe Respondent No.1 i.e. State government of NCT, places reliance onthe charge sheet to submit that the Appellants have committed an offencepunishable under Section 406 by not returning the amount of Rs. OneCrore advanced by the Respondent No.2.

Conclusion

15. First, we would like to deal with the submission of the learnedSenior Counsel for the Respondent No.2 that once the charge sheet isfiled, petition for quashing of FIR is untenable. We do not see any merit

Ain this submission, keeping in mind the position of this Court in JosephSalvaraj A. v. State of Gujarat[2]. In the case of Joseph Salvaraj A.(supra), this Court while deciding the question whether the High Courtcould entertain the 482 petition for quashing of FIR, when the chargesheet was filed by the police during the pendency of the 482 petition,observed: -B

“16. Thus, from the general conspectus of the various sectionsunder which the appellant is being charged and is to beprosecuted would show that the same are not made out evenprima facie from the complainant’s FIR. Even if the charge-sheet had been filed, the learned Single Judge could haveCstill examined whether the offences alleged to have beencommitted by the appellant were prima facie made out fromthe complainant’s FIR, charge-sheet, documents, etc. or not.”

16. Even otherwise it must be remembered that the provisioninvoked by the accused before the High Court is Section 482 Cr. P.CDand that this Court is hearing an appeal from an order under Section 482of Cr.P.C. Section 482 of Cr.P.C reads as follows: -

“482. Saving of inherent power of the High Court.- Nothingin this Code shall be deemed to limit or affect the inherentpowers of the High Court to make such orders as may beEnecessary to give effect to any order under this Code, or toprevent abuse of the process of any Court or otherwise tosecure the ends of justice.”

17. There is nothing in the words of this Section which restrictsthe exercise of the power of the Court to prevent the abuse of processFof court or miscarriage of justice only to the stage of the FIR. It issettled principle of law that the High court can exercise jurisdiction underSection 482 of Cr.P.C even when the discharge application is pendingwith the trial court[3]. Indeed, it would be travesty to hold that proceedingsinitiated against person can be interfered with at the stage of FIR butnot if it has advanced, and the allegations have materialized into chargeGsheet. On the contrary it could be said that the abuse of process causedby FIR stands aggravated if the FIR has taken the form of charge

2 (2011) 7 SCC 59

3 G. Sagar Suri and Anr. V. State of U.P and Others, (2000) 2 SCC 636 (Para 7). UmeshHKumar V. State of Andhra Pradesh and Anr. (2013) 10 SCC 591 (Para 20)

sheet after investigation. The power is undoubtedly conferred to preventabuse of process of power of any court.

18. The second submission of learned counsel for the RespondentNo.2 is that the Appellant No.1 has fraudulently transferred the propertywhich is the subject matter of the agreement dated 03.06.1993 to hiswife and has thereby committed criminal breach of trust. This charge iswholly untenable and rather extraordinary since the alleged fraudulenttransfer of property by the Appellant No.1 to his wife, assuming it to beillegal, by no stretch of imagination can constitute the offence of criminalbreach of trust, since the property was not entrusted by the RespondentNo.2 to the Appellants. The property belonged to Appellant No.1 andthere was therefore no question of Appellants having been entrustedwith their own property, and that too by the complainant, who had merelyentered into development agreement in respect of the property.

19. Lastly, we find that the FIR and the charge sheet essentiallycharged the petitioner for an offence under Section 406 of the Cr.P.C.for retaining the amount of Rs. One crore which was advanced to himby the Respondents at the time of entering into the developmentagreement.

Whether an offence under Section 406 made out

20. It is necessary to refer to Sections 405 and 406 of the IPC inorder to ascertain, whether in the facts and circumstances of the presentcase, an offence under Section 406 is made out against the Appellants.

Section 405 and 406 of the IPC reads as follows: -

“405. Criminal breach of trust.—Whoever, being in anymanner entrusted with property, or with any dominion overproperty, dishonestly misappropriates or converts to his ownuse that property, or dishonestly uses or disposes of thatproperty in violation of any direction of law prescribing themode in which such trust is to be discharged, or of any legalcontract, express or implied, which he has made touching thedischarge of such trust, or wilfully suffers any other personso to do, commits “criminal breach of trust”.

[Explanation [1].—A person, being an employer [of anestab-lishment whether exempted under section 17 of the

Employees’ Provident Funds and Miscellaneous ProvisionsAct, 1952 (19 of 1952), or not] who deducts the employee’scontribution from the wages payable to the employee for creditto Provident Fund or Family Pension Fund established byany law for the time being in force, shall be deemed to havebeen entrusted with the amount of the contribution so deductedby him and if he makes default in the payment of suchcontribution to the said Fund in violation of the said law,shall be deemed to have dishonestly used the amount of thesaid contribution in violation of direction of law asaforesaid.][Explanation 2.—A person, being an employer, who deductsthe employees’ contribution from the wages payable to theemployee for credit to the Employees’ State Insurance Fundheld and admin-istered by the Employees’ State InsuranceCorporation established under the Employees’ State InsuranceAct, 1948 (34 of 1948), shall be deemed to have beenentrusted with the amount of the contribution so deducted byhim and if he makes default in the payment of suchcontribution to the said Fund in violation of the said Act,shall be deemed to have dishonestly used the amount of thesaid contribution in violation of direction of law asaforesaid.]

406.Punishment for criminal breach of trust.—Whoevercommits criminal breach of trust shall be punished withimprisonment of either description for term which mayextend to three years, or with fine, or with both.”

21. The essence of the offence lies in the use of the propertyentrusted to person by that person, in violation of any direction of lawor any legal contract which he has made during the discharge of suchtrust. In the present case, the amount of Rs. One crore was paid by thecomplainant-Respondent to the Appellants as an interest free deposit onthe signing of the agreement. It was liable to be refunded to thecomplainant simultaneously on handing over of possession of the area ofthe owner’s share to the owner in the group housing complex vide Clause30 (b) of the agreement dated 03.06.1993.

22. Two things are significant in the transaction between theparties. Firstly, that the occasion for returning the amount i.e. thedeveloper handing over the possession of the area of the owner’s shareto the owner in the group housing complex, has not occurred. Accordingto the Appellants, the contract stands frustrated because no group housingcan be legally built on 20 Feroz Shah Road, New Delhi since it falls inthe Lutyens Bungalow Zone. Appellant No.1 has therefore, terminatedthe contract. Further, the amount has been retained by him as securitybecause not only is there any handing over of constructed portion, thecomplainant has also got into part possession of the property and has nothanded it back. Also, the complainant has failed to get the propertyvacated from the tenant’s possession.

23. We, thus find that it is not possible to hold that the amount ofRs. One crore which was paid along with the development agreementas deposit can be said to have been entrustment of property which hasbeen dishonestly converted to his own use or disposed of in violation ofany direction of law or contract by the Appellant. The Appellants havenot used the amount nor misappropriated it contrary to any direction oflaw or contract which prescribes how the amount has to be dealt with.

Going by the agreement dated 03.06.1993, the amount has to bereturned upon the handing over of the constructed area of the ownerwhich admittedly has not been done. Most significantly the RespondentNo.2 has not demanded the return of the amount at any point of time. Infact, it is the specific contention of the Respondent No.2 that he has notdemanded the amount because the agreement is still in subsistence.

We do not see how it can be contended by any stretch ofimagination that the Appellants have misappropriated the amount ordishonestly used the amount contrary to any law or contract. In anycase, we find that the dispute has the contours of dispute of civil natureand does not constitute criminal offence.

24. Having given our anxious consideration, we are of the viewthat assuming that there is security deposit of Rs. One Crore and thathe has misappropriated the dispute between the two parties can only bea civil dispute.

25. In Indian Oil Corporation v. NEPC India Ltd. and others[4],this Court observed as follows: -

A“13.….. Any effort to settle civil disputes and claims,which do not involve any criminal offence, by applyingpressure through criminal prosecution should be deprecatedand discouraged…..”

The Court noticed growing trend in business circles to convertBpurely civil dispute into criminal cases.

We find it strange that the complainant has not made any attemptfor the recovery of the money of Rs. One Crore except by filing thiscriminal complaint. This action appears to be mala fide and unsustainable.

26. In State of Haryana and Ors. v. Bhajan Laland Ors.[5], thisCCourt has set out the categories of cases in which the inherent powerunder Section 482 of Cr.P.C. can be exercised. Para 102 of the judgmentreads as follows: -

“102. In the backdrop of the interpretation of the variousrelevant provisions of the Code under Chapter XIV and ofDthe principles of law enunciated by this Court in series ofdecisions relating to the exercise of the extraordinary powerunder Article 226 or the inherent powers under Section 482of the Code which we have extracted and reproduced above,we give the following categories of cases by way of illustrationEwherein such power could be exercised either to preventabuse of the process of any court or otherwise to secure theends of justice, though it may not be possible to lay down anyprecise, clearly defined and sufficiently channelised andinflexible guidelines or rigid formulae and to give anexhaustive list of myriad kinds of cases wherein such powerFshould be exercised.

(1) Where the allegations made in the first information reportor the complaint, even if they are taken at their face valueand accepted in their entirety do not prima facie constituteany offence or make out case against the accused.

(2) Where the allegations in the first information report andother materials, if any, accompanying the FIR do not disclosea cognizable offence, justifying an investigation by policeofficers under Section 156(1) of the Code except under an

5 (1992) Supp (1) SCC 335H

order of Magistrate within the purview of Section 155(2) ofthe Code.

(3) Where the uncontroverted allegations made in the FIR orcomplaint and the evidence collected in support of the samedo not disclose the commission of any offence and make outa case against the accused.

(4) Where, the allegations in the FIR do not constitute acognizable offence but constitute only non-cognizableoffence, no investigation is permitted by police officer withoutan order of Magistrate as contemplated under Section155(2) of the Code.

(5) Where the allegations made in the FIR or complaint are soabsurd and inherently improbable on the basis of which noprudent person can ever reach just conclusion that there issufficient ground for proceeding against the accused.

(6) Where there is an express legal bar engrafted in any ofthe provisions of the Code or the concerned Act (under whicha criminal proceeding is instituted) to the institution andcontinuance of the proceedings and/or where there is aspecific provision in the Code or the concerned Act, providingefficacious redress for the grievance of the aggrieved party.

(7) Where criminal proceeding is manifestly attended withmala fide and/or where the proceeding is maliciously institutedwith an ulterior motive for wreaking vengeance on the accusedand with view to spite him due to private and personalgrudge.”

27. We are of the opinion that the present case falls under the 1[st],3[rd] and 5[th] category set out in the para 102 of the judgment in the case ofBhajan Lal (supra). In such situation, the High Court erred in dismissingthe petition of the Appellants filed under Section 482 of Cr.P.C. Thiswas fit case for the High Court to exercise its inherent power underSection 482 of Cr.P.C. to quash the FIR.

28. It is necessary here to remember the words of this Court inState of Karnataka v. L. Muniswamy and others[6] which read asfollows: -

6 1977 (2) SCC 699

“7. …..In the exercise of this wholesome power, the High Courtis entitled to quash proceeding if it comes to the conclusionthat allowing the proceeding to continue would be an abuseof the process of the Court or that the ends of justice requirethat the proceeding ought to be quashed. The saving of theHigh Court’s inherent powers, both in civil and criminalmatters, is designed to achieve salutary public purpose whichis that court proceeding ought not to be permitted todegenerate into weapon of harassment or persecution. In acriminal case, the veiled object behind lame prosecution,the very nature of the material on which the structure of theprosecution rests and the like would justify the High Court inquashing the proceeding in the interest of justice…..”

29. We find that the prosecution is mala fide, untenable and solelyintended to harass the Appellants. We are forfeited in view of theRespondent not having made any attempt to recover the deposit of Rs.DOne Crore through civil action.

30. We have, therefore, no hesitation in quashing the FIR and thecharge sheet filed against the Appellants. Hence, the FIR No.0139/2014 dated 20.08.2014 and charge sheet dated 03.08.2018 are herebyquashed.

31. For the aforesaid reasons, we hereby set aside the impugnedjudgment and order dated 02.02.2016 of High Court of Delhi. Accordingly,appeal is allowed along with the application filed by the Appellants seekingamendment of main prayer.

Kalpana K. Tripathy

Appeal allowed.