PRITI SARAF & ANR. versus STATE OF NCT OF DELHI & ANR.

PRITI SARAF & ANR.

STATE OF NCT OF DELHI & ANR.

(Criminal Appeal No. 296 of 2021)

MARCH 10, 2021

[INDU MALHOTRA AND AJAY RASTOGI, JJ.]

Code of Criminal Procedure, 1973 – s.482 – Scope and ambitof – Commercial transaction – FIR against respondent no.2 andone more person u/ss.420, 406 and 34 IPC – High Court quashedall the criminal proceedings – On appeal, held: To exercise powersu/s.482, the complaint in its entirety shall have to be examined onthe basis of the allegation made in the complaint/FIR/charge-sheet– At that stage, High Court not under an obligation to go into thematter or examine its correctness – Whatever appears on the faceof the complaint/FIR/charge-sheet shall be taken into considerationwithout any critical examination of the same – In the present case,ingredients of the offences u/ss. 406 and 420, IPC cannot be saidto be absent on the basis of the allegations in the complaint/FIR/charge-sheet – Sufficient material available to connect respondentno.2 in the commission of crime – High Court not justified inquashing the criminal proceedings – Penal Code, 1860- ss.420,406 & 34.

Allowing the appeals, the Court

Held: 1.1 To exercise powers under Section 482 CrPC,the complaint in its entirety shall have to be examined on thebasis of the allegation made in the complaint/FIR/charge-sheetand the High Court at that stage was not under an obligation togo into the matter or examine its correctness. Whatever appearson the face of the complaint/FIR/charge-sheet shall be taken intoconsideration without any critical examination of the same. Theoffence ought to appear ex facie on the complaint/FIR/charge-sheet and other documentary evidence, if any, on record. [Para23][588-D-E]

1.2 The exercise of inherent power of the High Court is anextraordinary power which has to be exercised with great care

Aand circumspection before embarking to scrutinise the complaint/FIR/charge-sheet in deciding whether the case is the rarest ofrare case, to scuttle the prosecution at its inception. Whetherthe allegations in the complaint were true is to be decided on thebasis of the evidence led at the stage of trial. [Paras 28, 30][590-F-G; 591-C]B

Nagpur Steel & Alloys Pvt. Ltd. v. P. Radhakrishna andOthers 1997 SCC(Cri) 1073 – relied on.

1.3 In the matter of exercise of inherent power by the HighCourt, the only requirement is to see whether continuance of theCproceedings would be total abuse of the process of the Court.The Criminal Procedure Code contains detailed procedure forinvestigation, framing of charge and trial, and in the event whenthe High Court is desirous of putting halt to the knownprocedure of law, it must use proper circumspection with greatcare and caution to interfere in the complaint/FIR/charge-sheetDin exercise of its inherent jurisdiction. In the instant case, on acareful reading of the complaint/FIR/charge-sheet, it cannot besaid that the complaint does not disclose the commission of anoffence. The ingredients of the offences under Sections 406 and420 IPC cannot be said to be absent on the basis of the allegationsEin the complaint/FIR/charge-sheet. Whether the allegations inthe complaint are otherwise correct or not, has to be decided onthe basis of the evidence to be led during the course of trial.Simply because there is remedy provided for breach of contractor arbitral proceedings initiated at the instance of the appellants,that does not by itself clothe the court to come to conclusionFthat civil remedy is the only remedy, and the initiation of criminalproceedings, in any manner, will be an abuse of the process ofthe court for exercising inherent powers of the High Court underSection 482 CrPC for quashing such proceedings. This Courthas perused the pleadings of the parties, the complaint/FIR/Gcharge-sheet and orders of the Courts below and have taken intoconsideration the material on record. The issue involved in thematter under consideration is not case in which the criminaltrial should have been short-circuited. The High Court was notjustified in quashing the criminal proceedings in exercise of its

inherent jurisdiction. The High Court has primarily adverted ontwo circumstances, (i) that it was case of termination ofagreement to sell on account of an alleged breach of the contractand (ii) the fact that the arbitral proceedings have been initiatedat the instance of the appellants. Both the alleged circumstancesnoticed by the High Court are unsustainable in law. The factsnarrated in the present complaint/FIR/charge-sheet indeed revealthe commercial transaction but that is hardly reason for holdingthat the offence of cheating would elude from such transaction.In fact, many times, offence of cheating is committed in thecourse of commercial transactions and the illustrations have beenset out under Sections 415, 418 and 420 IPC. So far as initiationof arbitral proceedings is concerned, there is no correlation withthe criminal proceedings. That apart, the High Court has not evenlooked into the charge-sheet filed against 2[nd]respondent whichwas on record to reach at the conclusion that any criminal offenceas stated is prima facie being made out and veracity of it indeedbe examined in the course of criminal trial. [Paras 31-34][591-G-H; 592-A-C; 592-D-G; 593-C-D]

Trisuns Chemical Industry v. Rajesh Agarwal and Ors.(1999) 8 SCC 686 : [1999] 2 Suppl. SCR 686 – reliedon.

1.4 There was sufficient material available as manifests fromthe record of criminal proceedings to connect the 2[nd ]respondentin the commission of crime. The judgment of the High Courtimpugned dated 15[th ]March, 2019 is hereby set aside. [Paras36, 38][593-G-H; 594-C]

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

R.P. Kapur v. State of Punjab [1960] 3 SCR 388; M.Krishnan v. Vijay Singh & Anr. (2001) 8 SCC 645 :[2001] 4 Suppl. SCR 45; Joseph Salvaraj A. v. State ofGujarat and Ors. (2011) 7 SCC 59 : [2011] 8 SCR 815;Arun Bhandari v. State of Uttar Pradesh and Ors. (2013)2 SCC 801 : [2013] 3 SCR 961; Anand Kumar Mohattaand Anr. v. State (NCT of Delhi), Department of Homeand Anr. (2019) 11 SCC 706 : [2018] 13 SCR 1028;

ARajabhai Abdul Rehman Munshi v. Vasudev DhanjibhaiMody [1964] 3 SCR 480; G. Narayanaswamy Reddy(Dead) by LRs. & Anr. v. Govt. of Karnataka and Anr.(1991) 3 SCC 261 : [1991] 2 SCR 563; G. Sagar Suri& Anr. v. State of U.P. and Ors. (2000) 2 SCC 636 :[2000] 1 SCR 417; Murari Lal Gupta v. Gopi SinghB(2005) 13 SCC 699; Indian Oil Corporation v. NEPCIndia Ltd. and Ors. (2006) 6 SCC 736 : [2006] 3 Suppl.SCR 704; Harmanpreet Singh Ahluwalia and Ors. v.State of Punjab and Ors. (2009) 7 SCC 712 : [2009] 7SCR 563; Chandran Ratnaswami v. K.C. PalanisamyCand Ors. (2013) 6 SCC 740 : [2013] 17 SCR 853; VESAHoldings Private Limited and Anr. v. State of Kerala &Ors. (2015) 8 SCC 293 : [2015] 4 SCR 27; K. SubbaRao and Ors. v. State of Telangana Rep. by its Secretary,Department of Home & Ors. (2018) 14 SCC 452; ArnabManoranjan Goswami v. State of Maharashtra andDOthers 2020 SCC Online SC 964 – referred to.

Case Law Reference

CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No.296 of 2021

From the Judgment and Order dated 15.3.2019 of the High Courtof Delhi at New Delhi in Crl.Misc.(Main) No. 1718 of 2017.

Mukul Rohatgi, Sr. Adv., Ms. Nupur Kumar, Hemant Manjani,M. Thangathurai, Sunil Fernandes, Ms. Nupur Kumar, Darpan Sachdeva,Prastut Dalvi, Shubham Sharma, Advs. for the Appellants.

Ms. Aishwarya Bhati, ASG., P. Chidambaram, Vikas Singh, Sr.Advs., Ms. Vijayshree Pattnaik, Ms. Rekha Pandey, Ms. Sansriti Pathak,Ms. Ameyavikrama Thanvi, B. V. Balaram Das, Ankur Chawla, AbhishekDPuri, Ms. Aruna Gupta, Rohit Ranjan, Rakesh Kumar, Manish Kumar,R. K. Mohit Gupta, Vinay Juneja, Advs. for the Respondents.

The Judgment of the Court was delivered by

RASTOGI, J.

1. Leave granted.

2. The appellants who are the de-facto complainants in FIR No.132/2017 dated 28[th] April, 2017 are questioning the order of the HighCourt dated 15[th] March, 2019 passed in Criminal Miscellaneous CaseNos. 1718/2017 and 7009/2017 whereby the learned Single Judge inexercise of its jurisdiction under Section 482 of the Code of CriminalProcedure(hereinafter being referred to as “CrPC”) taking cognizancefor the offence under Sections 420, 406 and 34 IPC quashed the ordersand set aside the criminal proceedings against 2[nd] respondent on thefoundation that the allegations made in the complaint/FIR does notconstitute offences under aforestated sections.

Brief facts of the case

3. The factual matrix of the matter as reflected from the complaintas alleged are that the subject property in question, i.e., 37, FriendsColony(East), New Delhi is in the ownership of 2[nd] respondent. Thesaid property was mortgaged with State Bank of Patiala and the total

Alegal liability payable to the Bank was Rs. 18 crores. That in order toclear the said dues, 2[nd] respondent hatched conspiracy with brokerAshok Kumar so as to cheat and defraud the appellants/complainantsand to further misappropriate the amounts paid by the complainants aspart of the deal, the 2[nd] respondent breached the trust of the appellants/complainants deliberately and falsely stating to the appellants/Bcomplainants that the 2[nd] respondent would be liable to pay sum of Rs.25.50 crores to the complainant if the deal is not carried forward by the2[nd] respondent. Keeping in view the overall scenario, agreement to sellwas executed on 24[th] December, 2011 between the 2[nd] respondent andthe 1[st] appellant. The 2[nd] respondent agreed to sell 1205.43 sq yds. ofCthe property in question for total sale consideration of Rs. 63,28,50,750/-. At the time of execution, 1[st] appellant paid sum of Rs. 12.50 croresvide cheque dated 24[th] December, 2011 drawn on HDFC Bank, NewFriends Colony, Delhi. As per clause 3 of the said agreement to sell, 2[nd]respondent had to perform and complete three requirements which werecompulsory in nature. The said requirements were to be completed byDthe 2[nd] respondent latest by 24[th] March, 2012 before any further amountis to be received by her from the 1[st] appellant/complainant.

4. It was further alleged in the complaint that the threerequirements in terms of clause 3 of the agreement to sell were notfulfilled by the 2[nd] respondent and even after there being delay inEobtaining sanction plans, still the 1[st] appellant on demand made paymentof Rs. 5.40 crores by cheque dated 23[rd] May, 2012 and to show herbonafides, the 2[nd] respondent handed over post-dated cheques worthRs. 25.50 crores towards security for performance of agreement dated24[th] December 2011. After the amount was received from the 1[st]Fappellant/complainant, 2[nd] respondent immediately cleared her outstandinglegal liability of State Bank of Patiala and obtained NOC from the bank,however, the fact of obtaining NOC was never divulged by the 2[nd]respondent to the complainants deliberately. This fact for the first timewas disclosed by the 2[nd] respondent at the stage when post-dated chequesof Rs.25.50 crores handed over as security to the complainant wereGrendered invalid.

5. The intention of the 2[nd] respondent from the very inception tocheat and deceive the complainants/appellants is made out from the factthat the 2[nd] respondent had to complete the compulsory requirement onor before 24[th] March, 2012 but the first two requirements were completedHon 11[th] May, 2012 and 2[nd] June, 2012 respectively and the third

requirement was still not complete. At this stage, just to cheat the 1[st]appellant/complainant, 2[nd] respondent illegally terminated the agreementto sell vide communication dated 30[th] January, 2013. The 1[st] appellanthad tried her level best to get the matter settled but, the modus operandiof the 2[nd] respondent was to cheat from the very inception when theagreement to sell was executed, nothing materialised.

6. In this regard, private complaint was filed under Section 200read with Section 190 CrPC on 23[rd] September, 2015 before the learnedMagistrate for taking cognizance of the offence committed by the 2[nd]respondent before Saket Court, Delhi wherein it was directed to theconcerned Police Station to register the FIR under Section 156(3) CrPCvide Order dated 15[th] November, 2016 that came to be challenged bythe 2[nd] respondent by filing of criminal revision but that came to bedismissed by the ASJ & Special Judge(NDPS), South East, Saket Courts,New Delhi vide Order dated 26[th] April, 2017 and thereafter FIR underSection 156(3) CrPC came to be registered against the 2[nd] respondentand the broker Mr. Ashok Kumar under Sections 420, 406 and 34 IPCon 28[th] April, 2017.

7. The Investigation Officer conducted investigation and filedcharge-sheet dated 5[th] October, 2018 under Sections 420, 406 and 34IPC. It reveals from the charge-sheet that the property in question, i.e.1205.43 sq. yds was alleged to be sub-divided whereas the subjectproperty, i.e. Plot No. 37 is admeasuring 3930 sq. yds. and sub-divisionof the plot is not permitted to be sanctioned as per Clause 4.4.3(IV) ofthe Master Plan Delhi, 2021. It also reveals from the charge-sheet thatprior to the present transaction which was executed pursuant toagreement to sell dated 24[th] December, 2011, 2[nd] respondent under thesame modus operandi earlier in reference to self-same subject propertyforfeited in the year 2007 sum of Rs.18 crores from M/s. ShinestarBuildcon Private Ltd. It further reveals that 2[nd] respondent never gotthe site plan sanctioned for appellants nor the bifurcated & demarcatedarea knowingly because of her malafide intentions. The role of husbandof 2[nd] respondent as suspect is under pending investigation under Section173(8) CrPC and if adverse material comes on record, the supplementarycharge-sheet may be filed against S.C. Goyal(husband of 2[nd] respondent)at later stage.

8. The 2[nd] respondent challenged the orders dated 15[th] November,2016 and 26[th] April, 2017 passed in revision petition filed at her instancebefore the High Court under Section 482 CrPC.

A9. It reveals from the record that after this fact was brought tothe notice of the learned Judge of the High Court that the charge-sheethas been filed, the learned Judge directed the Public Prosecutor by Orderdated 9[th] October, 2018 to place the charge-sheet on record. Even afterthe charge-sheet came to be filed by the Public Prosecutor in complianceof the Order of the Court, the learned Judge of the High Court whileBnoticing the facts has only taken note of the agreement to sell dated 24[th]December, 2011, notice of termination dated 30[th] January, 2013 andwithout examining the bare facts on record, what being transpired in thecomplaint and so also during the investigation reflected from the charge-sheet filed before the trial Court and which was part of the record stillCproceeded on the premise and observed that the case is of simplebreach of contract, which gives rise to purely civil dispute and cannot beconverted into criminal offence, more so, when the arbitral proceedingshave been initiated, in the given circumstances, held that if such civildisputes as alleged are being permitted to be prosecuted in the criminalproceedings, this according to the learned Judge, would be sheer abuseDof the process of the Court. In consequence thereof, quashed all thecriminal proceedings and the orders under challenge therein dated 15[th]November, 2016 and 24[th] April, 2017 and further observed that theobservations made shall not be construed to be expression on merits, inthe arbitration proceedings by impugned judgment dated 15[th ]March, 2019.E10. We have heard Mr. Mukul Rohatgi, learned senior counsel forthe appellants, Mr. P. Chidambaram, learned senior counsel for 2[nd]respondent and Ms. Aishwarya Bhati, learned Additional Solicitor Generalfor the State.

11. Mr. Mukul Rohatgi, learned senior counsel for the appellantsFsubmitted that the charge-sheet filed by the Investigating Officer on 5[th]October, 2018 discloses that the offence under Sections 406, 420 and 34IPC has been committed by the 2[nd] respondent and pursuant to the orderof the learned Judge of the High Court dated 9[th] October, 2018, copy ofthe charge-sheet was placed on record still no reference of the charge-Gsheet has been made by the learned Judge in the impugned judgmentwhile quashing the criminal proceedings.

12. Learned counsel further submits that the exercise of inherentpower of the High Court under Section 482 CrPC is an exceptional one.Great care should be taken by the High Court before embarking toHscrutinise the complaint/FIR/charge-sheet in deciding whether the rarest

of the rare case is made out to scuttle the prosecution in its inception. Itwas expected from the High Court to prima facie consider the complaint,charge-sheet and the statement of witness recorded in support thereofwhich was recorded by the Investigating Officer in arriving at conclusionwhether court could take cognizance of the offence, on that evidenceand proceed further with the trial. If it reaches conclusion that nocognizable offence is made out, no further act could be done except toquash the FIR/charge-sheet. But only in exceptional cases, i.e., in rarestof rare cases of mala fide initiation of the proceedings to wreak privatevengeance process is availed of in laying complaint or FIR itself doesnot disclose any cognizable offence.13. Learned counsel submits that the High Court has committed amanifest error in ignoring the material facts on record which make theorders sensitively susceptible and further submits that the learnedAdditional Sessions Judge had considered the entire gamut of facts andappositely opined that the order taking cognizance could not be flawedbut the High Court has completely erred in its conclusion and has noteven looked into the bare facts available on record and has proceededon premise that in case where there is an agreement to sell and itssubsequent termination for its alleged breach, such disputes are civildisputes and more so where the arbitral proceedings are pending, criminalproceedings will be an abuse of the process of the Court, in the givencircumstances, what has been made to be basis by the learned Judgeis unsustainable in law and hence the order deserves to be set aside.

14. In support of his submissions, learned counsel has placedreliance on the judgments of this Court in R.P. Kapur Vs. State ofPunjab1; State of Haryana and Ors.Vs. Bhajan Lal and Others2;Trisuns Chemical Industry Vs. Rajesh Agarwal and Ors.3; M.Krishnan Vs. Vijay Singh & Anr.4; Joseph Salvaraj A. Vs. State ofGujarat and Ors.5; Arun Bhandari Vs. State of Uttar Pradesh andOrs.6; Anand Kumar Mohatta and Anr. Vs. State (NCT of Delhi),7Department of Home and Anr..

1 1960 (3) SCR 388

2 1992 Suppl (1) SCC 335

3 1999 (8) SCC 686

4 2001 (8) SCC 645

5 2011 (7) SCC 59

6 2013 (2) SCC 801

7 2019 (11) SCC 706

A15. Per contra, Mr. P. Chidambaram, learned senior counsel for2nd respondent submits that agreement to sell dated 24[th] December,2011 discloses all the facts about the ownership of the property, propertybeing mortgaged with the State Bank of Patiala and after the payment,property to be redeemed after obtaining the original papers and noobjection certificate from the Bank, thereafter further procedure to beBcarried out by the parties as per the terms and conditions of the agreementto sell dated 24[th] December, 2011. When the appellant failed to carry outits obligation in compliance of the terms and conditions of the agreementto sell,the agreement to sell was terminated by letter dated 30[th] January,2013 and that empowers the 2[nd] respondent to forfeit the earnest moneyCwhich was deposited in terms of the agreement and it was purely civildispute and as their being clause of arbitration, arbitral proceedingswere initiated at the instance of the 1[st] appellant and although duringpendency of the proceedings in the Court, learned Arbitrator has passedan award dated 8[th]May, 2020 which has been challenged by the 2[nd]respondent under Section 34 of the Arbitration and Conciliation Act,D1996 which is pending before the High Court of Delhi.

16. Learned counsel further submits that parties have enteredinto an agreement to sell that does not amount to an offence under Section420 IPC. Neither the complaint which was initially instituted at the instance

of the appellants nor the charge-sheet dated 5[th] October, 2018 whichEwas later filed although remain unnoticed by the High Court in theimpugned judgment nowhere reveals even prima facie case of criminaloffence being committed by the 2[nd] respondent under Sections 420, 406and 34 IPC and if the parties have entered into an agreement to sellwhich is purely commercial transaction, and if there is breach of theFterms of agreement to sell, the party to the agreement in consequencewas justified to forfeit the earnest money, it is simply civil dispute. Asthere was demand to refund the forfeited amount failing which FIRwas registered to set the criminal law into motion obviously to settle thescores giving the colour of criminal proceedings which is impermissibleand this what has been observed by the High Court in the impugnedGjudgment supported by the factual matrix on record.17. Learned counsel further submits that the present case is ofcivil dispute as earnest money was forfeited by the 2[nd] respondent whenthe 1[st] appellant was not ready to fulfil and perform the terms andconditions of agreement to sell dated 24[th] December, 2011 and after theHarbitral proceedings were initiated, criminal proceedings were initiated

just to harass the respondent with criminal charge under Sections 420,406 and 34 IPC and further submits that no offence under Section 406 ismade out as the earnest money was paid in terms of the contract andthere was no restriction in the agreement as to how this money was tobe utilised therefore, there is no misappropriation.

18. Learned counsel further submits that the appellant has notcome with clean hands and she has suppressed the fact that she did notreceive the letter dated 28[th] February, 2012 sent by 2[nd] respondent. Tothe contrary, there is sufficient documentary evidence, as well as his/heradmission to this effect by the 1[st] appellant, which would show that shehad received the said letter. Since she did not respond to the letter dated28[th] December, 2012, it was observed that she was not ready to performher obligations in terms of the contract and consequently, the 2[nd]respondent was well within her rights to terminate the contract by letterdated 30[th] January, 2013.

19. Learned counsel has further tried to justify that all the threeconditions of clause 3 of agreement hammered by the appellants werefulfilled, and there is documentary evidence placed on record in supportthereof in the counter affidavit.

20. Learned counsel for the 2[nd] respondent has also placed relianceon various judgments of this Court which lays down the basic principlesunder which inherent powers under Section 482 CrPC to be exercisedby the High Court and has set aside the criminal proceedings observingthat when there are civil disputes, the initiation of criminal proceedingswould be abuse of the process of the Court and placed reliance on thejudgments inRajabhai Abdul Rehman Munshi Vs. Vasudev DhanjibhaiMody8; G. Narayanaswamy Reddy (Dead) by LRs. & Anr. Vs. Govt.of Karnataka and Anr.9; G. Sagar Suri & Anr. Vs. State of U.P. andOrs.10; Murari Lal Gupta Vs. Gopi Singh11; Indian Oil CorporationVs. NEPC India Ltd. and Ors.12; Harmanpreet Singh Ahluwaliaand Ors. Vs. State of Punjab and Ors.13; Joseph Salvaraj A. Vs.State of Gujarat and Ors.14; Chandran Ratnaswami Vs. K.C.

8 1964 (3) SCR 4809 1991 (3) SCC 261

10 2000 (2) SCC 636

11 2005 (13) SCC 699

12 2006 (6) SCC 736

13 2009 (7) SCC 712

14 2011 (7) SCC 59

APalanisamy and Ors.15; VESA Holdings Private Limited and Anr.Vs. State of Kerala & Ors.16; K. Subba Rao and Ors. Vs. State of17Telangana Rep. by its Secretary, Department of Home & Ors..

21. Learned counsel has further submitted in his written submissionsthat the High Court indeed has not referred to the charge-sheet of whichBa reference has been made, this Court if considers it appropriate, in thefacts and circumstances, may remit the matter back to the High Courtfor fresh consideration. It would be unjust if the 2[nd] respondent wascompelled to face criminal prosecution on the ground that the High Courthad not looked into the material available on record.

C22. After the conclusion of the submissions, an IA has been filedat the instance of the 2[nd] respondent for initiating proceedings underSection 340 read with Section 195 CrPC, in which it has been allegedthat the appellants have not only concealed the documents but has madefalse statement and it has been prayed that proceedings under Section340 CrPC may be initiated against the appellants.D

23. It being settled principle of law that to exercise powersunder Section 482 CrPC, the complaint in its entirety shall have to beexamined 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 gointo the matter or examine its correctness. Whatever appears on theEface of the complaint/FIR/charge-sheet shall be taken into considerationwithout any critical examination of the same. The offence ought to appearex facie on the complaint/FIR/charge-sheet and other documentaryevidence, if any, on record.

24. The question which is raised for consideration is that in whatFcircumstances and categories of cases, criminal proceeding may bequashed either in exercise of the extraordinary powers of the High Courtunder Article 226 of the Constitution, or in the exercise of the inherentpowers of the High Court under Section 482 CrPC. This has often beenhotly debated before this Court and various High Courts. Though in aseries of decisions, this question has been answered on several occasionsGby this Court, yet the same still comes up for consideration and is seriouslydebated.

15 2013 (6) SCC 74016 2015 (8) SCC 293H17 2018 (14) SCC 452

25. In this backdrop, the scope and ambit of the inherent jurisdictionof the High Court under Section 482 CrPC has been examined in thejudgment of this Court in State of Haryana and OthersVs. BhajanLal and Others(supra).The relevant para is mentioned hereunder:-

“102. In the backdrop of the interpretation of the various relevantprovisions of the Code under Chapter XIV and of the principlesof law enunciated by this Court in series of decisions relating tothe exercise of the extraordinary power under Article 226 or theinherent powers under Section 482 of the Code which we haveextracted and reproduced above, we give the following categoriesof cases by way of illustration wherein such power could beexercised either to prevent abuse of the process of any court orotherwise to secure the ends of justice, though it may not be possibleto lay down any precise, clearly defined and sufficientlychannelised and inflexible guidelines or rigid formulae and to givean exhaustive list of myriad kinds of cases wherein such powershould be exercised.

(1)Where the allegations made in the first information report orthe complaint, even if they are taken at their face value andaccepted in their entirety do not prima facie constitute anyoffence or make out case against the accused.

(2)Where the allegations in the first information report and othermaterials, if any, accompanying the FIR do not disclose acognizable offence, justifying an investigation by policeofficers under Section 156(1) of the Code except under anorder of Magistrate within the purview of Section 155(2)of the 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.

A(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 of theBprovisions of the Code or the concerned Act (under which acriminal 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.

C(7)Where criminal proceeding is manifestly attended with malafide and/or where the proceeding is maliciously institutedwith an ulterior motive for wreaking vengeance on theaccused and with view to spite him due to private andpersonal grudge.”

D26. This Court has clarified the broad contours and parameters inlaying down the guidelines which have to be kept in mind by the HighCourts while exercising inherent powers under Section 482 CrPC. Theaforesaid principles laid down by this Court are illustrative and notexhaustive. Nevertheless, it throws light on the circumstances and thesituation which is to be kept in mind when the High Court exercises itsEinherent powers under Section 482 CrPC.

27. It has been further elucidated recently by this Court inArnabManoranjan Goswami Vs. State of Maharashtra and Others18 wherejurisdiction of the High Court under Article 226 of the Constitution ofIndia and Section 482 CrPC has been analysed at great length.F

28. It is thus settled that the exercise of inherent power of theHigh Court is an extraordinary power which has to be exercised withgreat care and circumspection before embarking to scrutinise thecomplaint/FIR/charge-sheet in deciding whether the case is the rarestof rare case, to scuttle the prosecution at its inception.G

29. In the matter under consideration, if we try to analyse theguidelines of which reference has been made, can it be said that theallegations in the complaint/FIR/charge-sheet do not make out caseagainst the 2[nd] respondent or do they disclose the ingredients of an

H18 2020 SCC Online SC 964

offence alleged against the 2[nd] respondent or the allegations are patentlyabsurd and inherently improbable so that no prudent person can everreach to such conclusion that there is sufficient ground for proceedingagainst the 2[nd] respondent.

30. In the instant case, the complaint/FIR/charge-sheet as noticedabove, does, however, lend credence to the questions posed. It is settledthat one is not supposed to dilate on this score, or intend to present thatthe allegations in the complaint will have to be accepted on the face of itand the truth or falsity of which would not be gone into by the Court atthis stage, as noticed above, whether the allegations in the complaintwere true is to be decided on the basis of the evidence led at the stage oftrial and the observations on this score in the case of Nagpur Steel &Alloys Pvt. Ltd.Vs. P. Radhakrishna and Others19 ought to be noticed.

In para 3, this Court observed:-

“3. We have perused the complaint carefully. In our opinion itcannot be said that the complaint did not disclose the commissionof an offence. Merely because the offence was committed duringthe course of commercial transaction, would not be sufficient tohold that the complaint did not warrant trial. Whether or not theallegations in the complaint were true was to be decided on thebasis of evidence to be led at the trial in the complaint case. Itcertainly was not case in which the criminal trial should havebeen cut short. The quashing of the complaint has resulted ingrave miscarriage of justice. We, therefore, without expressingany opinion on the merits of the case, allow this appeal and setaside the impugned order of the High Court and restore thecomplaint. The learned trial Magistrate shall proceed with thecomplaint and dispose of it in accordance with law expeditiously.”

31. Be it noted that in the matter of exercise of inherent power bythe High Court, the only requirement is to see whether continuance ofthe proceedings would be total abuse of the process of the Court. TheCriminal Procedure Code contains detailed procedure for investigation,framing of charge and trial, and in the event when the High Court isdesirous of putting halt to the known procedure of law, it must useproper circumspection with great care and caution to interfere in thecomplaint/FIR/charge-sheet in exercise of its inherent jurisdiction.

A32. In the instant case, on careful reading of the complaint/FIR/charge-sheet, in our view, it cannot be said that the complaint does notdisclose the commission of an offence. The ingredients of the offencesunder Sections 406 and 420 IPC cannot be said to be absent on the basisof the allegations in the complaint/FIR/charge-sheet. We would like toadd that whether the allegations in the complaint are otherwise correctBor not, has to be decided on the basis of the evidence to be led during thecourse of trial. Simply because there is remedy provided for breach ofcontract or arbitral proceedings initiated at the instance of the appellants,that does not by itself clothe the court to come to conclusion that civilremedy is the only remedy, and the initiation of criminal proceedings, inCany manner, will be an abuse of the process of the court for exercisinginherent powers of the High Court under Section 482 CrPC for quashingsuch proceedings.

33. We have perused the pleadings of the parties, the complaint/FIR/charge-sheet and orders of the Courts below and have taken intoDconsideration the material on record. After hearing learned counsel forthe parties, we are satisfied that the issue involved in the matter underconsideration is not case in which the criminal trial should have beenshort-circuited. The High Court was not justified in quashing the criminalproceedings in exercise of its inherent jurisdiction. The High Court hasprimarily adverted on two circumstances, (i) that it was case ofEtermination of agreement to sell on account of an alleged breach of thecontract and (ii) the fact that the arbitral proceedings have been initiatedat the instance of the appellants. Both the alleged circumstances noticedby the High Court, in our view, are unsustainable in law. The factsnarrated in the present complaint/FIR/charge-sheet indeed reveal the

Fcommercial transaction but that is hardly reason for holding that theoffence of cheating would elude from such transaction. In fact, many atimes, offence of cheating is committed in the course of commercialtransactions and the illustrations have been set out under Sections 415,418 and 420 IPC. Similar observations have been made by this Court inTrisuns Chemical IndustryVs. Rajesh Agarwal and Ors.(supra):-G

“9. We are unable to appreciate the reasoning that the provisionincorporated in the agreement for referring the disputes toarbitration is an effective substitute for criminal prosecution whenthe disputed act is an offence. Arbitration is remedy for affordingreliefs to the party affected by breach of the agreement but theH

arbitrator cannot conduct trial of any act which amounted to anoffence albeit the same act may be connected with the dischargeof any function under the agreement. Hence, those are not goodreasons for the High Court to axe down the complaint at thethreshold itself. The investigating agency should have had thefreedom to go into the whole gamut of the allegations and to reacha conclusion of its own. Pre-emption of such investigation wouldbe justified only in very extreme cases as indicated in State ofHaryana v. Bhajan Lal [1992 Supp (1) SCC 335]”

34. So far as initiation of arbitral proceedings is concerned, thereis no correlation with the criminal proceedings. That apart, the HighCourt has not even looked into the charge-sheet filed against 2[nd]respondent which was on record to reach at the conclusion that anycriminal offence as stated is prima facie being made out and veracity ofit indeed be examined in the course of criminal trial.

35. The submission made by Mr. P. Chidambaram, learned seniorcounsel for 2[nd] respondent showing bonafides and taking us through thedocumentary evidence annexed to the counter affidavit on record toshow that it was simple case of termination because of breach ofterms of the contract giving rise to purely civil dispute or initiation ofthe arbitral proceedings would not attract the provisions under Sections406, 420, 34 IPC may not hold good at this stage for the reason what isbeing suggested by the learned counsel for the 2[nd] respondent can be hisdefence during the course of trial but was not open to be examined bythe High Court to take judicial notice and for quashing of the criminalproceedings in exercise of its inherent powers under Section 482 CrPC.

36. So far as the further submission made by learned counsel forthe 2[nd] respondent that if the High Court has failed to consider the charge-sheet and other material available on record, the matter be remittedback to the High Court for re-consideration afresh in accordance withlaw. There may be some substance in what being urged by learnedcounsel for the 2[nd] respondent but for the reason that matter has beenargued threadbare before us, and learned counsel for the parties havetaken us through the record of criminal proceedings. After going throughthe record, we are satisfied that there was sufficient material availableas manifests from the record of criminal proceedings to connect the 2[nd]respondent in the commission of crime. Consequently, we do not consider

Ait appropriate to remit the matter back at this stage, as it would be anexercise in futility; on the contrary, it will just delay the proceedings, andhold the criminal trial at bay, which deserves to be expedited.

37. At the time of conclusion of the proceedings, IA has beenfiled at the instance of 2[nd] respondent initiating criminal proceedingsBagainst the 1[st] appellant under Section 340 read with Section 195 CrPC.We find that such applications are being filed for ulterior reasons whichwe seriously deprecate. The said IA is accordingly dismissed.

38. Consequently, the appeal succeeds and is accordingly allowed.The judgment of the High Court impugned dated 15[th] March, 2019 isChereby set aside. We, however, make it clear that what has been observedby us is only for the purpose of disposal of the present appeal. The trialCourt may proceed with the trial expeditiously without being influencedby the observations made in this judgment or taken as an expression ofour opinion.

D39. All pending IAs stand disposed of.

Divya Pandey

Appeal allowed.