PRITI SARAF & Anr. v. STATE OF NCT OF DELHI & Anr.

inherent jurisdiction. The High Court has primarily adverted on two circumstances, (i) that it was a case of termination of agreement to sell on account of an alleged breach of the contract and (ii) the fact that the arbitral proceedings have been initiated at the instance of the appellants. Both the alleged circumstances noticed by the High Court are unsustainable in law. The facts narrated in the present complaint/FIR/charge-sheet indeed reveal the commercial transaction but that is hardly a reason for holding that the offence of cheating would elude from such transaction. In fact, many a times, offence of cheating is committed in the course of commercial transactions and the illustrations have been set out under Sections 415, 418 and 420 IPC. So far as initiation of arbitral proceedings is concerned, there is no correlation with the criminal proceedings. That apart, the High Court has not even looked into the charge-sheet filed against 2nd respondent which was on record to reach at the conclusion that any criminal offence as stated is prima facie being made out and veracity of it indeed be 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 – relied on.

1.4 There was sufficient material available as manifests from the record of criminal proceedings to connect the 2nd respondent in the commission of crime. The judgment of the High Court impugned dated 15th March, 2019 is hereby set aside. [Paras 36, 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 of Gujarat 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 Mohatta and Anr. v. State (NCT of Delhi), Department of Home and Anr. (2019) 11 SCC 706 : [2018] 13 SCR 1028; A B C D E F G H 580 SUPREME COURT REPORTS [2021] 2 S.C.R. Rajabhai Abdul Rehman Munshi v. Vasudev Dhanjibhai Mody [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 Singh (2005) 13 SCC 699; Indian Oil Corporation v. NEPC India 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] 7 SCR 563; Chandran Ratnaswami v. K.C. Palanisamy and Ors. (2013) 6 SCC 740 : [2013] 17 SCR 853; VESA Holdings Private Limited and Anr. v. State of Kerala & Ors. (2015) 8 SCC 293 : [2015] 4 SCR 27; K. Subba Rao and Ors. v. State of Telangana Rep. by its Secretary, Department of Home & Ors. (2018) 14 SCC 452; Arnab Manoranjan Goswami v. State of Maharashtra and Others 2020 SCC Online SC 964 – referred to. Case Law Reference [1960] 3 SCR 388 referred to [1990] 3 Suppl. SCR 259 relied on [1999] 2 Suppl. SCR 686 relied on [2001] 4 Suppl. SCR 45 referred to [2011] 8 SCR 815 [2013] 3 SCR 961 referred to referred to [2018] 13 SCR 1028 referred to [1964] 3 SCR 480 [1991] 2 SCR 563 [2000] 1 SCR 417 referred to referred to referred to (2005) 13 SCC 699 referred to [2006] 3 Suppl. SCR 704 referred to [2009] 7 SCR 563 referred to para 14 para 14 para 14 para 14 para 14 para 14 para 14 para 20 para 20 para 20 para 20 para 20 para 20 A B C D E F G H PRITI SARAF & ANR. v. STATE OF NCT OF DELHI & ANR. [AJAY RASTOGI, J.] 581 [2013] 17 SCR 853 referred to [2015] 4 SCR 27 referred to (2018) 14 SCC 452 referred to 1997 SCC(Cri) 1073 relied on para 20 para 20 para 20 para 27 CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No. 296 of 2021 From the Judgment and Order dated 15.3.2019 of the High Court of 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, Abhishek Puri, 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 28th April, 2017 are questioning the order of the High Court dated 15th March, 2019 passed in Criminal Miscellaneous Case Nos. 1718/2017 and 7009/2017 whereby the learned Single Judge in exercise of its jurisdiction under Section 482 of the Code of Criminal Procedure(hereinafter being referred to as “CrPC”) taking cognizance for the offence under Sections 420, 406 and 34 IPC quashed the orders and set aside the criminal proceedings against 2nd respondent on the foundation that the allegations made in the complaint/FIR does not constitute offences under aforestated sections. Brief facts of the case

#3. The factual matrix of the matter as reflected from the complaint as alleged are that the subject property in question, i.e., 37, Friends Colony(East), New Delhi is in the ownership of 2nd respondent. The said property was mortgaged with State Bank of Patiala and the total A B C D E F G H 582 SUPREME COURT REPORTS [2021] 2 S.C.R. A B C D E F G H legal liability payable to the Bank was Rs. 18 crores. That in order to clear the said dues, 2nd respondent hatched a conspiracy with broker Ashok Kumar so as to cheat and defraud the appellants/complainants and to further misappropriate the amounts paid by the complainants as part of the deal, the 2nd respondent breached the trust of the appellants/ complainants deliberately and falsely stating to the appellants/ complainants that the 2nd respondent would be liable to pay a sum of Rs. 25.50 crores to the complainant if the deal is not carried forward by the 2nd respondent. Keeping in view the overall scenario, agreement to sell was executed on 24th December, 2011 between the 2nd respondent and the 1st appellant. The 2nd respondent agreed to sell 1205.43 sq yds. of the property in question for a total sale consideration of Rs. 63,28,50,750/ -. At the time of execution, 1st appellant paid a sum of Rs. 12.50 crores vide cheque dated 24th December, 2011 drawn on HDFC Bank, New Friends Colony, Delhi. As per clause 3 of the said agreement to sell, 2nd respondent had to perform and complete three requirements which were compulsory in nature. The said requirements were to be completed by the 2nd respondent latest by 24th March, 2012 before any further amount is to be received by her from the 1st appellant/complainant.

#4. It was further alleged in the complaint that the three requirements in terms of clause 3 of the agreement to sell were not fulfilled by the 2nd respondent and even after there being a delay in obtaining sanction plans, still the 1st appellant on demand made a payment of Rs. 5.40 crores by a cheque dated 23rd May, 2012 and to show her bonafides, the 2nd respondent handed over post-dated cheques worth Rs. 25.50 crores towards security for performance of agreement dated 24th December 2011. After the amount was received from the 1st appellant/complainant, 2nd respondent immediately cleared her outstanding legal liability of State Bank of Patiala and obtained NOC from the bank, however, the fact of obtaining NOC was never divulged by the 2nd respondent to the complainants deliberately. This fact for the first time was disclosed by the 2nd respondent at the stage when post-dated cheques of Rs.25.50 crores handed over as security to the complainant were rendered invalid.

#5. The intention of the 2nd respondent from the very inception to cheat and deceive the complainants/appellants is made out from the fact that the 2nd respondent had to complete the compulsory requirement on or before 24th March, 2012 but the first two requirements were completed on 11th May, 2012 and 2nd June, 2012 respectively and the third PRITI SARAF & ANR. v. STATE OF NCT OF DELHI & ANR. [AJAY RASTOGI, J.] 583 requirement was still not complete. At this stage, just to cheat the 1st appellant/complainant, 2nd respondent illegally terminated the agreement to sell vide communication dated 30th January, 2013. The 1st appellant had tried her level best to get the matter settled but, the modus operandi of the 2nd respondent was to cheat from the very inception when the agreement to sell was executed, nothing materialised.

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

#7. The Investigation Officer conducted investigation and filed charge-sheet dated 5th October, 2018 under Sections 420, 406 and 34 IPC. 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 subject property, i.e. Plot No. 37 is admeasuring 3930 sq. yds. and sub-division of the plot is not permitted to be sanctioned as per Clause 4.4.3(IV) of the Master Plan Delhi, 2021. It also reveals from the charge-sheet that prior to the present transaction which was executed pursuant to agreement to sell dated 24th December, 2011, 2nd respondent under the same modus operandi earlier in reference to self-same subject property forfeited in the year 2007 a sum of Rs.18 crores from M/s. Shinestar Buildcon Private Ltd. It further reveals that 2nd respondent never got the site plan sanctioned for appellants nor the bifurcated & demarcated area knowingly because of her malafide intentions. The role of husband of 2nd respondent as a suspect is under pending investigation under Section 173(8) CrPC and if adverse material comes on record, the supplementary charge-sheet may be filed against S.C. Goyal(husband of 2nd respondent) at a later stage.

#8. The 2nd respondent challenged the orders dated 15th November, 2016 and 26th April, 2017 passed in revision petition filed at her instance before the High Court under Section 482 CrPC. A B C D E F G H 584 SUPREME COURT REPORTS [2021] 2 S.C.R. A B C D E F G H

#9. It reveals from the record that after this fact was brought to the notice of the learned Judge of the High Court that the charge-sheet has been filed, the learned Judge directed the Public Prosecutor by Order dated 9th October, 2018 to place the charge-sheet on record. Even after the charge-sheet came to be filed by the Public Prosecutor in compliance of the Order of the Court, the learned Judge of the High Court while noticing the facts has only taken note of the agreement to sell dated 24th December, 2011, notice of termination dated 30th January, 2013 and without examining the bare facts on record, what being transpired in the complaint and so also during the investigation reflected from the charge- sheet filed before the trial Court and which was part of the record still proceeded on the premise and observed that the case is of a simple breach of contract, which gives rise to purely civil dispute and cannot be converted into a criminal offence, more so, when the arbitral proceedings have been initiated, in the given circumstances, held that if such civil disputes as alleged are being permitted to be prosecuted in the criminal proceedings, this according to the learned Judge, would be a sheer abuse of the process of the Court. In consequence thereof, quashed all the criminal proceedings and the orders under challenge therein dated 15th November, 2016 and 24th April, 2017 and further observed that the observations made shall not be construed to be expression on merits, in the arbitration proceedings by impugned judgment dated 15th March, 2019.

#10. We have heard Mr. Mukul Rohatgi, learned senior counsel for the appellants, Mr. P. Chidambaram, learned senior counsel for 2nd respondent and Ms. Aishwarya Bhati, learned Additional Solicitor General for the State.

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

#12. Learned counsel further submits that the exercise of inherent power of the High Court under Section 482 CrPC is an exceptional one. Great care should be taken by the High Court before embarking to scrutinise the complaint/FIR/charge-sheet in deciding whether the rarest PRITI SARAF & ANR. v. STATE OF NCT OF DELHI & ANR. [AJAY RASTOGI, J.] 585 of the rare case is made out to scuttle the prosecution in its inception. It was expected from the High Court to prima facie consider the complaint, charge-sheet and the statement of witness recorded in support thereof which was recorded by the Investigating Officer in arriving at a conclusion whether court could take cognizance of the offence, on that evidence and proceed further with the trial. If it reaches a conclusion that no cognizable offence is made out, no further act could be done except to quash the FIR/charge-sheet. But only in exceptional cases, i.e., in rarest of rare cases of mala fide initiation of the proceedings to wreak private vengeance process is availed of in laying a complaint or FIR itself does not disclose any cognizable offence.

#13. Learned counsel submits that the High Court has committed a manifest error in ignoring the material facts on record which make the orders sensitively susceptible and further submits that the learned Additional Sessions Judge had considered the entire gamut of facts and appositely opined that the order taking cognizance could not be flawed but the High Court has completely erred in its conclusion and has not even looked into the bare facts available on record and has proceeded on a premise that in case where there is an agreement to sell and its subsequent termination for its alleged breach, such disputes are civil disputes and more so where the arbitral proceedings are pending, criminal proceedings will be an abuse of the process of the Court, in the given circumstances, what has been made to be a basis by the learned Judge is unsustainable in law and hence the order deserves to be set aside.

#14. In support of his submissions, learned counsel has placed reliance on the judgments of this Court in R.P. Kapur Vs. State of Punjab1; 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 of Gujarat and Ors.5; Arun Bhandari Vs. State of Uttar Pradesh and Ors.6; Anand Kumar Mohatta and Anr. Vs. State (NCT of Delhi), Department of Home and Anr.7.