M. Suresh v. State Of A.P.

P. Durga Prasad, J.:— Both the Criminal Petitions are filed under Section 482 of Cr.P.C. for quashing the proceedings in C.C.No.1736 of 2006 on the file of the III Additional Chief Metropolitan Magistrate, Hyderabad.

2. The Criminal Petition No. 7657 of 2009 was filed by A-1 and the Criminal Petition No. 7588 of 2010 was filed by A-2 in C.C. No. 1736 of 2006.

3. The respondent No. 2 herein has lodged a complaint before the III Additional Chief Metropolitan Magistrate, Hyderabad against the present petitioners and other two accused for the offences under Sections 420, 421, 426 and 120-B of IPC and the said Magistrate has taken cognizance of the said complaint under Section 420 of IPC against all the accused. Questioning the said cognizance under Section 420 of IPC, the accused 1 and 2 therein have filed the present Criminal Petitions for quashing of the same.

4. The petitioners-accused have pleaded that the III Additional Chief Metropolitan Magistrate, Hyderabad has no jurisdiction to take cognizance of the offence as the lands in dispute are situated at Bangalore and the accused are residents of Bangalore and the Memorandum of Understanding dated 22.01.2005 and the agreement of sale dated 22.01.2005 disclose that the stamp papers were purchased for executing the said document at Bangalore. They further pleaded that due to the disputes between the parties, the sale transaction under the agreement of sale was cancelled and settlement was arrived at and the respondent No. 2 suppressing the said settlement has filed the false complaint against them even after receiving of more than the amount paid by them with interest and the averments made in the complaint do not constitute any offence of cheating.

5. The 2 respondent's counsel, on the other hand, pleaded that the respondent No. 2 has induced the petitioners and other accused to part with the sale consideration of Rs. 85,00,000/- and they failed to produce the documents of the lands agreed to be sold and finally the accused colluded together and sale deeds were executed by the accused No. 1 in favour of accused No. 2 on 21.09.2005 and 04.01.2006 and thereby cheated him.

6. Now it has to be examined as to whether the averments made in the complaint prima facie constitute any offence under Section 420 of IPC.

7. It is alleged in the complaint that A-2 accompanied by A-1, A-3 and A-4, approached the complainant at Banjara Hills, Hyderabad and A-2 introduced A-1 as a owner of the land in Sy. Nos. 118/1B, 118/1A, etc. admeasuring about Ac.36-31 guntas of land in Avathi village and Bullahalli Village, Vijayapura Hobil, Devanahalli Taluq and Sy. Nos. 271/1, 272/4, 272/2, 272/3, etc. totally admeasuring about Ac.39.19 guntas of land in Avathi village, Kasaba Hobli, Devanahalli Taluq, Karnataka State for sale and A-2 assured the complainant that A-1 is a genuine person and believing the same, the complainant initially agreed to purchase the said land in the month of December, 2004 and paid Rs. 10,00,000/- as an advance by way of cheque to the A-3, who received the same on behalf of A-1. A-4 stood as one of the witnesses along with others to the said acknowledgment dated 28.12.2004. On 22.01.2005 an MOU was entered into between the A-1 and the complainant initially for purchase of Ac.36-31 guntas to which A-3 and A-4 acted as witnesses and accordingly Rs. 9,00,000/- was paid to A-1 by way of demand draft at the time of entering into the MOU and subsequent agreement of sale was executed on 22.01.2005. The accused Nos. 1 to 4 have placed at Hotel Grand Kakatiya at the expenses of the complainant and entered into the MOU and agreement of sale at the residence of the complainant and the accused Nos. 1 to 4 have gone back promising that they will be on the job and inform the complainant when the registration will be taken place after completing of the formalities. The complainant also paid Rs. 66,00,000/- by way of demand drafts to the A-1 as per the agreement of sale dated 22.01.2005. The accused Nos. 1 to 4 are under the obligation to hand over the copies of all relevant documents on or before 15.04.2005 to enable the complainant for processing the loans by financial institutions and banks but the accused Nos. 1 to 4 have failed to comply with the same and when demanded by the complainant they started avoiding the complainant. On suspicion, the complainant insisted A-1 to A-4 to stick to their commitment or return back his money of Rs. 85,00,000/-, which was paid till then to the accused. On a consistent and persistent demand for return of the money, A-1 has issued two cheques dated 05.05.2005 for an amount of Rs. 7,00,000/- and Rs. 85,00,000/- drawn on ICICI bank, Bangalore towards repayment of the amount but both the cheques were dishonoured with an endorsement ‘payments stopped by the drawer’. When the complainant reminded about the dishonour of the said cheques, they requested for some time for procuring the documents and comply with the terms and conditions in the agreement and the MOU and in the month of August, 2005 A-1 came to him and insisted upon the complainant that they can register the lands under MOU and agreement of sale only if the complainant could arrange Rs. 1,00,00,000/- immediately before 10 September, 2005 and the complainant believing the said words mobilized an amount of Rs. 1,00,00,000/- and took a demand draft payable at Union Bank of India, Bangalore on 05.09.2005 and handed over the same with a condition that it can be realized if they atleast provide him with the Xerox copies of the lands mentioned by them. But there is no response from the accused. Thereupon the complainant got suspicion and verified and found that A-1 to A-4 conspired together and A-1 executed three sale deeds in favour of A-2 pertaining to the part of the said land mentioned in MOU and agreement of sale entered into with the complainant and thereby sought for the prosecution of the accused for the offences under Sections 420, 421, 426 and 120-B of IPC. But the said complaint was taken cognizance only under Section 420 of IPC by the Magistrate.

8. The petitioners' counsel has pleaded that they have paid back the entire amount received by them with interest as per the understanding entered into between them by way of two cheques for an amount of Rs. 85,00,000/- and Rs. 7,00,000/- each and asked the complainant not to present the same without prior intimation, but the complainant has submitted the said cheques for realization without intimation, as such they could not be honoured and, thereafter A-1 repaid Rs. 95,00,000/- towards full and final settlement through demand draft drawn on HDFC Bank Limited, Bangalore on different dates. As such, there is no cheating on the part of the accused.

9. The petitioners' counsel has relied upon a decision rendered in Hridaya Ranjan Prasad Verma v. State of Bihar[ (2000) 4 SCC 168]. In the above decision it is held as follows:

“The appellant agreed to sell the land to a cooperative society for a consideration of Rs. 16,00,000/-. The respondent No. 2 was the Secretary of the Society and the respondent has paid a sum of Rs. 11,00,000/- to the appellant by way of demand drafts. The appellant executed registered sale deed in respect of the land in favour of the society. It is the case of the appellant that on insistence of respondent No. 2, two other brothers of the appellant signed in the sale deed as witnesses. By way of a further safeguard, the appellant has executed separate indemnity bond on the same day in which they undertook to indemnify any loss caused to the society on account of any objection which may be raised by any co-sharer against the transfer of the land in future. The appellant asserted that they have delivered possession of the land to the society on the same day. On registration of the sale deed, respondent No. 2 handed over three cheques to the appellant for a sum of Rs. 5,50,000/-. When the appellant presented the said cheques in the bank, the same were dishonoured on account of insufficiency of amount. The appellant served a notice through their advocate and lodged a complaint for the offences under Sections 406, 420 and 120-B of IPC. The police after investigation into the allegations filed charge sheet against respondent No. 2 and the Vice-President of the Society. The appellant also filed three suits for realization of the amount due to them. Shortly thereafter the respondent No. 2 filed a complaint in the Court of the Chief Judicial Magistrate against the appellants alleging commission of offences under Sections 418, 420, 423, 469, 504 and 120-B of IPC. In the complaint, respondent No. 2 alleged inter alia that by conspiring together all the accused have defaulted and cheated the Society and the complainant by giving false, concocted and wrongful information and assurances and thus they induced the complainant to enter into negotiations and also to advance them a heavy amount with their ulterior design to acquire wrongful gain to themselves and for wrongful loss to the society and the complainant. The appellant, therefore, filed a petition for quashing of the complaint. The High Court has declined to quash the same and thereby the appeal is filed before the Apex Court. The Apex Court has held 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. From his mere failure to keep up promise subsequently such a culpable intention right at the beginning, that is, when he made the promise cannot be presumed and taking into consideration that the respondent No. 2 as against the complainant is that they did not disclose that one of their brothers has filed a partition suit, which was pending. The information was not disclosed intentionally in order to make respondent No. 2 part with the property, is not alleged expressly or even impliedly in the complaint. Therefore, the core postulate of dishonest intention in order to deceive the complainant-respondent No. 2 is not made out even accepting all the averments in the complaint on their face value. In such a situation continuing of criminal proceeding against the accused will be an abuse of process of the Court and thereby quashed the proceedings.”

10. In another decision rendered in Murari Lal Gupta v. Gopi Singh. (2006) 2 SCC (Cri) 430, the Apex Court has observed as follows:

“that merely because the petitioner has failed to honour the agreement, it cannot be said that he has cheated the respondent. Further observed that the complaint filed at Madhepura against the petitioner, who is a resident of Delhi, seems to be an attempt to pressurize the petitioner for coming to terms with the respondent and thereby quashed the proceedings.”

11. In another decision rendered in B. Suresh Yadav v. Sharifa Bee (2007) 13 SCC 107, it is held as follows:

“that the parties thereto have entered into an agreement of sale in respect of a house and sale deed was executed by 30.09.2005 by the appellant herein. Indisputably on or about 29.09.2005 two rooms allegedly constructed on the said lands were demolished. A suit was filed in relation thereto. Respondent No. 1, who was also defendant in the said suit, did not allege that she has been cheated by the appellant herein but later on filed a complaint in the Court alleging commission of an offence by the appellant purported to be under Section 420 of IPC. A petition under Section 482 of Cr.P.C. for quashing the complaint had been dismissed by the High Court and thereafter the matter came up before the Apex Court. The Apex Court has observed that while executing the sale deed, the appellant did not make any false or misleading representation. There had also not been any dishonest act of inducement on his part to do or omit to do anything which he could not have done or omitted to have done if he were not so deceived. Admittedly, the matter is pending before a competent civil Court. A decision of a competent Court of law is required to be taken in this behalf. Essentially, the dispute between the parties is a civil dispute and further observed that for the purpose of establishing the offence of cheating, the complainant is required to show that the accused had fraudulent or dishonest intention at the time of making promise or representation. In a case of this nature, it is permissible in law to consider the stand taken by a party in a pending civil litigation. This does not mean that the liability of a person cannot be both civil and criminal at the same time. But when a stand has been taken in a complaint petition which is contrary to or inconsistent with the stand taken by him in a civil suit, it assumes significance and the facts and circumstances of the case do not constitute any offence under Section 420 of IPC and thereby quashed the proceedings.”

12. In the present case, as per the allegations made in the complaint, the accused has approached the complainant at Hyderabad and in pursuance of their discussions he entered into an agreement of sale and MOU on 22.01.2005 for purchase of the land by paying an advance of Rs. 85,00,000/-. But the accused did not execute the registered sale deed or they did not even hand over the copies of the relevant documents in pursuance of the agreement and when he insisted for return of the advance amount paid by him along with interest or honour the terms and conditions under the agreement of sale and MOU, the accused have issued two cheques i.e. one for Rs. 7,00,000/- and another for Rs. 85,00,000/- and both the cheques were presented and were dishonoured as ‘stopped payment’ by the drawer. Therefore, from the above averments made in the complaint, it is evident that the accused have got an intention to cheat the complainant by inducting him to enter into an agreement and MOU and part with the advance amount of Rs. 85,00,000/-. Therefore, the allegations made in the complaint clearly establish inducement on the part of the accused to the complainant for parting with Rs. 85,00,000/- under the guise of entering into MOU and agreement of sale for purchase of the land situated at Bangalore. Their failure even to furnish the copies of the documents and dishonouring the cheques issued by them at their instance itself shows that they have got an intention to cheat the complainant from the beginning.

13. The contention of the petitioner's counsel is that they have no intention to cheat the complainant and at the instance of the accused under settlement they have repaid the advance amount of Rs. 85,00,000/- with interest Rs. 7,00,000/- by issuing two cheques and asking him before presenting the said cheques for arranging but presented the same without their knowledge, as such the said cheques were dishonoured. He further pleaded that the accused has already paid Rs. 95,00,000/-, which is more than the amount payable to the complainant on different dates.

14. The contention of the petitioner's counsel cannot be accepted since the said cheques issued for Rs. 85,00,000/- and Rs. 7,00,000/- were dishonoured as the payment was stopped by the drawer and the payment of Rs. 95,00,000/- on different dates as mentioned in the petition is subsequent to filing of the complaint. Simply making of the payment of the amount subsequent to filing of the complaint does not absolve the criminal liability of the petitioner. Thus, the complaint filed by the respondent No. 2 prima facie establishes an offence under Section 420 of IPC against the petitioners and the petitioners are not entitled for quashing of the proceedings as prayed for.

15. In the result, both the Criminal Petitions are dismissed.