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2018 (11) TMI 1846 - SC - Indian LawsWrongful retention of amount - commission of offence punishable Under Section 406 by not returning the amount of Rs. One Crore advanced by the Respondent No. 2 - HELD THAT - There is nothing in the words of this Section which restricts the exercise of the power of the Court to prevent the abuse of process of court or miscarriage of justice only to the stage of the FIR. It is settled principle of law that the High court can exercise jurisdiction Under Section 482 of Code of Criminal Procedure even when the discharge application is pending with the trial court. Fraudulent transfer of property - criminal breach of trust or not - HELD THAT - This charge is wholly untenable and rather extraordinary since the alleged fraudulent transfer of property by the Appellant No. 1 to his wife, assuming it to be illegal, by no stretch of imagination can constitute the offence of a criminal breach of trust, since the property was not entrusted by the Respondent No. 2 to the Appellants. The property belonged to Appellant No. 1 and there was therefore no question of Appellants having been entrusted with their own property, and that too by the complainant, who had merely entered into a development agreement in respect of the property. Whether an offence Under Section 406 made out? - HELD THAT - It is not possible to hold that the amount of Rs. One crore which was paid along with the development agreement as a deposit can be said to have been entrustment of property which has been dishonestly converted to his own use or disposed of in violation of any direction of law or contract by the Appellant. The Appellants have not used the amount nor misappropriated it contrary to any direction of law or contract which prescribes how the amount has to be dealt with - there is a security deposit of Rs. One Crore and that he has misappropriated the dispute between the two parties can only be a civil dispute. There are no no hesitation in quashing the FIR and the charge sheet filed against the Appellants - appeal allowed.
Issues Involved:
1. Quashing of FIR No. 0139/2014 dated 20.08.2014. 2. Quashing of charge sheet dated 03.08.2018. 3. Determination of whether the dispute constitutes a civil or criminal matter. 4. Examination of the applicability of Section 406 of the Indian Penal Code. Analysis: Quashing of FIR No. 0139/2014 dated 20.08.2014: The appellants sought to quash the FIR lodged on 20.08.2014, which was filed 21 years after the agreement dated 03.06.1993 between the appellant and the respondent. The High Court dismissed the petition under Section 482 of the Code of Criminal Procedure, stating it was premature as the investigation was ongoing. The Supreme Court, referencing Joseph Salvaraj A. v. State of Gujarat, held that the High Court could still examine whether the offences alleged were prima facie made out from the complainant's FIR, even if a charge sheet had been filed. Quashing of Charge Sheet dated 03.08.2018: The appellants also sought to quash the charge sheet filed during the pendency of the appeal. The Supreme Court noted that the inherent powers under Section 482 of the Code of Criminal Procedure could be invoked to prevent abuse of the process of the court or miscarriage of justice, irrespective of the stage of the case. The court emphasized that the abuse of process caused by the FIR is aggravated if it materializes into a charge sheet. Determination of Whether the Dispute Constitutes a Civil or Criminal Matter: The court found that the dispute essentially revolved around the retention of Rs. One crore, which was an interest-free deposit under the development agreement. The appellants argued that the amount was retained as the conditions for its return were not met, and the respondent had not demanded its return. The court concluded that the dispute had the contours of a civil matter and did not constitute a criminal offence. The court cited Indian Oil Corporation v. NEPC India Ltd., emphasizing that civil disputes should not be converted into criminal cases to apply pressure. Examination of the Applicability of Section 406 of the Indian Penal Code: The court examined whether the retention of Rs. One crore constituted an offence under Section 406, which deals with criminal breach of trust. The court found that the amount was not misappropriated or used dishonestly in violation of any direction of law or contract. The court noted that the occasion for returning the amount had not arisen, and the respondent had not demanded its return. The court held that the allegations did not prima facie constitute an offence under Section 406. Conclusion: The Supreme Court quashed FIR No. 0139/2014 and the charge sheet dated 03.08.2018, finding them untenable and solely intended to harass the appellants. The court set aside the High Court's judgment and allowed the appeal, emphasizing that the dispute was of a civil nature and did not constitute a criminal offence. The court reiterated the inherent powers under Section 482 to prevent abuse of process and secure the ends of justice.
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