2019 (10) TMI 767 - SC - Indian Laws

Dishonor of Cheque - HC quashed the complaint - offences under Sections 417, 418, 420, 422 and 120(B) read with Section 34 of IPC - HELD THAT - It is fairly well settled that power under Section 482 Cr.P.C. is to be exercised sparingly when the case is not made out for the offences alleged on the reading of the complaint itself or in cases where such complaint is filed by way of abuse of the process. Whether any Schedules were appended to the agreement or not, a finding is required to be recorded after full fledged trial. Further, as the contract is for the purpose of procuring the land, as such the same is of civil nature, as held by the High Court, is also no ground for quashing. Though the contract is of civil nature, if there is an element of cheating and fraud it is always open for a party in a contract, to prosecute the other side for the offences alleged. Mere filing of a suit or complaint filed under Section 138 of the N.I. Act, 1881 by itself is no ground to quash the proceedings. While considering the petition under Section 482 of Cr.P.C., we are of the view that the High Court also committed an error that there is a novation of the contract in view of the subsequent agreement entered into on 08.11.2012. Whether there is novation of contract or not and the effect of such entering into the contract is a matter which is required to be considered only after trial but not at the stage of considering the application under Section 482 of Cr.P.C. The High Court has committed an error in allowing the petitions filed under Section 482, Cr.P.C. by the respondents-accused - criminal appeals are allowed.

Summary

Issues:
1. Quashing of criminal complaints under Section 482 of Cr.P.C.
2. Allegations of fraud, cheating, and conspiracy in land procurement agreements.
3. Dispute over novation of contract and breach of trust leading to criminal prosecution.
4. Interpretation of legal provisions and judgments in determining criminal liability.

Issue 1: Quashing of criminal complaints under Section 482 of Cr.P.C.
The High Court quashed criminal complaints filed against the accused under Section 482 of Cr.P.C., citing novation of contract, disbelief in the schedules, and civil nature of the contract. The appellant contended that factual disputes exist, and the High Court erred in disbelieving the schedules due to pagination issues. The appellant argued that cheating and criminal conspiracy allegations necessitate a trial, and filing civil suits or complaints under Section 138 of the N.I. Act does not warrant quashing. The Supreme Court held that the High Court's decision to quash the complaints was erroneous, emphasizing the need for a full-fledged trial to determine the veracity of the allegations.

Issue 2: Allegations of fraud, cheating, and conspiracy in land procurement agreements
The complaints alleged that the accused misrepresented ownership of land, received a substantial sum, and failed to fulfill the agreements. The appellant claimed that the accused sold land to a third party before the agreements and issued cheques from a closed account. The appellant was coerced into signing a sale deed, implicating all accused in a conspiracy to retain the advance payment illegally. The Supreme Court noted the seriousness of the allegations and emphasized that the presence of fraud and cheating warranted a trial to establish criminal liability.

Issue 3: Dispute over novation of contract and breach of trust leading to criminal prosecution
The accused argued for novation of the contract and contended that breach of contract may not always lead to criminal prosecution. However, the appellant maintained that the accused's actions demonstrated mens rea, including selling land already promised and issuing cheques from a closed account. The Supreme Court highlighted the importance of considering the circumstances and allegations to determine if fraudulent intent existed, supporting the need for a trial to ascertain criminal breach of trust or cheating.

Issue 4: Interpretation of legal provisions and judgments in determining criminal liability
The Supreme Court analyzed legal precedents cited by both parties to assess the applicability of criminal liability in the case. The Court emphasized that fraudulent and dishonest intentions, as alleged by the appellant, could lead to criminal prosecution for breach of trust or cheating. The judgments referenced did not support the accused's arguments, reinforcing the need for a trial to establish criminal culpability. The Court set aside the High Court's decision, allowing the trial court to proceed with the complaints based on their merits and the legal provisions involved.

This detailed analysis of the judgment highlights the key legal issues, arguments presented, and the Supreme Court's decision regarding the quashing of criminal complaints and the allegations of fraud, cheating, and conspiracy in land procurement agreements.