Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2021 Supreme(Kar) 359

IN THE HIGH COURT OF KARNATAKA AT BENGALURU
M. NAGAPRASANNA, J.
SRI NITESH SHETTY, S/O. LATE P.V.SHETTY, CHAIRMAN AND MANAGING DIRECTOR, M/S. NITESH ESTATES LIMITED - Appellant
Vs.
STATE OF KARNATAKA, BY THE STATION HOUSE OFFICER, THALAGHATTAPURA POLICE STATION, REP. BY SPP, HIGH COURT OF KARNATAKA, BANGALORE - Respondent
CRIMINAL PETITION No.8029/2017
Decided On : 26-08-2021

Advocates Appeared:
For The Appellant :SRI. C.V.NAGESH, SENIOR COUNSEL FOR SRI. RAGHAVENDRA.K ADVOCATE
For The Respondent:SMT. NAMITHA MAHESH B.G, HCGP, (PHYSICAL HEARING) SRI. PHANIRAJ KASHYAP, ADVOCATE

Point of Law : Agreement was terminated by the complainant himself and the dispute before the Arbitrator was sought by the complainant himself. Therefore, there can be no question of an intention to cheat or inducement of the complainant with such objective of cheating right from the beginning.

Headnote:
Criminal Procedure Code, 1973 - Section 482, 155(2) and 156(1) –Penal Code, 1860 - Sections 403, 406, 415 and 420 - No police officer shall investigation cognizable case with out order - Construction did not move forward pace that was expected and there were certain discrepancies in execution of Joint Development Agreement, complainant caused a legal notice against petitioners on with regard to ineffective and non-timely completion of project and also indicated that he would be constrained to commence proceedings, if they failed to comply with terms set out in notice - Whether a Civil liability of nature as is found in present proceedings before Arbitrator could have been made a subject matter of a criminal complaint by complainant and exercise of jurisdiction by Court under Section 482 of Cr.P.C. to efface such proceedings - Whether criminal proceedings instituted by complainant if permitted to continue would result in miscarriage of justice or would be an abuse of process of law
Finding Of The Court :
Joint Development Agreement cannot be said to be an inducement by petitioners on complainant to enter into said agreement - Lands belonging to complainant were offered by complainant himself for a Joint Development Agreement - Agreement was terminated by complainant himself and dispute before Arbitrator was sought by complainant himself - Therefore, there can be no question of an intention to cheat or inducement of complainant with such objective of cheating right from beginning. - Noticing law laid down by Apex Court interpreting cheating, in circumstances, becomes apposite - Court being a superior court to make such orders to secure ends of justice and to weed out such criminal proceedings which if permitted would generate into a weapon of harassment - Case at hand will have to be considered on the bedrock of aforesaid principle laid down by Apex Court and being followed from time to time - Preceding analysis, this is a classic case, where civil proceedings which are admittedly initiated by complainant are given a cloak of crime.
Result : Criminal petition is allowed.

ORDER :

Petitioners, who are accused Nos. 1 and 2 call in question proceedings initiated by respondent No.2 in Crime No.254 of 2017 pending on the file of the Additional Chief Judicial Magistrate, Bangalore Rural District, Bangalore.

2. Shorn of unnecessary details, facts in brief, are as follows:-

The complainant/2nd respondent owned certain lands and on being interested in getting the lands developed enters into a Joint Development Agreement with petitioners No. 1 and 2. In terms of Joint Development Agreement, the property of the complainant was offered for such development subject to conditions stipulated in the said agreement. The Joint Development Agreement was entered into between the parties on 30-05-2013. Certain additional terms and conditions were incorporated by substitution into the said Joint Development Agreement on 18.06.2014.

3. On an allegation that the construction did not move forward in the pace that was expected and there were certain discrepancies in execution of Joint Development Agreement, the complainant caused a legal notice against the petitioners on 03-08-2015 with regard to ineffective and non-timely completion of the project and also indicated that he would be constrained to commence the proceedings, if they failed to comply with the terms set out in the notice. This was replied by the petitioners on 25-11-2015 by payment that was sought for and notwithstanding the said payment, the complainant terminated the Joint Development Agreement and also caused a notice that he would be willing for appointment of a sole Arbitrator to arbitrate upon the issues. The controversy with regard to appointment of an Arbitrator loomed large which necessitated the complainant to approach this Court seeking appointment of a sole Arbitrator in Civil Miscellaneous Petition No.74 of 2017. This Court disposed of the Civil Miscellaneous Petition by appointing former Judge of the Apex Court Hon’ble Mr. Justice Deepak Verma to be the sole Arbitrator to arbitrate upon the issues that arose between the parties.

4. After the complainant seeking arbitration and this Court appointing the Arbitrator to arbitrate upon the dispute between the parties, the said Arbitrator commenced proceedings on 23.03.2017. After participating in arbitration proceedings, the complainant registers a complaint on 08.09.2017 alleging that the acts of petitioners amounted to violation and breach of Joint Development Agreement, which is a criminal breach of trust and cheating for having misappropriated certain funds. The complaint resulted in registration of an FIR against the petitioners for offences punishable under Sections 406 and 420 of the IPC. On issuance of summons, the petitioners, who are accused Nos.1 and 2 in Crime No.254 of 2017 are before this Court in the present criminal petition calling in question initiation of such proceedings.

5. Heard Sri C.V.Nagesh, learned senior Counsel for Sri Raghavendra K., learned counsel appearing for the petitioners, Smt. Namitha Mahesh B.G., learned High Court Government Pleader appearing for respondent No.1 and Sri Phaniraj Kashyap, learned counsel appearing for respondent No.2/complainant.

6. The learned senior Counsel, Sri C.V.Nagesh representing the petitioners would submit that the complainant having sought arbitration by issuance of notice and filing a Civil Miscellaneous Petition before this Court and an Arbitrator being appointed to adjudicate the dispute with regard to Joint Development Agreement, could not have resorted to registration of a criminal case on the very same set of facts. The complaint even if it is read in its entirety does not even link to offences under Sections 406 and 420 of the IPC. The claim of the complainant is purely civil in nature and is a cloak of criminal liability with mala fide intention and would submit that the proceedings ought to be quashed.

7. On the other hand, Sri Phaniraj Kashyap, 2nd learned counsel appearing for the respondent/complainant would refute every submiss

Click Here to Read the rest of this document

2021 Supreme(Kar) 359

Point of Law : Agreement was terminated by the complainant himself and the dispute before the Arbitrator was sought by the complainant himself. Therefore, there can be no question of an intention to cheat or inducement of the complainant with such objective of cheating right from the beginning.

Cases Referred (15)