Breaches of commercial agreements do not constitute criminal offenses unless fraudulent intent is established at the outset, reinforcing that civil disputes should not be converted into criminal matters.

ORDER :

(PER: THE HON'BLE MR JUSTICE M.NAGAPRASANNA)

The petitioners/accused 1 to 6 are before this Court calling in question a crime in Crime No.422 of 2024 registered for offences punishable under Sections 406 , 420 and 506(2) of the IPC pending before the II Additional Civil Judge (Junior Division) and JMFC, Anekal, Bengaluru.

2. Facts, in brief, germane are as follows:-

1st petitioner/Patel Engineering Company (‘the Company’ for short) is a Company incorporated under the provisions of the Companies Act, 2013 and is said to be engaged in construction of dams, bridges, tunnels, roads, piling works, industrial structures, real estate and is said to be a public limited company in the Bombay Stock Exchange and the National Stock Exchange. The 2nd respondent is the complainant. The Company and the 2nd petitioner/the Chairman and Managing Director of the Company who is now said to be no more, owned certain properties measuring about 103 acres in various survey numbers in Hulimangala, Thirupalya and Maragondanahalli, Jigani Hobli, Anekal Taluk, Bengaluru (‘the aggregate property’) and desirous of developing into an integrated township on the property had applied to the State Government seeking requisite permission to develop the lands as integrated township in the name and style of ‘Neotown’.

3. One Gulam Mustafa, of Gulam Mustafa Enterprises Pvt. Ltd., approached petitioners 1 and 2 being desirous of developing the said aggregate property. In terms of talks of the 2nd petitioner indulged with Gulam Mustafa, they enter into a Memorandum of Understanding (‘MoU’ for short) on 15-03-2016. The MoU was for the purpose of development of the property as noticed hereinabove. Post execution of MoU, the parties enter into sale deed and Joint Development Agreements (‘JDAs’ for short) with regard to various packets or parcels of lands in the property. Of the agreements so entered, the subject lis concerns two particular agreements in Sy.No.30/1 measuring 32 guntas, Sy.No.30/3 measuring 33 guntas, Sy.No.31 measuring 1 acre 6 guntas, Sy.No.43 measuring 1 acre 32 guntas, Sy.No.44/6 measuring 35 guntas of Maragondanalli Village, Jigani Hobli (‘the Schedule property’) and Sy.No.352 measuring 4 acres 38 guntas situated at Hullimangala Village, Jigani Hobli, Anekal Taluk, Bengaluru (‘Townsville property’).

4. On 21-11-2017 the Company and Gulam Mustafa Infinite Dwelling (India) Private Limited (‘GM infinite’) took finance assistance from State Bank of India for sanction of loan facility. The Company which was the legal owner of the land was insisted by the Bank to give a corporate guarantee towards the finance availed of by the other parties to the JDA. Based on the representations of all the parties, the Company agreed to give a corporate guarantee. The corporate guarantee was submitted by the Company to the Bank on 06-07-2018. After about 5 years of the JDA availing of the loan, the GM Infinite is said to have approached the Company expressing its intention to purchase the schedule property through its group Company Azeem Infinite Dwelling (India) Private Limited (‘Azeem Infinite’ for short). These are the broad focus of the agreements that are entered into between the parties.

5. On 08-12-2022 another agreement or a term sheet comes to be signed for a buyout of certain packets of property as aforesaid. Since the Company had mortgaged the properties to State Bank of India and the loan became sticky, the Bank initiated SARFAESI proceedings in respect of the said property and sought to invoke the guarantee given by the Company