Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2025 Supreme(MP) 991

IN THE HIGH COURT OF MADHYA PRADESH AT INDORE
Prem Narayan Singh, J.
Ms Golden Terrace Apartment Partnership Firm Through Partner Mahavir Jain – Petitioner
Versus
The State Of Madhya Pradesh – Respondent
Misc. Criminal Case No. 13905 of 2025
Decided On : 21-04-2025

Advocates Appeared:
For the Petitioner: Shri Vishal Baheti, learned Senior counsel with Shri Prince Jain, learned counsel
For the Respondent: Shri Romil Verma, counsel

The Magistrate's discretion under Section 156(3) of the Cr.P.C. to order police investigation for cognizable offences must be exercised judicially. Where evidence requires police-led discovery, an arbitrary refusal to direct the registration of an FIR is legally unsustainable and infringes upon the rights of the complainant.

Headnote:(A) Code of Criminal Procedure, 1973 - Section 156(3) - Power of Magistrate to direct police investigation - Where a complaint discloses the commission of a cognizable offence and necessitates the retrieval of evidence under the control of the accused, the Magistrate’s discretion to refuse a police investigation must be exercised judicially and cannot be arbitrary - The underlying purpose of Section 156(3) is to act as a reminder to the police to exercise their plenary investigation powers. (Paras 9, 10, 12, 13, 14, 15, 17)

Facts of the case:
An entity filed a complaint under Section 156(3) seeking a direction for the registration of an FIR, alleging that accused parties received substantial funds under a business agreement, defaulted on payments, and subsequently mortgaged the same properties to third parties without the knowledge of the complainant. The trial court rejected the application, observing that the matter was essentially of a contractual nature and could be handled through a private complaint procedure under Section 200 of the Act.

Findings of Court:
The court held that the trial judge recognized the information as a cognizable offence yet erroneously declined to order a police investigation. Given that the allegations involved misappropriation and documentation in the exclusive control of the accused, the court reasoned that a police investigation was necessary for effective discovery, rendering the trial court's order unsustainable.

Issues: Whether the trial court erred in exercising its discretion under Section 156(3) by rejecting an application for police investigation despite prima facie evidence of cognizable offences that required specialized police intervention.

Ratio Decidendi: The court ruled that whilst Section 156(3) confers discretionary power, such discretion must be guided by judicial reasoning. When a complaint highlights the need for police-led discovery of facts and evidence held by the accused, the duty of the Magistrate to facilitate a fair investigation takes precedence over alternative procedural remedies.

Result: Petition allowed; impugned order set aside and remanded for fresh consideration.

Table of Content
1. factual and procedural history regarding the rejection of a complaint filed under section 156(3) crpc. (Para 1 , 2 , 3)
2. arguments concerning the mandatory registration of firs for cognizable offenses and the limits of judicial discretion. (Para 4 , 5 , 6 , 7)
3. judicial discretion under section 156(3) requires application of mind and should favor police investigation when collection of evidence requires state power. (Para 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15)
4. setting aside improper judicial orders and mandating reconsideration in compliance with established precedent. (Para 17 , 18)

ORDER :

PREM NARAYAN SINGH, J.

1. The petitioner has filed the present petition under Section 528 of BNSS, 2023 (482 of Cr.P.C.) for quashment of the order dated 06.02.2025 passed in UNCR No.68743/2019 by Judicial Magistrate First Class, Indore.

2. Facts narrated narrated before this Court are that the petitioner filed a complaint/petition under section 156(3) of Code of Criminal Procedure alleging that the petitioner is a partnership firm and One Ashish Dass came in to contact in the year 2012 and informed that his company Ms JSM Devcon Private Limited was developing a residential project named “Pinecal The Dream” and having agreement with land owners namely Ms Ashoka Hightech Builders Pvt. Limited and its Director Nitesdh Wadhwani S/o Late Ashok Wadhwani. The accused persons gave assurance to the petitioner that they are in need of loan which shall be payable carrying interest @ 15% per.annum and flats will be mortgaged for security of the advance paid by the petitioner. It was further stated in the complaint that the petitioner has paid total 07 crores to the aforesaid company towards loan through various cheques between 22.12.2012 to 26.03.2013. Thereafter further amount of Rs. 7.48 Crores were paid from. 28.03.2013 to 10.07.2015 through various cheques on the belief that the aforesaid amount shall be repaid by the accused person. Thus, the petitioner has paid total amount of Rs.14,48,00.000/=. On receipt of the aforesaid amount, 2 memorandums of understanding cum undertaking were executed on 15.01.2014 and there was clearly mentioned that 15+ 21 flats ad-measuring 24242+35973 sq. feet built up area were reserved for the petitioner towards reimbursement of the aforesaid amount. It was assured that the registration of the aforesaid portion will be done in favour of the petitioner. The accused persons have also handed over cheques to the petitioner for repayment which stood dishonoured. Later on it came to the notice of the petitioner that the accused persons were alienating the aforesaid promised flats without repayment of the loan of the petitioner and committed an offence of fraud and cheating within the meaning of section 420, 409 & 120 of Indian Penal Code.

3. The petitioner has informed the respondent for registration of offence under section 156 of the Code of Criminal Procedure Code but the respondent did not take any action and hence a complaint case has been filed before the Learned Trial Court. The Learned Trial Judge called report from the respondent police station and the respondent submitted a report dated 08.06.2022 and it was informed that despite having execution of the documents in favour of the petitioner, the accused person has taken a loan from L.N.T. Finance. In view of the above, it is clear that the accused persons have committed a cognizable offence but the respondent has not registered a FIR in the matter. Thereafter, the petitioner filed a W.P. No. 15813/2024 before this Hon’ble Court for issuance of mandamus directing the police to register a FIR and to start investigation. The aforesaid writ petition was disposed off vide order dated 19.07.2024 with direction to Magistrate to proceed in accordance with code Criminal Procedure. After passing of the aforesaid order, the petitioner filed another application under section 156(3) of CRPC in pursuance of the directions issued by this Hon’ble Court with a pr