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IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
K. LAKSHMAN, J.
Sri. Kota Reddy Veerappareddy – Petitioner
Versus
The State of Telangana Rep. by Public Prosecutor, High Court, Hyderabad – Respondent
Criminal Petition No. 3276 of 2020
Decided On : 18-01-2021
Indian Penal Code, 1860 - Sections 420, 406 and 405 - Criminal Procedure, 1973 - Section - 482 - Limited Liability Partnership Act, 2008 - Section - 12(1)(b) - Companies Act - Section 394 - Arbitration and Conciliation Act, 1996 - Section - 9 - Offence of cheating - Criminal breach of trust - Filed to quash the proceedings - LLP has undertaken a project - It had entered into three - Development Agreements-cum-General Power of Attorneys respectively in relation to development of residential Villas over an extent of land admeasuring approximately Acs. guntas in Survey Nos. - Petitioner - Accused in utter disregard to terms of LLP Agreement and in violation of his fiduciary duty as a designated partner towards LLP, has operated affairs of LLP in a unilateral manner, with a mala-fide intention to make illegal and wrongful gain and committed offence of cheating and criminal breach of trust - LLP has not passed any resolution to sell any Villa that fell to its share, much less deciding sale consideration for sale of such Villas and that petitioner has unilaterally decided to sell Villas falling to share of LLP without consent and concurrence of de facto complainant which is a violative of terms of LLP Agreement and fiduciary duty as a designated partner of LLP - Whether on face of allegations, an offence of criminal breach of trust is constituted or not.
Finding of the Court:
Expression ‘entrusted with property’ or ‘with any dominion over property’ has been used in wide sense - Such expression includes all case in which goods are entrusted, that is, voluntarily handed over for a specific purpose and dishonestly disposed of in violation of law or in violation of contract - Court vide order dated directed police not to take any coercive steps against petitioner and that the said order will not preclude police from investigating into matter - Said order is subsisting as on this day - It is also relevant to note that petitioner is on anticipatory bail - According to petitioner, under guise of investigation, police are trying to harass him by making calls to him and by making him to wait hours together at police station, and police are also pressuring petitioner to compromise with de facto complainant and settle the issues with de facto complainant - Court can safely conclude that de facto complainant has lodged present complaint with an ulterior motive and intention for wrecking vengeance on petitioner and, thus it is a fit case to exercise inherent power of this Court as present case is one of rarest of rare cases - Said effort to settle civil disputes and claims which do not involve any criminal offence by applying pressure through criminal prosecution should be deprecated and discouraged.
Result: Criminal Petition is allowed.
ORDER :
1. This Criminal Petition is filed under Section 482 of the Code of Criminal Procedure, 1973 (for short Cr.P.C.) to quash the proceedings in Crime No. 458 of 2020 pending on the file of Banjara Hills Police Station, Hyderabad City Commissionerate. The petitioner herein is sole accused in the said Crime. The offences alleged against him are under Sections 420 and 406 of the Indian Penal Code, 1860 (for short ‘IPC’).
2. BRIEF FACTS AND ALLEGATIONS LEVELLED AGAINST THE PETITIONER IN THE COMPLAINT:
(ii) The LLP has undertaken a project named Sri. Aditya Casa Grand at Narsingi, Hyderabad. It had entered into three Development Agreements-cum-General Power of Attorneys (for short ‘DAGPAs’) dated 16.09.2016, 21.09.2016 and 26.09.2016 respectively in relation to the development of residential Villas over an extent of land admeasuring approximately Acs. 16-24 guntas in Survey Nos. 155 and 156 of Narsingi Village, Gandipet Mandal, Ranga Reddy District.
(iii) The LLP has contributed its land towards the project, for which the de facto complainant has made the proportionate investment into the LLP.
(iv) Pursuant to the DAGPAs, the LLP has agreed to develop the project consisting of 54 Villas, out of which 29.5 Villas fell to the share of the LLP.
(v) As per Clause 4.1 of the LLP agreement, the day-to-day operation of the LLP vests in the designated partners and according to Clause 4.2, a designated partner is entitled to carry out such specific acts, deeds and things, as the partners, by resolution, authorize them to do.
(vi) As per Article 12.1 of the LLP agreement, each partner of Sri. Aditya-Vamsiram Homes LLP shall be bound to carry on the business of the LLP in a diligent manner to the greatest common advantage to be just and faithful to each other and to render true and fair statements of accounts and solvency and other information relating to the state of affairs of the LLP.
(vii) Ever since the date of incorporation of LLP, neither of the designated partners have signed any resolution or authorization, empowering the other to undertake any action on behalf of the LLP, more so, with regard to sale of Villas which fell to the share of LLP and the sale consideration at which the Villas should be sold and such decisions should be undertaken by both the designated partners, as set out in Clauses 4.1 and 4.2 of the LLP agreement.
(viii) The petitioner-accused in utter disregard to the terms of the LLP Agreement and in violation of his fiduciary duty as a designated partner towards the LLP, has operated the affairs of the LLP in a unilateral manner, with a mala-fide intention to make illegal and wrongful gain and committed offence of cheating and criminal breach of trust.
(ix) The LLP has not passed any resolution to sell any Villa that fell to its share, much less deciding the sale consideration for sale of such Villas and that the petitioner has unilaterally decided to sell the Villas falling to the share of the LLP without consent and concurrence of the de facto complainant which is a violative of the terms of the LLP Agreement and the fiduciary duty as a designated partner of the LLP.
(x) The de facto complainant came to know about the unilateral execution of sale-deeds in respect of 23 Villas in favour of purchasers by the petitioner without the consent and signature of the de facto complainant and without the LLP passing any resolution for execution of any sale-deed only after getting certified copies of sale-deeds from the Registration office (e-Seva).
(xi) The petitioner herein has unilaterally and without consent of the designated partner, authorized one Mr. B. Sudheer Reddy, as a representative of the LLP, to execute the sale-deed
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The Court held that the essential ingredients of the offences alleged against the petitioners are not present. The Court also noted that the dispute between the parties is essentially civil in nature....
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