IMPORTANT POINT
Criminal prosecution cannot be resorted to for settling civil disputes. Such an exercise is nothing but abuse of process of law which must be discouraged in its entirety.

JUDGMENT :

KRISHNA MURARI, J.

1. Leave granted.

2. This appeal is directed against the judgment and order dated 13.08.2019 passed by the High Court of Karnataka at Bengaluru in Criminal Petition No. 2691 of 2016, filed by the Appellants under Section 482 of the Code of Criminal Procedure (hereinafter referred to as Cr.P.C.) challenging the FIR No. 185/2016 dated 29.03.2016 implicating the appellants for offences under Section 420 read with Section 34 IPC and to quash the proceedings in C.C. No. 20609 of 2017 on the file of VI Additional CMM, Bengaluru, initiated pursuant to charge sheet dated 29.03.2017 against the appellants for offences punishable under Sections 406, 419, 420 read with Section 34 of IPC. The High Court vide order impugned herein dismissed the same.

3. Pending instant appeal before this Court, Appellant No. 1 has died and his name has been deleted vide order dated 29.09.2021. The term ‘Appellants’ used herein should thus be construed to include only Appellant No. 2.

Facts

4. On 07.08.2013 Respondent No. 2 had initially executed a Joint Development Agreement (JDA) for developing a particular property with the company of the Appellants (The Appellants being directors in this company), i.e. Rajarajeshwari Buildcon Private Ltd. (hereinafter referred to as ‘the builder company’). The property was to be developed either entirely as residential apartments, or as residential apartments with commercial complex. In furtherance of the Joint Development Agreement, a General Power of Attorney (GPA) was also executed on the same date. Respondent No. 2 thereafter also entered into a Supplementary Agreement with the Appellants specifying their respective shares in undivided area and super built up area.

5. Further, on 19.02.2015 a Memorandum of Understanding (MoU) was entered into by Respondent No. 2 with the builder company, whereby the company was authorized to sell 8000 sq. ft out of respondent No. 2’s share in the undivided area and super built up area. The MoU was entered into by Respondent No. 2 for the purpose of making partial payment of a loan borrowed by him from one Religare Finvest Ltd. Pursuant to the MoU, Appellants had to obtain NOC for 15 flats by making payment of Rs. 40,00,000/- for each flat.

6. The Appellants herein contend at this juncture, that it was verbally agreed between the parties, that the company would be entitled to adjust the payments made to Religare Finvest Ltd. by way of selling additional flats beyond its share, i.e. an additional 8000 sq. ft. of built up area would be allotted to the company’s share in lieu of the partial payment of loan borrowed by Respondent No. 2 from Religare Finvest Ltd.

7. Eventually, at the instance of Respondent no. 2, the said developer company thereby executed sale-deeds for two flats, Flat No. 202 and 203 in favour of the daughter and son-in-law of Respondent No. 2. The company further executed a sale deed for another flat bearing No. 301 in favour of one Smt. Yashoda Sundararajan on 27.08.2015.

8. Thereafter, vide an email the company informed Respondent no. 2 to execute and register the above said flats comprising 6821 sq. ft. (out of the 8000 sq. ft. given to the company as per the MoU dated 19.02.2015) in favour of the relevant purchasers and to further make payments to Religare Finvest Ltd. At this juncture, Respondent no. 2 issued a letter to the Appellants contending that the company had not adhered to the terms of the JDA and consequently revoked the GPA.

9. Aggrieved, the company filed an application for arbitration under section 9 of the Arbitration Act, praying for injunction restraining Respondent No. 2 from alienating or creating third party rights over the property. Respondent No. 2 on the other hand filed a police complaint claiming that the sale of flats was in excess of the share agreed between the parties. The complaint (Respondent No. 2), inter-alia, had two contentions:

(i) First, that the GPA was not executed in favour of the company, therefore, compan