Priti Saraf vs State Of Nct Of Delhi on 10 March, 2021


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Supreme Court of India

Priti Saraf vs State Of Nct Of Delhi on 10 March, 2021

Author: Ajay Rastogi

Bench: Hon’Ble Ms. Malhotra, Ajay Rastogi

                                                                       REPORTABLE
                                   IN THE SUPREME COURT OF INDIA
                                   CRIMINAL APPELLATE JURISDICTION
                              CRIMINAL APPEAL NO(S).296 OF 2021
                              (Arising out of SLP(Crl.) No(s). 6364 of 2019)

              PRITI SARAF & ANR.                                 ….APPELLANT(S)


                                   VERSUS


              STATE OF NCT OF DELHI & ANR.                       ….RESPONDENT(S)


                                             JUDGMENT

Rastogi, J.

1. Leave granted.

2. The appellants who are the de-facto complainants in FIR No.

132/2017 dated 28th April, 2017 are questioning the order of the

High Court dated 15th March, 2019 passed in Criminal Miscellaneous

Case Nos. 1718/2017 and 7009/2017 whereby the learned Single

Judge in exercise of its jurisdiction under Section 482 of the Code of

Criminal Procedure(hereinafter being referred to as “CrPC”) taking
Signature Not Verified

Digitally signed by
Nidhi Ahuja
Date: 2021.03.10
13:47:22 IST
Reason:

cognizance for the offence under Sections 420, 406 and 34 IPC

1
quashed the orders and set aside the criminal proceedings against

2nd respondent on the foundation that the allegations made in the

complaint/FIR does not constitute offences under aforestated

sections.

Brief facts of the case

3. The factual matrix of the matter as reflected from the complaint

as alleged are that the subject property in question, i.e., 37, Friends

Colony(East), New Delhi is in the ownership of 2nd respondent. The

said property was mortgaged with State Bank of Patiala and the total

legal liability payable to the Bank was Rs. 18 crores. That in order

to clear the said dues, 2nd respondent hatched a conspiracy with

broker Ashok Kumar so as to cheat and defraud the

appellants/complainants and to further misappropriate the amounts

paid by the complainants as part of the deal, the 2nd respondent

breached the trust of the appellants/complainants deliberately and

falsely stating to the appellants/complainants that the 2nd

respondent would be liable to pay a sum of Rs. 25.50 crores to the

complainant if the deal is not carried forward by the 2nd respondent.

Keeping in view the overall scenario, agreement to sell was executed

2
on 24th December, 2011 between the 2nd respondent and the 1st

appellant. The 2nd respondent agreed to sell 1205.43 sq yds. of the

property in question for a total sale consideration of Rs.

63,28,50,750/-. At the time of execution, 1st appellant paid a sum of

Rs. 12.50 crores vide cheque dated 24th December, 2011 drawn on

HDFC Bank, New Friends Colony, Delhi. As per clause 3 of the said

agreement to sell, 2nd respondent had to perform and complete three

requirements which were compulsory in nature. The said

requirements were to be completed by the 2nd respondent latest by

24th March, 2012 before any further amount is to be received by her

from the 1st appellant/complainant.

4. It was further alleged in the complaint that the three

requirements in terms of clause 3 of the agreement to sell were not

fulfilled by the 2nd respondent and even after there being a delay in

obtaining sanction plans, still the 1st appellant on demand made a

payment of Rs. 5.40 crores by a cheque dated 23rd May, 2012 and to

show her bonafides, the 2nd respondent handed over post-dated

cheques worth Rs. 25.50 crores towards security for performance of

agreement dated 24th December 2011. After the amount was received

3
from the 1st appellant/complainant, 2nd respondent immediately

cleared her outstanding legal liability of State Bank of Patiala and

obtained NOC from the bank, however, the fact of obtaining NOC was

never divulged by the 2nd respondent to the complainants

deliberately. This fact for the first time was disclosed by the 2nd

respondent at the stage when post-dated cheques of Rs.25.50 crores

handed over as security to the complainant were rendered invalid.

5. The intention of the 2nd respondent from the very inception to

cheat and deceive the complainants/appellants is made out from the

fact that the 2nd respondent had to complete the compulsory

requirement on or before 24th March, 2012 but the first two

requirements were completed on 11th May, 2012 and 2nd June, 2012

respectively and the third requirement was still not complete. At this

stage, just to cheat the 1st appellant/complainant, 2nd respondent

illegally terminated the agreement to sell vide communication dated

30th January, 2013. The 1st appellant had tried her level best to get

the matter settled but, the modus operandi of the 2nd respondent was

to cheat from the very inception when the agreement to sell was

executed, nothing materialised.

4

6. In this regard, a private complaint was filed under Section 200

read with Section 190 CrPC on 23rd September, 2015 before the

learned Magistrate for taking cognizance of the offence committed by

the 2nd respondent before Saket Court, Delhi wherein it was directed

to the concerned Police Station to register the FIR under Section

156(3) CrPC vide Order dated 15th November, 2016 that came to be

challenged by the 2nd respondent by filing of a criminal revision but

that came to be dismissed by the ASJ & Special Judge(NDPS), South

East, Saket Courts, New Delhi vide Order dated 26th April, 2017 and

thereafter FIR under Section 156(3) CrPC came to be registered

against the 2nd respondent and the broker Mr. Ashok Kumar under

Sections 420, 406 and 34 IPC on 28th April, 2017.

7. The Investigation Officer conducted investigation and filed

charge-sheet dated 5th October, 2018 under Sections 420, 406 and

34 IPC. It reveals from the charge-sheet that the property in question,

i.e. 1205.43 sq. yds was alleged to be sub-divided whereas the subject

property, i.e. Plot No. 37 is admeasuring 3930 sq. yds. and sub-

division of the plot is not permitted to be sanctioned as per Clause

4.4.3(IV) of the Master Plan Delhi, 2021. It also reveals from the

5
charge-sheet that prior to the present transaction which was

executed pursuant to agreement to sell dated 24th December, 2011,

2nd respondent under the same modus operandi earlier in reference

to self-same subject property forfeited in the year 2007 a sum of

Rs.18 crores from M/s. Shinestar Buildcon Private Ltd. It further

reveals that 2nd respondent never got the site plan sanctioned for

appellants nor the bifurcated & demarcated area knowingly because

of her malafide intentions. The role of husband of 2nd respondent as

a suspect is under pending investigation under Section 173(8) CrPC

and if adverse material comes on record, the supplementary charge-

sheet may be filed against S.C. Goyal(husband of 2nd respondent) at

a later stage.

8. The 2nd respondent challenged the orders dated 15th November,

2016 and 26th April, 2017 passed in revision petition filed at her

instance before the High Court under Section 482 CrPC.

9. It reveals from the record that after this fact was brought to the

notice of the learned Judge of the High Court that the charge-sheet

has been filed, the learned Judge directed the Public Prosecutor by

Order dated 9th October, 2018 to place the charge-sheet on record.

6
Even after the charge-sheet came to be filed by the Public Prosecutor

in compliance of the Order of the Court, the learned Judge of the

High Court while noticing the facts has only taken note of the

agreement to sell dated 24th December, 2011, notice of termination

dated 30th January, 2013 and without examining the bare facts on

record, what being transpired in the complaint and so also during

the investigation reflected from the charge-sheet filed before the trial

Court and which was part of the record still proceeded on the premise

and observed that the case is of a simple breach of contract, which

gives rise to purely civil dispute and cannot be converted into a

criminal offence, more so, when the arbitral proceedings have been

initiated, in the given circumstances, held that if such civil disputes

as alleged are being permitted to be prosecuted in the criminal

proceedings, this according to the learned Judge, would be a sheer

abuse of the process of the Court. In consequence thereof, quashed

all the criminal proceedings and the orders under challenge therein

dated 15th November, 2016 and 24th April, 2017 and further observed

that the observations made shall not be construed to be expression

on merits, in the arbitration proceedings by impugned judgment

dated 15th March, 2019.

7

10. We have heard Mr. Mukul Rohatgi, learned senior counsel for

the appellants, Mr. P. Chidambaram, learned senior counsel for 2nd

respondent and Ms. Aishwarya Bhati, learned Additional Solicitor

General for the State.

11. Mr. Mukul Rohatgi, learned senior counsel for the appellants

submitted that the charge-sheet filed by the Investigating Officer on

5th October, 2018 discloses that the offence under Sections 406, 420

and 34 IPC has been committed by the 2nd respondent and pursuant

to the order of the learned Judge of the High Court dated 9th October,

2018, copy of the charge-sheet was placed on record still no reference

of the charge-sheet has been made by the learned Judge in the

impugned judgment while quashing the criminal proceedings.

12. Learned counsel further submits that the exercise of inherent

power of the High Court under Section 482 CrPC is an exceptional

one. Great care should be taken by the High Court before embarking

to scrutinise the complaint/FIR/charge-sheet in deciding whether

the rarest of the rare case is made out to scuttle the prosecution in

its inception. It was expected from the High Court to prima facie

consider the complaint, charge-sheet and the statement of witness

8
recorded in support thereof which was recorded by the Investigating

Officer in arriving at a conclusion whether court could take

cognizance of the offence, on that evidence and proceed further with

the trial. If it reaches a conclusion that no cognizable offence is made

out, no further act could be done except to quash the FIR/charge-

sheet. But only in exceptional cases, i.e., in rarest of rare cases of

mala fide initiation of the proceedings to wreak private vengeance

process is availed of in laying a complaint or FIR itself does not

disclose any cognizable offence.

13. Learned counsel submits that the High Court has committed a

manifest error in ignoring the material facts on record which make

the orders sensitively susceptible and further submits that the

learned Additional Sessions Judge had considered the entire gamut

of facts and appositely opined that the order taking cognizance could

not be flawed but the High Court has completely erred in its

conclusion and has not even looked into the bare facts available on

record and has proceeded on a premise that in case where there is

an agreement to sell and its subsequent termination for its alleged

breach, such disputes are civil disputes and more so where the

9
arbitral proceedings are pending, criminal proceedings will be an

abuse of the process of the Court, in the given circumstances, what

has been made to be a basis by the learned Judge is unsustainable

in law and hence the order deserves to be set aside.

14. In support of his submissions, learned counsel has placed

reliance on the judgments of this Court in R.P. Kapur Vs. State of

Punjab1; State of Haryana and Ors. Vs. Bhajan Lal and Others2;

Trisuns Chemical Industry Vs. Rajesh Agarwal and Ors.3; M.

Krishnan Vs. Vijay Singh & Anr.4; Joseph Salvaraj A. Vs. State

of Gujarat and Ors.5; Arun Bhandari Vs. State of Uttar Pradesh

and Ors.6; Anand Kumar Mohatta and Anr. Vs. State (NCT of

Delhi), Department of Home and Anr.7.

15. Per contra, Mr. P. Chidambaram, learned senior counsel for 2nd

respondent submits that agreement to sell dated 24th December,

2011 discloses all the facts about the ownership of the property,

1 1960 (3) SCR 388
2 1992 Suppl (1) SCC 335
3
1999 (8) SCC 686
4 2001 (8) SCC 645
5 2011 (7) SCC 59
6
2013 (2) SCC 801
7 2019 (11) SCC 706
10
property being mortgaged with the State Bank of Patiala and after the

payment, property to be redeemed after obtaining the original papers

and no objection certificate from the Bank, thereafter further

procedure to be carried out by the parties as per the terms and

conditions of the agreement to sell dated 24th December, 2011. When

the appellant failed to carry out its obligation in compliance of the

terms and conditions of the agreement to sell,the agreement to sell

was terminated by letter dated 30th January, 2013 and that

empowers the 2nd respondent to forfeit the earnest money which was

deposited in terms of the agreement and it was purely a civil dispute

and as their being a clause of arbitration, arbitral proceedings were

initiated at the instance of the 1st appellant and although during

pendency of the proceedings in the Court, learned Arbitrator has

passed an award dated 8thMay, 2020 which has been challenged by

the 2nd respondent under Section 34 of the Arbitration and

Conciliation Act, 1996 which is pending before the High Court of

Delhi.

16. Learned counsel further submits that parties have entered into

an agreement to sell that does not amount to an offence under

11
Section 420 IPC. Neither the complaint which was initially instituted

at the instance of the appellants nor the charge-sheet dated 5th

October, 2018 which was later filed although remain unnoticed by

the High Court in the impugned judgment nowhere reveals even a

prima facie case of a criminal offence being committed by the 2nd

respondent under Sections 420, 406 and 34 IPC and if the parties

have entered into an agreement to sell which is purely a commercial

transaction, and if there is a breach of the terms of agreement to sell,

the party to the agreement in consequence was justified to forfeit the

earnest money, it is simply a civil dispute. As there was a demand

to refund the forfeited amount failing which FIR was registered to set

the criminal law into motion obviously to settle the scores giving the

colour of criminal proceedings which is impermissible and this what

has been observed by the High Court in the impugned judgment

supported by the factual matrix on record.

17. Learned counsel further submits that the present case is of civil

dispute as earnest money was forfeited by the 2nd respondent when

the 1st appellant was not ready to fulfil and perform the terms and

conditions of agreement to sell dated 24th December, 2011 and after

12
the arbitral proceedings were initiated, criminal proceedings were

initiated just to harass the respondent with criminal charge under

Sections 420, 406 and 34 IPC and further submits that no offence

under Section 406 is made out as the earnest money was paid in

terms of the contract and there was no restriction in the agreement

as to how this money was to be utilised therefore, there is no

misappropriation.

18. Learned counsel further submits that the appellant has not

come with clean hands and she has suppressed the fact that she did

not receive the letter dated 28th February, 2012 sent by 2nd

respondent. To the contrary, there is sufficient documentary

evidence, as well as his/her admission to this effect by the 1st

appellant, which would show that she had received the said letter.

Since she did not respond to the letter dated 28th December, 2012, it

was observed that she was not ready to perform her obligations in

terms of the contract and consequently, the 2nd respondent was well

within her rights to terminate the contract by letter dated 30th

January, 2013.

13

19. Learned counsel has further tried to justify that all the three

conditions of clause 3 of agreement hammered by the appellants were

fulfilled, and there is documentary evidence placed on record in

support thereof in the counter affidavit.

20. Learned counsel for the 2nd respondent has also placed reliance

on various judgments of this Court which lays down the basic

principles under which inherent powers under Section 482 CrPC to

be exercised by the High Court and has set aside the criminal

proceedings observing that when there are civil disputes, the

initiation of criminal proceedings would be abuse of the process of

the Court and placed reliance on the judgments in Rajabhai Abdul

Rehman Munshi Vs. Vasudev Dhanjibhai Mody8; G.

Narayanaswamy Reddy (Dead) by LRs. & Anr. Vs. Govt. of

Karnataka and Anr.9; G. Sagar Suri & Anr. Vs. State of U.P. and

Ors.10; Murari Lal Gupta Vs. Gopi Singh11; Indian Oil

Corporation Vs. NEPC India Ltd. and Ors.12; Harmanpreet Singh

8
1964 (3) SCR 480
9 1991 (3) SCC 261
10 2000 (2) SCC 636

11
2005 (13) SCC 699
12 2006 (6) SCC 736

14
Ahluwalia and Ors. Vs. State of Punjab and Ors.13; Joseph

Salvaraj A. Vs. State of Gujarat and Ors.14; Chandran

Ratnaswami Vs. K.C. Palanisamy and Ors.15; VESA Holdings

Private Limited and Anr. Vs. State of Kerala & Ors.16; K. Subba

Rao and Ors. Vs. State of Telangana Rep. by its Secretary,

Department of Home & Ors.17.

21. Learned counsel has further submitted in his written

submissions that the High Court indeed has not referred to the

charge-sheet of which a reference has been made, this Court if

considers it appropriate, in the facts and circumstances, may remit

the matter back to the High Court for fresh consideration. It would

be unjust if the 2nd respondent was compelled to face criminal

prosecution on the ground that the High Court had not looked into

the material available on record.

22. After the conclusion of the submissions, an IA has been filed at

the instance of the 2nd respondent for initiating proceedings under

13
2009 (7) SCC 712
14 2011 (7) SCC 59
15 2013 (6) SCC 740

16
2015 (8) SCC 293
17 2018 (14) SCC 452

15
Section 340 read with Section 195 CrPC, in which it has been alleged

that the appellants have not only concealed the documents but has

made false statement and it has been prayed that proceedings under

Section 340 CrPC may be initiated against the appellants.

23. It being a settled principle of law that to exercise powers under

Section 482 CrPC, the complaint in its entirety shall have to be

examined on the basis of the allegation made in the

complaint/FIR/charge-sheet and the High Court at that stage was

not under an obligation to go into the matter or examine its

correctness. Whatever appears on the face of the

complaint/FIR/charge-sheet shall be taken into consideration

without any critical examination of the same. The offence ought to

appear ex facie on the complaint/FIR/charge-sheet and other

documentary evidence, if any, on record.

24. The question which is raised for consideration is that in what

circumstances and categories of cases, a criminal proceeding may be

quashed either in exercise of the extraordinary powers of the High

Court under Article 226 of the Constitution, or in the exercise of the

inherent powers of the High Court under Section 482 CrPC. This has

16
often been hotly debated before this Court and various High Courts.

Though in a series of decisions, this question has been answered on

several occasions by this Court, yet the same still comes up for

consideration and is seriously debated.

25. In this backdrop, the scope and ambit of the inherent

jurisdiction of the High Court under Section 482 CrPC has been

examined in the judgment of this Court in State of Haryana and

Others Vs. Bhajan Lal and Others(supra). The relevant para is

mentioned hereunder:-

“102. In the backdrop of the interpretation of the various
relevant provisions of the Code under Chapter XIV and of
the principles of law enunciated by this Court in a series of
decisions relating to the exercise of the extraordinary
power under Article 226 or the inherent powers under
Section 482 of the Code which we have extracted and
reproduced above, we give the following categories of cases
by way of illustration wherein such power could be
exercised either to prevent abuse of the process of any
court or otherwise to secure the ends of justice, though it
may not be possible to lay down any precise, clearly defined
and sufficiently channelised and inflexible guidelines or
rigid formulae and to give an exhaustive list of myriad
kinds of cases wherein such power should be exercised.

(1) Where the allegations made in the first information report
or the complaint, even if they are taken at their face value
and accepted in their entirety do not prima facie constitute
any offence or make out a case against the accused.

(2) Where the allegations in the first information report and
other materials, if any, accompanying the FIR do not
disclose a cognizable offence, justifying an investigation by

17
police officers under Section 156(1) of the Code except
under an order of a Magistrate within the purview of
Section 155(2) of the Code.

(3) Where the uncontroverted allegations made in the FIR or
complaint and the evidence collected in support of the
same do not disclose the commission of any offence and
make out a case against the accused.

(4) Where, the allegations in the FIR do not constitute a
cognizable offence but constitute only a non-cognizable
offence, no investigation is permitted by a police officer
without an order of a Magistrate as contemplated under
Section 155(2) of the Code.

(5) Where the allegations made in the FIR or complaint are so
absurd and inherently improbable on the basis of which no
prudent person can ever reach a just conclusion that there
is sufficient ground for proceeding against the accused.

(6) Where there is an express legal bar engrafted in any of the
provisions of the Code or the concerned Act (under which
a criminal proceeding is instituted) to the institution and
continuance of the proceedings and/or where there is a
specific provision in the Code or the concerned Act,
providing efficacious redress for the grievance of the
aggrieved party.

(7) Where a criminal proceeding is manifestly attended with
mala fide and/or where the proceeding is maliciously
instituted with an ulterior motive for wreaking vengeance
on the accused and with a view to spite him due to private
and personal grudge.”

26. This Court has clarified the broad contours and parameters in

laying down the guidelines which have to be kept in mind by the High

Courts while exercising inherent powers under Section 482 CrPC.

The aforesaid principles laid down by this Court are illustrative and

not exhaustive. Nevertheless, it throws light on the circumstances
18
and the situation which is to be kept in mind when the High Court

exercises its inherent powers under Section 482 CrPC.

27. It has been further elucidated recently by this Court in Arnab

Manoranjan Goswami Vs. State of Maharashtra and Others18

where jurisdiction of the High Court under Article 226 of the

Constitution of India and Section 482 CrPC has been analysed at

great length.

28. It is thus settled that the exercise of inherent power of the High

Court is an extraordinary power which has to be exercised with great

care and circumspection before embarking to scrutinise the

complaint/FIR/charge-sheet in deciding whether the case is the

rarest of rare case, to scuttle the prosecution at its inception.

29. In the matter under consideration, if we try to analyse the

guidelines of which a reference has been made, can it be said that

the allegations in the complaint/FIR/charge-sheet do not make out

a case against the 2nd respondent or do they disclose the ingredients

of an offence alleged against the 2nd respondent or the allegations are

patently absurd and inherently improbable so that no prudent

18
2020 SCC Online SC 964
19
person can ever reach to such a conclusion that there is sufficient

ground for proceeding against the 2nd respondent.

30. In the instant case, the complaint/FIR/charge-sheet as noticed

above, does, however, lend credence to the questions posed. It is

settled that one is not supposed to dilate on this score, or intend to

present that the allegations in the complaint will have to be accepted

on the face of it and the truth or falsity of which would not be gone

into by the Court at this stage, as noticed above, whether the

allegations in the complaint were true is to be decided on the basis

of the evidence led at the stage of trial and the observations on this

score in the case of Nagpur Steel & Alloys Pvt. Ltd. Vs. P.

Radhakrishna and Others19 ought to be noticed. In para 3, this

Court observed:-

“3. We have perused the complaint carefully. In our opinion
it cannot be said that the complaint did not disclose the
commission of an offence. Merely because the offence was
committed during the course of a commercial transaction,
would not be sufficient to hold that the complaint did not
warrant a trial. Whether or not the allegations in the
complaint were true was to be decided on the basis of
evidence to be led at the trial in the complaint case. It
certainly was not a case in which the criminal trial should
have been cut short. The quashing of the complaint has
resulted in grave miscarriage of justice. We, therefore,
without expressing any opinion on the merits of the case,

19
1997 SCC(Cri) 1073
20
allow this appeal and set aside the impugned order of the
High Court and restore the complaint. The learned trial
Magistrate shall proceed with the complaint and dispose of it
in accordance with law expeditiously.”

31. Be it noted that in the matter of exercise of inherent power by

the High Court, the only requirement is to see whether continuance

of the proceedings would be a total abuse of the process of the Court.

The Criminal Procedure Code contains a detailed procedure for

investigation, framing of charge and trial, and in the event when the

High Court is desirous of putting a halt to the known procedure of

law, it must use proper circumspection with great care and caution

to interfere in the complaint/FIR/charge-sheet in exercise of its

inherent jurisdiction.

32. In the instant case, on a careful reading of the

complaint/FIR/charge-sheet, in our view, it cannot be said that the

complaint does not disclose the commission of an offence. The

ingredients of the offences under Sections 406 and 420 IPC cannot

be said to be absent on the basis of the allegations in the

complaint/FIR/charge-sheet. We would like to add that whether the

allegations in the complaint are otherwise correct or not, has to be

decided on the basis of the evidence to be led during the course of

21
trial. Simply because there is a remedy provided for breach of

contract or arbitral proceedings initiated at the instance of the

appellants, that does not by itself clothe the court to come to a

conclusion that civil remedy is the only remedy, and the initiation of

criminal proceedings, in any manner, will be an abuse of the process

of the court for exercising inherent powers of the High Court under

Section 482 CrPC for quashing such proceedings.

33. We have perused the pleadings of the parties, the

complaint/FIR/charge-sheet and orders of the Courts below and

have taken into consideration the material on record. After hearing

learned counsel for the parties, we are satisfied that the issue

involved in the matter under consideration is not a case in which the

criminal trial should have been short-circuited. The High Court was

not justified in quashing the criminal proceedings in exercise of its

inherent jurisdiction. The High Court has primarily adverted on two

circumstances, (i) that it was a case of termination of agreement to

sell on account of an alleged breach of the contract and (ii) the fact

that the arbitral proceedings have been initiated at the instance of

the appellants. Both the alleged circumstances noticed by the High

22
Court, in our view, are unsustainable in law. The facts narrated in

the present complaint/FIR/charge-sheet indeed reveal the

commercial transaction but that is hardly a reason for holding that

the offence of cheating would elude from such transaction. In fact,

many a times, offence of cheating is committed in the course of

commercial transactions and the illustrations have been set out

under Sections 415, 418 and 420 IPC. Similar observations have

been made by this Court in Trisuns Chemical Industry Vs. Rajesh

Agarwal and Ors.(supra) :-

“9. We are unable to appreciate the reasoning that the
provision incorporated in the agreement for referring the
disputes to arbitration is an effective substitute for a
criminal prosecution when the disputed act is an offence.
Arbitration is a remedy for affording reliefs to the party
affected by breach of the agreement but the arbitrator
cannot conduct a trial of any act which amounted to an
offence albeit the same act may be connected with the
discharge of any function under the agreement. Hence,
those are not good reasons for the High Court to axe down
the complaint at the threshold itself. The investigating
agency should have had the freedom to go into the whole
gamut of the allegations and to reach a conclusion of its
own. Pre-emption of such investigation would be justified
only in very extreme cases as indicated in State of
Haryana v. Bhajan Lal
[1992 Supp (1) SCC 335]”

34. So far as initiation of arbitral proceedings is concerned, there is

no correlation with the criminal proceedings. That apart, the High

Court has not even looked into the charge-sheet filed against 2nd

23
respondent which was on record to reach at the conclusion that any

criminal offence as stated is prima facie being made out and veracity

of it indeed be examined in the course of criminal trial.

35. The submission made by Mr. P. Chidambaram, learned senior

counsel for 2nd respondent showing bonafides and taking us through

the documentary evidence annexed to the counter affidavit on record

to show that it was a simple case of termination because of breach of

terms of the contract giving rise to a purely civil dispute or initiation

of the arbitral proceedings would not attract the provisions under

Sections 406, 420, 34 IPC may not hold good at this stage for the

reason what is being suggested by the learned counsel for the 2nd

respondent can be his defence during the course of trial but was not

open to be examined by the High Court to take a judicial notice and

for quashing of the criminal proceedings in exercise of its inherent

powers under Section 482 CrPC.

36. So far as the further submission made by learned counsel for

the 2nd respondent that if the High Court has failed to consider the

charge-sheet and other material available on record, the matter be

remitted back to the High Court for re-consideration afresh in

24
accordance with law. There may be some substance in what being

urged by learned counsel for the 2nd respondent but for the reason

that matter has been argued threadbare before us, and learned

counsel for the parties have taken us through the record of criminal

proceedings. After going through the record, we are satisfied that

there was sufficient material available as manifests from the record

of criminal proceedings to connect the 2nd respondent in the

commission of crime. Consequently, we do not consider it

appropriate to remit the matter back at this stage, as it would be an

exercise in futility; on the contrary, it will just delay the proceedings,

and hold the criminal trial at bay, which deserves to be expedited.

37. At the time of conclusion of the proceedings, IA has been filed

at the instance of 2nd respondent initiating criminal proceedings

against the 1st appellant under Section 340 read with Section 195

CrPC. We find that such applications are being filed for ulterior

reasons which we seriously deprecate. The said IA is accordingly

dismissed.

38. Consequently, the appeal succeeds and is accordingly allowed.

The judgment of the High Court impugned dated 15th March, 2019 is

25
hereby set aside. We, however, make it clear that what has been

observed by us is only for the purpose of disposal of the present

appeal. The trial Court may proceed with the trial expeditiously

without being influenced by the observations made in this judgment

or taken as an expression of our opinion.

39. All pending IAs stand disposed of.

……………………………J.

(INDU MALHOTRA)

.…………………………..J.

(AJAY RASTOGI)
NEW DELHI
March 10, 2021

26



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