Case Note & Summary
The petitioner, Sharan P Khanna, owned certain premises and entered into a license agreement with respondent No.1, Oil & Natural Gas Corporation Ltd. (ONGC), on 29.10.1983. The agreement granted ONGC a license for 5 years with an option to purchase the premises within that period. The consideration for sale was to be mutually decided, and ONGC paid Rs.1,28,52,000 as earnest money. If the option was not exercised, ONGC was to vacate and the petitioner would return the earnest money without interest. ONGC did not exercise the option within 5 years, but continued to occupy the premises. The petitioner repeatedly asked ONGC to vacate and claimed increased license fees and municipal taxes. He filed a criminal complaint under Section 406 IPC for criminal breach of trust, alleging that ONGC dishonestly retained the premises and failed to return the earnest money. The Magistrate refused to issue process, leading to this writ petition. The court examined whether the refusal was justified. The court noted that the agreement had expired and ONGC continued in possession, but there was no entrustment of property after expiry. The failure to return earnest money was a civil liability, not criminal breach of trust. The court held that the dispute was purely civil and no criminal offence was made out. The petition was dismissed.
Headnote
A) Criminal Law - Criminal Breach of Trust - Section 406 Indian Penal Code, 1860 - Civil vs. Criminal Dispute - The petitioner alleged that the respondent committed criminal breach of trust by not vacating premises and not returning earnest money after expiry of license agreement with option to purchase. The court held that the dispute was purely civil in nature as the agreement had expired and the respondent continued in possession, but there was no entrustment of property or dominion over property after expiry. The failure to return earnest money was a civil liability, not criminal breach of trust. Held that the Magistrate's order refusing to issue process was correct and the petition was dismissed. (Paras 2-8)
Issue of Consideration
Whether the refusal by the Magistrate to issue process under Section 406 IPC against the respondent for alleged criminal breach of trust was justified when the dispute arose from a license agreement with an option to purchase.
Final Decision
The petition is dismissed. The order of the Magistrate refusing to issue process under Section 406 IPC is upheld.
Law Points
- Criminal breach of trust
- Section 406 IPC
- Civil dispute
- License agreement
- Option to purchase
- Earnest money
- Criminal proceedings abuse of process
