Case Note & Summary
The petitioner, Embassy One Developers Private Limited, a private limited company, filed a private complaint before the IV Additional Chief Metropolitan Magistrate, Bangalore, against one of its directors (accused No.1) and others, alleging offences under Sections 120-B (criminal conspiracy), 403 (dishonest misappropriation of property), 406 (criminal breach of trust), 408 (criminal breach of trust by a clerk or servant), 415 (cheating), 420 (cheating and dishonestly inducing delivery of property), and 424 (dishonest or fraudulent removal or concealment of property) of the Indian Penal Code, 1860. The complaint was based on the fiduciary relationship between the company and its director. The Magistrate, upon registration of the complaint, perused it and concluded that there was an arbitration agreement between the parties to resolve the dispute. Consequently, the Magistrate dismissed the complaint as not maintainable. Aggrieved by this order, the petitioner filed a criminal revision petition under Section 397 read with Section 401 of the Code of Criminal Procedure, 1973, before the High Court of Karnataka. The High Court admitted the petition and dispensed with notice to the respondents as no notice was issued before the trial court. The court observed that the fact of the matter was that the petitioner had filed a private complaint alleging criminal offences against its director and others. The court held that the existence of an arbitration agreement does not oust the jurisdiction of the criminal court to entertain a complaint alleging criminal offences. The court reasoned that criminal proceedings are distinct from civil proceedings and the mere availability of an alternative civil remedy, such as arbitration, cannot be a ground to dismiss a criminal complaint. The court set aside the impugned order dated 28.06.2017 passed by the IV Addl. C.M.M., Bangalore in PCR No.7114/2017 and restored the complaint. The court directed the learned Magistrate to refer the complaint to the jurisdictional police for investigation in accordance with law. The revision petition was allowed.
Headnote
A) Criminal Procedure Code - Maintainability of Complaint - Arbitration Agreement - Sections 397, 401 Cr.P.C. - The petitioner company filed a private complaint against its director and others alleging offences under Sections 120-B, 403, 406, 408, 415, 420 and 424 IPC. The Magistrate dismissed the complaint as not maintainable on the ground that there was an arbitration agreement between the parties. The High Court held that the existence of an arbitration clause does not oust the jurisdiction of the criminal court to entertain a complaint alleging criminal offences. The court set aside the impugned order and restored the complaint, directing the Magistrate to refer it to the jurisdictional police for investigation. (Paras 2-4)
Issue of Consideration
Whether a private complaint alleging criminal offences can be dismissed as not maintainable solely on the ground that there exists an arbitration agreement between the parties to resolve the dispute.
Final Decision
The High Court allowed the criminal revision petition, set aside the impugned order dated 28.06.2017 passed by the IV Addl. C.M.M., Bangalore in PCR No.7114/2017, restored the complaint, and directed the learned Magistrate to refer the complaint to the jurisdictional police for investigation.
Law Points
- Existence of arbitration agreement does not bar criminal prosecution
- Criminal complaint maintainable despite civil remedy
- Private complaint for cheating and criminal breach of trust cannot be dismissed solely on ground of arbitration clause
