Case Note & Summary
The petitioners, a housing development company and its directors, filed a petition under Section 482 of the Code of Criminal Procedure, 1973 seeking quashing of PCR No.24421/2011 pending before the IV ACMM Court, Bangalore, and the FIR in Crime No.70/2012 registered by Sanjay Nagar Police Station. The second respondent, a developer and infrastructure company, had entered into a construction agreement with the first petitioner company regarding property belonging to the second respondent. Under the agreement, certain cheques were deposited by the second respondent with the first petitioner as performance guarantee. Subsequently, disputes arose between the parties regarding the performance of the agreement, leading to its termination. The second respondent filed a private complaint alleging offences under Sections 406, 420, 506 read with 34 of the Indian Penal Code, 1860, claiming that the petitioners had cheated and criminally breached trust by not returning the cheques. The learned magistrate took cognizance and issued process. The petitioners contended that the dispute was purely civil in nature, arising from a breach of contract, and that no criminal offence was made out. The court examined the allegations and found that the transaction was contractual, with no evidence of fraudulent or dishonest intention at the inception. The court held that the dispute was essentially civil and that criminal proceedings were an abuse of the process of law. Accordingly, the court allowed the petition and quashed the entire proceedings in PCR No.24421/2011 and the FIR in Crime No.70/2012.
Headnote
A) Criminal Law - Quashing of FIR - Section 482 CrPC - Civil Dispute - Dispute arose from a construction agreement where cheques were deposited as performance guarantee - Complainant alleged cheating and criminal breach of trust after termination of agreement - Held that the dispute is purely civil in nature and criminal proceedings are an abuse of process of law - FIR quashed (Paras 2-5).
Issue of Consideration
Whether criminal proceedings for offences under Sections 406, 420, 506 read with 34 IPC can be sustained when the dispute arises out of a breach of a construction agreement and is essentially civil in nature
Final Decision
Petition allowed. The entire proceedings in PCR No.24421/2011 pending on the file of IV ACMM Court, Bangalore, and the FIR in Crime No.70/2012 registered by Sanjay Nagar Police Station are quashed.
Law Points
- Criminal proceedings cannot be used as a tool for recovery of civil dues
- breach of contract does not constitute criminal offence unless fraudulent intention exists at inception
- quashing under Section 482 CrPC is warranted when dispute is predominantly civil
Case Details
2014 LawText (KAR) (06) 11
Criminal Petition No.5521 of 2012
Sri.Ganapathi Hegde for M/s.Dua Associates (for petitioners), Sri.Keshava Murthy, Addl. SPP for R-1, Sri.S.Kalyan Basavaraj for R-2
Vakil Housing Development Corporation, Mohsin Ali Vakil, Mohammed Arif Vakil, Mohammed Ali Vakil, H.G.Girish
State by Sanjay Nagar Police Station, Sovereign Developers and Infrastructure Ltd.
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Nature of Litigation
Criminal petition under Section 482 CrPC seeking quashing of private complaint and FIR alleging offences under Sections 406, 420, 506 read with 34 IPC
Remedy Sought
Quashing of PCR No.24421/2011 and FIR in Crime No.70/2012
Filing Reason
Dispute arising from a construction agreement where cheques were deposited as performance guarantee; complainant alleged cheating and criminal breach of trust after termination of agreement
Issues
Whether the dispute is purely civil in nature and criminal proceedings are an abuse of process
Whether the allegations in the complaint make out any criminal offence
Submissions/Arguments
Petitioners argued that the dispute is civil in nature and no criminal offence is made out
Respondent argued that the petitioners cheated and criminally breached trust
Ratio Decidendi
When the dispute between parties is essentially civil in nature arising out of a breach of contract, criminal proceedings for cheating and criminal breach of trust cannot be sustained as they amount to an abuse of the process of court. The court must examine whether the allegations disclose a criminal offence or are merely a civil wrong.
Judgment Excerpts
The transaction between the petitioners and second respondent, which has led to filing of this petition, is as under: A construction agreement is entered into between the first petitioner – Company and second respondent – Company with reference to property belonging to second respondent.
In the said transaction, it is stated that certain cheques were deposited with the first petitioner towards performance guarantee amount.
It is not in dispute that the transaction between the parties is purely a civil transaction.
In that view of the matter, the petition is allowed. The entire proceedings in PCR No.24421/2011 pending on the file of IV ACMM Court, Bangalore, and the FIR in Crime No.70/2012 registered by Sanjay Nagar Police Station are quashed.
Procedural History
The second respondent filed a private complaint (PCR No.24421/2011) before the IV ACMM Court, Bangalore, alleging offences under Sections 406, 420, 506 read with 34 IPC. The learned magistrate took cognizance and issued process. The police registered FIR in Crime No.70/2012. The petitioners (accused nos.1 to 5) filed this petition under Section 482 CrPC seeking quashing of the proceedings.
Acts & Sections
- Code of Criminal Procedure, 1973: 482
- Indian Penal Code, 1860: 406, 420, 506, 34
