An agreement of civil nature is not only ground for quashing of FIR

THE SUPREME COURT OF INDIA in  CRIMINAL APPEAL NOS.1573-1575 OF 2019 [Arising out of S.L.P.(Crl.)Nos.6115-6117 of 2017] in the matter of

Dr. Lakshman ... Appellant Versus The State of Karnataka & Ors. Etc. ... Respondents

held that an agreement of Civil nature between the parties is not the only ground for quashing of FIR.
Court observed that  though the contract is of civil nature, if there is an element of cheating and fraud it is always open for a party in a contract, to prosecute the other side for the offences alleged. Equally, mere filing of a suit or complaint filed under Section 138 of the N.I. Act, 1881 by itself is no ground to quash the proceedings. While considering the petition under Section 482 of Cr.P.C., we are of the view that the High Court also committed an error that there is a novation of the contract in view of the subsequent agreement entered into on 08.11.2012. Whether there is novation of contract or not and the effect of such entering into the contract is a matter which is required to be considered only after trial but not at the stage of considering the application under Section 482, Cr.P.C.

FULL J U D G M E N T

 R. Subhash Reddy, J.

 1. Leave granted.

 2.These criminal appeals are filed by the complainant, aggrieved by the judgment and order dated 28th April, 2017 passed by the High Court of Karnataka at Bengaluru in Crl.P Nos.2383 of 2017, 7976 of 2013 and 7161 of 2016. By the aforesaid order, the High Court has allowed the petitions filed by the respondents-accused under Section 482 of Cr.P.C. and quashed the complaint bearing P.C.R. No.12317 of 2013 filed before the IV ACMM, Bangalore, and complaint bearing P.C.R. No.14420 of 2015, filed before the VIII ACMM, 1 Crl.A.@ SLP(Crl.)Nos.6115-6117/2017 Bengaluru, as well as the order dated 27th November, 2015 (wrongly mentioned as 27th July, 2015) passed by the VIII ACMM, Bengaluru, in P.C.R.No.14420 of 2015, directing the Sanjaya Nagara Police Station to investigate the matter.

 3. The appellant herein has filed complaint on 29th April, 2013 before the Chief Metropolitan Magistrate, Bangalore, which is registered as P.C.R. No.12317 of 2013 against the accused A1 to A5, namely (1) M/s. Pramila Santhosh Land Developers and Builders Pvt. Ltd., (2) D.T. Santhosh (3) D.C. Thamanna (4) Smt. K.G. Pramila and (5) M/s. Sri Sai Developers for the alleged offences under Sections 403, 406, 420, 506(B) of the Indian Penal Code. There is also a susequent complaint by the same complainant on 27th November, 2015 which is registered as P.C.R. No.14420 of 2015, which is subseqently numbered as CC No.54 of 2016 (after filing of the chargesheet dated 22nd December, 2015) against the accused therein namely (1) M/s. Pramila Santhosh Land Developers and Builders Pvt Ltd. (2) D.T. Santhosh and (3) Smt. K.G. Pramila for the alleged offences under Sections 417, 418, 420, 422, 120(B) read with Section 34 of IPC and for offences under the Prevention of Money Laundering Act.

 4. The first complaint dated 29th April, 2013 was filed alleging that the respondents-accused made a representation that they are owners and are absolutely seized and possessed of land at Ballur village, Attibele Hobli, Anekal Taluk and promised to procure an extent of 70 acres of land and entered into an agreement with the appellant-complainant on 26th September, 2012 and received an amount of Rs.9 crores (Rupees Nine crores) by way of cheques and demand drafts. It is alleged that the extent and survey nos. of land mentioned in the Schedule appended to the Memorandum of Understanding (MOU) were to be procured in favour of the complainant. It was further pleaded that there were two cheques issued by the accused as security for the amount of advance paid by the appellant-complainant. It was the case of the complainant that subsequent to agreement dated 26th September, 2012, the respondents-accused having failed to perform the contract in terms of agreement, have entered into another MOU on 8th November, 2012, representing that they are in possession of 70 acres of agricultural land and 30 acres of converted land and they promised to transfer such land in favour of the appellant. To the MOU dated 8th November, 2012 M/s. Sri Sai Developers was added as a party. As per the complaint, there is also a Schedule indicating the survey nos. and extent of lands to the second MOU. In the complaint filed on 29th April, 2013 it was alleged that though the respondents have already sold the land covered by Survey Nos.115 and 117 to M/s. Sri Sai Developers on 7th June, 2012, with a dishonest intention respondents have played fraud and cheated the appellant by receiving huge sum of Rs.9 Crores (Rupees Nine crores), by including the lands covered by Survey Nos.115 and 117 also. Further alleging that when the demand was made to comply with the terms of the contract, the respondents have threatened the complainant, as such the respondents are liable to be punished for offences under Sections 403, 406, 420, 506(B) of IPC.

 5. Further alleging that after filing of the first criminal complaint, the respondents have threatened and pressurised the appellant and the second complaint was filed. In the second complaint, it was alleged that one of the accused, by name, D.C. Thamanna also gave an undertaking in writing stating that from 16th May, 2013 onwards they would start registering the sale deeds but they failed to do so. It was further alleged that instead of abiding by such undertaking, the appellant was forced to enter into an addendum dated 30th May 2013. In the second complaint, it is alleged that all the accused have told the appellant that lands bearing Survey Nos.115 and 117 are not available for sale, as such they will compensate in other lands and made a request to become confirming party to sale deed dated 6.7.2013 executed in favour of the trust. It is stated in the complaint that though the purchaser of the lands covered by Survey nos.115 and 117 was not known to the appellant, he was made to sign the sale deed as a confirming party which is also a conspiracy of all the accused to avoid performance of the contract entered into by the accused with the appellant and to retain the amount of Rs.9 crores (Rupees Nine crores) with them illegally. In the second complaint, it was further the case of the appellant that when the cheques, which were given by the accused as security, were presented, it was learnt that the account of which cheques were issued was closed even prior to entering into the agreement dated 26.9.2012. Alleging that there is a fraud, cheating and conspiracy, it is pleaded that the respondents are liable to be prosecuted for the offences under Sections 417, 418, 420, 422 and 120(B) read with Section 34, IPC and the provisions of Prevention of Money Laundering Act.

 6. At this stage, it is to be noticed that in the second complaint, after investigation, chargesheet is also filed and C.C. is numbered.

7. The High Court has allowed the petitions filed under Section 482, Cr.P.C. by the respondents-accused mainly on the ground that in view of the agreement entered into on 08.11.2012, there is a novation of the contract between the parties. Further the High Court has disbelieved the Schedule to the MOU dated 08.11.2012 on the ground that the additional pages were not paginated. Further on the grounds that the appellant has already filed a civil suit for recovery of advance paid by him for a sum of Rs.9 crores (Rupees Nine crores) and the appellant has filed complaint for offence under Section 138 of the Negotiable Instruments Act, 1881, the appellant has joined in the sale deed for lands covered by Survey Nos.115 and 117 of Ballur Village, has allowed the petitions and quashed the proceedings.

 8. Having heard Sri Arun Joshi, learned counsel for the appellant and Sri R. Basant, learned senior counsel assisted by Mr. Anand Sanjay M. Nuli, Advocate, appearing for the respondents, we have perused the impugned order passed by the High Court and other materials placed on record.

 9. It is not seriously disputed by the parties with regard to the entering of the agreements for procuring the land in favour of the appellant in Ballur Village, Anekal Taluk, Bangalore Urban District and respondents have received the amount of Rs.9 crores by way of demand drafts and cheques. It is the specific case of the appellant that there are schedules mentioned to the agreements as per which respondents have agreed to procure the land covered by Survey Nos.115 and 117 of Ballur Village apart from other lands. In a petition under Section 482, Cr.P.C. it is fairly well settled that it is not permissible for the High Court to record any findings, wherever there are factual disputes. Merely on the ground that there is no pagination in the Schedule, the High Court has disbelieved such Schedule to the Agreements. It is the specific case of the appellant that the lands covered by Survey Nos.115 and 117  of Ballur Village were sold even prior to the first agreement, as such respondents have committed an act of cheating. It is also the specific case of the appellant that two cheques were issued by respondents-accused by way of security for the amount of Rs.9 crores which is advance but the account of such cheques was closed even prior to entering into the Agreement itself. The second complaint filed by the appellant is self-explanatory and he is forcefully made to sign the sale deed which were executed subsequently for the lands covered by Survey Nos.115 and 117 of Ballur Village. Mere filing of the suits for recovery of the money and complaint filed under Section 138 of the N.I. Act by itself is no ground to quash the proceedings in the complaints filed by the appellant herein. When cheating and criminal conspiracy are alleged against the accused, for advancing a huge sum of Rs.9 crores, it is a matter which is to be tried, but at the same time the High Court has entered into the disputed area, at the stage of considering the petitions filed under Section 482, Cr.P.C. It is fairly well settled that power under Section 482 Cr.P.C. is to be exercised sparingly when the case is not made out for the offences alleged on the reading of the complaint itself or in cases where such complaint is filed by way of abuse of the process. Whether any Schedules were appended to the agreement or not, a finding is required to be recorded after full fledged trial. Further, as the contract is for the purpose of procuring the land, as such the same is of civil nature, as held by the High Court, is also no ground for quashing. Though the contract is of civil nature, if there is an element of cheating and fraud it is always open for a party in a contract, to prosecute the other side for the offences alleged. Equally, mere filing of a suit or complaint filed under Section 138 of the N.I. Act, 1881 by itself is no ground to quash the proceedings. While considering the petition under Section 482 of Cr.P.C., we are of the view that the High Court also committed an error that there is a novation of the contract in view of the subsequent agreement entered into on 08.11.2012. Whether there is novation of contract or not and the effect of such entering into the contract is a matter which is required to be considered only after trial but not at the stage of considering the application under Section 482, Cr.P.C.


 10. Learned senior counsel Sri R. Basant appearing for the accused, in support of his case, relied on the judgment of this Court in the case of S.W. Palanitkar and Ors. vs. State of Bihar and Anr. 1 and submitted that every breach of contract may not result in a penal offence, but in the very same judgment, this Court has held that breach of trust with mens rea gives rise to a criminal prosecution as well. In a given case, whether there is any mens rea on the part of the accused or not is a matter which is required to be considered having regard to the facts and circumstances of the case and contents of the complaint etc. In the case on hand, it is clearly alleged that even before entering into the agreement dated 26.09.2012, lands were already sold to third party, which were agreed to be procured in favour of the appellant. Not only that, it is the specific allegation of the complainant that the cheques were issued towards security from the account which was also closed much earlier to the date of Agreement itself. Learned counsel also relied on judgment in the case of Anil Mahajan vs. Bhor Industries Ltd. and Anr.  but in the very same judgment it  (2002) 1 SCC 241 2 (2005) 10 SCC 228  is also held that where there exists a fraudulent and dishonest intention at the time of the commission of the offence, law permits the victim to proceed against the wrongdoer for having committed an offence of criminal breach of trust or cheating. In another case relied on by the learned counsel, viz., Inder Mohan Goswami and Anr. vs. State of Uttaranchal and Ors.  this Court has reiterated the scope of power of the High Court under Section 482 Cr.P.C. Having regard to the facts of the case, we are of the view that the said judgments relied on by the learned counsel would not support the case of the respondents. It is also to be noticed that in the complaint filed in P.C.R.No.14420 of 2015, investigation has been completed and chargesheet was also filed on 22nd December 2015. 11. For the aforesaid reasons, we are of the view that the High Court has committed an error in allowing the petitions filed under Section 482, Cr.P.C. by the respondents-accused. Accordingly, these criminal appeals are allowed and impugned common order dated 28.4.2017 passed by the High Court of Karnataka at Bengaluru is set aside. It is made clear that the findings recorded in this judgment are confined only for 2007 (12) Scale 15  these appeals and the same cannot be construed as an expression of opinion on merits of the matter and it is open for the trial court to proceed in accordance with law and decide the complaints on their own merits. .................

... J. [R.Banumathi] .................... J. [R. Subhash Reddy] New Delhi; October 17, 2019 12

LEGEM EYE: Changes in Indian Arbitration Law

LEGEM EYE: Changes in Indian Arbitration Law: The Arbitration and Conciliation Act, 1996 failed to achieve its object to provide cost effective and speedy dispute resolution unlike...

Reforms needed in Indian Arbitration



By Azeez Nazar Sabri 

The Amendment in Arbitration and Conciliation Act (2015) have made sea changes in the Arbitration as it has fixed time limit to for passing the award, fixed fee of Arbitrators, removed the practice of automatic, stay, reduced the interference of court, introduced fast track Arbitration, power to Arbitral Tribunal to grant interim relief, reduced misuse of stay under section 9. With the reduced interference of the courts, and removal of automatic stay, unnecessary challenges to the Arbitration Award will be reduced. Further, with the establishment of the Commercial Court the disposal rate of the Section 34 & 37 Petitions has been improved.  

However, Amendment Act 2015 made lots of changes in the Arbitration proceedings but still there are numbers of areas of concerns which need to be addressed to make India as an Arbitration hub.

  1. Institutional Arbitration – In India most of the Arbitrations are adhoc Arbitration and there is need to make the Arbitration Institutionalized.  However, in the proposed amendment 2018 establishment of Arbitration Council of India is proposed for strengthening the Institutional Arbitration, but until the same is setup the adhoc Arbitration will continue.  
  2. Arbitration Centers – The cost of the Arbitration venue is very high. There is need to establish Arbitration centers in the majors cities so that the venue can be arranged at the nominal cost to reduce the arbitration cost.
  3. Arbitration Bar- There should be a full time arbitration practice and Arbitration Bar should be established for the same. Normally the advocates who are in regular litigation practice appears in the Arbitration matters and they give priority to the court litigations and do arbitration practice as their part time job.  
  4. Full time hearings – Normally the arbitrators hear the arbitration matters only for 1-2 hours. This causes delay. The hearings should be full time and there should not be unnecessary hearings for the submission of pleading or exchange of the documents.
  5. Terms of Reference (TOR) and meeting schedule- Unlike International Arbitration there is no practice of finalizing the terms of reference (TOR) and meeting schedule in the Indian Arbitration. The terms of the reference help in reducing the issues of parties and meeting schedule strictly set the schedule of submissions of documents and hearings, which speeds up the arbitration proceedings.
  6. Appointment of Expert:  Many arbitrations including construction arbitration involves complex and technical issues. Normally the Arbitrators appointed by Court are retired judges who are not technical persons/ Engineers. In such cases there should be appointment of the expert who can help the tribunal to address the technical issues, which will help the Arbitral panel to determine the claims of parties and will reduce the time of arbitration.
  7. Cross Examination of the witnesses: Even after the amendment of the Arbitration Act,2015 there is no change in the procedure and practice of cross examination of the witnesses. It takes a long time to conclude the cross examination of the witnesses and sometime unnecessary questions are also asked by the lawyers to drag the matter. However, in International Arbitration a witness is cross examined in a day or two, but in India it take months or years.  

Arrest of a person under UAE Law



By A N Sabri


Fedral Law No.(35)of 1992 contains Criminal Procedure in UAE. Provisions of this law are applicable to procedures for reprehension crimes and also for procedures related to hudoud, retribution and blood money without prejudice to the stipulations of Islamic Sharia.

As per Article 2 of the Law no criminal penalty shall be imposed on any one without his conviction according to the law. If a person is acquitted no penalty shall be imposed upon him.

No person shall be arrested, searched detained or imprisoned except under the circumstances and conditions mentioned in the law. Detention or imprisonment  may only take place in places designated for that purpose and for the period specified in the warrant issued by the competent authority.

No physical or moral harm shall be applied on the accused, and no person shall be subjected to torture or degrading treatment.

As per the article 3 members of the public authority may not enter into any place of residence except under the circumstances specified in the law or in case of a request for assistance from inside or under a serious threat on life or property.

As per Article 4 each person in a felony punishable with death sentence or life imprisonment shall have an attorney to defend  his case during the hearing stage, or otherwise the court  shall appoint an attorney whose fee shall be charged to the state.

The accused in a felony punishable by provisional imprisonment may also ask the court to provide him with an attorney in his defense after verifying his financial liability to hire an attorney/lawyer.
As per Article 10 a criminal action may not be filed in the following crimes without a written or oral complaint from the victim or his legal substitutes:

1.       Theft, fraud, treasury and concealing proceeds of the same if the victim is the spouse of the accused or any of his next of kin and such proceeds were not under judicial or administrative seizure or surcharged with the right of another person.

2.       Refusal to handover a minor to his lawful guardian and removing him from the authority of his guardian or caretaker.

3.       Refusal to pay alimony, custody or nursing fees or adjudged residence.

4.       Insulting and defaming others.

5.       Other crimes stipulated by the law.

A Complaint shall not be accepted after the lapse of three months from the day of the victim’s knowledge of the crime and the criminal, unless otherwise stipulated by the Law.

As per article 45 the judicial officer may order the arrest of the present accused where there are sufficient evidence for his involvement in the crime in any of the following circumstances :
First : In crimes
Second : When caught red handed in felonies that are not punished by fines.
Third : In felonies that are not punished by fines if accused is under surveillance or it is fared that he could escape.
Fourth: In felonies of theft, fraud, treasury, severe assault, resisting public force personnel by force, breaching public manners, as well as felonies related to weapons, ammunition, alcohol and hazardous drugs.
As per Article 46 if the accused is not present, the judicial officer may issue an arrest warrant which has to be stated in the report.

As per Article 49, in red handed felonies that are not punishable by fines, public authority personnel may bring the accused and hand him over to the nearest judicial officer.

As per Article 50, it is not permissible to arrest the accused if the red handed crime requires a complaint for raising a criminal action thereon, unless anyone authorized to file a complaint explicitly presents the same; in this case it is permissible that a complaint is made by a present member of the public authority. 
  
azeezsabri@gmail.com

After LLB what to do LLM or MBA

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