Allowed

Yennarkay R Rajaratnam v. State of Karnataka by

Karnataka HC11 Oct 2023CRL.P/2280/2018

Case brief

AI extract

What is this about?

Criminal petition filed under Section 482 Cr.P.C. to quash proceedings for cheating. Court held lower court erred in cognizance after Section 202 enquiry and found civil dispute lacking criminal intent. Proceedings quashed insofar as petitioner accused.

What did the court decide?

Criminal proceedings in C.C.No.13283/2016 quashed insofar as petitioner accused No.2 is concerned.

Yennarkay R Rajaratnam Vs State of Karnataka by — Cheque Dishonour | Karnataka HC (2023)

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 11^TH DAY OF OCTOBER, 2023

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BEFORE

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THE HON’BLE MR. JUSTICE SACHIN SHANKAR MAGADUM

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CRIMINAL PETITION NO.2280 OF 2018

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BETWEEN:

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YENNARKAY R RAJARATNAM S/O RAVINDRAN,

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AGED ABOUT 51 YEARS, R/AT NO.3, A R ARUNACHALA NADAR ROAD, SIVAKASI TALUK, VIRDHUNAGAR DISTRICT TAMIL NADU-626 123

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...PETITIONER

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(BY SRI ASHOK HARANAHALLI, SENIOR COUNSEL FOR SRI YESHU MISHRA, ADVOCATE)

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AND:

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1 . STATE OF KARNATAKA BY PARAPPANA AGRAHARA POLICE STATION, REPRESENTED BY SPP

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HIGH COURT BUILDING, BENGALURU-560001

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2 . P RAVINDRA

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S/O PEDDA REDDY, AGED ABOUT 48 YEARS, R/AT HALE BOMMASANDRA, MUTHANALLURU POST,

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ANEKAL TALUK-562 106 BENGALURU URBAN DISTRICT

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…RESPONDENTS

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(BY SRI.VINAYAKA.V.S, HCGP FOR R1; SRI.V.VINOD REDDY, ADVOCATE FOR R2)

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THIS CRL.P IS FILED U/S.482 CR.P.C BY THE ADVOCATE FOR THE PETITIONER PRAYING TO QUASH THE CHARGE SHEET AND ENTIRE PROCEEDINGS IN CC NO.13283/2016 ON THE FILE OF THE LEARNED IX A.C.M.M., AT BENGALURU, AGAINST THE PETITIONER HEREIN, FOR THE OFFENCES PUNISHABLE UNDER SECTION 420 READ WITH SECTION 34 OF THE INDIAN PENAL CODE, IN THE ENDS OF JUSTICE, EQUITY AND GOOD CONSCIENCES.

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THIS PETITION HAVING BEEN HEARD AND COMING ON FOR PRONOUNCEMENT OF ORDERS THIS DAY, THE COURT MADE THE FOLLOWING:

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ORDER

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The captioned petition is filed by accused No.2 seeking quashing of charge sheet and the entire proceedings in C.C.No.13283/2016 for the offences punishable under Section 420 read with Section 34 of IPC.

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The facts leading to the case are as under:

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The respondent No.2 filed a complaint under Section 200 of Cr.P.C. before the IX Additional Chief Metropolitan Magistrate, Bengaluru in PCR.No.2010/2013 against the petitioner herein and five others alleging commission of offences punishable under Sections 419 and 420 of IPC. The sum and substance of the complaint is that petitioner/accused No.2 was negotiating to sell the lands and in the meantime, the accused No.1 approached the respondent No.2/complainant and offered to negotiate and sell the properties owned by the present petitioner/accused No.1. The respondent No.2 alleged that accused No.1 claims to be a close friend of the present petitioner/accused No.2 and informed respondent No.2 that petitioner intends to sell his properties. The respondent No.2 has further alleged that on 07.10.2011, he along with one

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B.M.Raghupathy went to Sivakasi and held negotiations with the present petitioner and in the course of negotiation, agreed to sell the properties. The respondent No.2 has further claimed that accused No.1 entered into an agreement of sale on 25.01.2012 with the petitioner for a total sale consideration of Rs.91,50,00,000/-. It is also alleged that accused No.1 assured respondent No.2/complainant that he has paid Rs.25 Crores to the petitioner/accused No.2 by way of a cheque. Believing the words of accused No.1, the respondent No.2/complainant claimed that accused No.1 has collected an amount of Rs.3,16,00,000/from the respondent No.2/complainant herein.

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The respondent No.2/complainant’s grievance is that accused No.1 and the present petitioner having collected huge amount of Rs.3,16,00,000/- have sold the property in favour of

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M/s. Shoba Developers without the consent and knowledge of respondent No.2/complainant by virtue of sale deed dated 06.11.2013. Hence, a complaint is filed under Section 200 alleging that all the accused persons have hand in glove by colluding with each other have hatched conspiracy and have cheated the complainant and huge amount of Rs.3,16,00,000/- is illegally collected by the accused persons. On these set of allegations, a private complaint came to be filed.

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On registration of complaint, learned

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Magistrate has taken cognizance on 10.01.2013 and ordered to post the matter for recording sworn statement. The learned Magistrate vide order dated 04.04.2014, formed an opinion that sworn statement of the complainant coupled with documents are not sufficient to proceed against the accused persons. However, taking note of involvement of huge cash

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transaction, felt it necessary to direct jurisdictional Police Officer to investigate and file a report. Therefore, acting under Section 202 of Cr.P.C., the Magistrate directed the SHO, Parappana Agrahara Police Station to investigate and submit a report. On receipt of charge sheet submitted by the jurisdictional police station, the Magistrate has taken cognizance on 04.05.2016 and has straight away issued non-bailable warrant to the present petitioner and other accused. The present petitioner who is arrayed as accused No.2 is seeking quashing of the proceedings.

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Learned Senior Counsel reiterating the

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grounds urged in the petition would vehemently argue and contend that the entire charge sheet does not prima facie demonstrate that the alleged consideration is paid to the petitioner by the respondent No.2. Referring to the complaint and the charge sheet materials, he would vehemently argue and contend

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that it is the specific case of the respondent No.2/complainant that he has paid Rs.3,16,00,000/to accused No.1 pursuant to assurance given by accused No.1 that he will secure sale deed from accused No.2 who is the owner of the land in question. Referring to the entire charge sheet, he would submit that there is absolutely no material whatsoever insofar as the present petitioner is concerned and therefore, he would contend that the proceedings against the petitioner for the alleged offence punishable under Section 420 is liable to be quashed. Learned Senior Counsel would further contend that the Magistrate has mechanically accepted the charge sheet submitted by the Investigating Officer. Therefore, he would point out that the Magistrate erred in not applying his mind independently.

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Learned Senior Counsel would place

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reliance on the judgment rendered by the Hon’ble Apex Court in the case of Devarpalli Lakshminarayana Reddy and Others vs. V.Narayana Reddy and Others¹ . Placing reliance on the said judgment, he would point out that there is distinction of power conferred under Section 156(3) of Cr.P.C. to the Magistrate under Section 190(1)(a). Referring to these sections, he would point out that if Magistrate takes cognizance and embarks upon the procedure embodied in Chapter XV, he is not competent to switch back to the pre-cognizance stage and avail Section 156(3). Referring to the said judgment, he would point out that when an enquiry is ordered under Section 202 of Cr.P.C., the Investigating Officer has a limited role while carrying out investigation and he has to only verify the prima facie truthfulness. He would further contend that 1 (1976) 3 SCC 252

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police officer investigating under Section 202 under the orders of Magistrate is therefore required to look into prima facie veracity of the allegations in the complaint and thereafter submit a report to the Magistrate as to whether there is sufficient grounds to proceed against the accused or not.

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Learned Senior Counsel would further point out that the object of investigating under Section 202 is not to initiate a fresh case on a police report but to assist the Magistrate in completing the proceedings already instituted upon a complaint before him. He has also placed reliance on the following judgments:

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1) Ramdev Food Products Pvt. Ltd. Vs. State of Gujarat – AIR 2015 SC 1742;

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2) Vinod Kumar, IAS vs.Union of India and Others – 2021 SCC Online SC 559;

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3) Kailash Vijayvargiya vs.Rajlakshmi Chaudhuri and Others – 2023 SCC Online SC 569.

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Learned counsel for respondent No.2,

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however, while repelling the arguments canvassed by the learned Senior Counsel appearing for the petitioner would contend that there are sufficient materials to proceed against the petitioner and therefore, this is not a fit case to quash the proceedings at this juncture. To buttress his arguments, he has placed reliance on the following judgments:

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1) Moseen vs. State of Karnataka – LAWS (KAR) 2021-12-5;

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2) Devaramane Sringeshwaraiah and Another vs. M.R.Narasimha Pandith and Another – ILR 2002 Kar 3567;

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3) Khalsa Medical & Educational Trust vs. Union of India – ILR 1994 Kar 3211;

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4) Arun Bhandari vs. State of U.P.and Others – (2013) 2 SCC 801;

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5) Jamuna Singh and others vs. Bhadai Shah

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– 1964 (2) Crl.L.J. 468 (SC);

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6) Chandra Kumar Poddar vs. State of West Bengal – Laws (CAL) 1999-7-37;

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7) Vijayendra Kumar and Others vs. State of Rajasthan and Another – (2014) 3 SCC 389;

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8) Lalitha Kumara vs. Govt. of U.P. and Otheres – AIR 2014 SC 187;

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9) Rameshbhai Pandurao Hedau vs. State of Gujarat – (2010) 4 SCC 185;

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10) Pradeep S. Wadeyar vs. State of Karnataka – AIR 2021 SC 1108.

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While placing reliance on the judgment

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rendered by this Court in the case of Moseen vs. State of Karnataka (supra) , he would vehemently argue and contend that the Magistrate having taken cognizance of receipt of complaint may postpone the issuance of process and therefore, he would contend that there is no illegality in taking cognizance on receipt of charge sheet. He would place reliance on the judgment rendered in the case of Devaramane Sringeshwaraiah (supra) and would contend that when Magistrate refers the matter for investigation by

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police under Section 156(3), it is deemed that Court has not taken cognizance.

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While countering the petitioner’s claim that

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remedy of respondent No.2 is to file a civil suit, he has placed reliance on the judgment rendered by the Hon’ble Apex Court in the case of Arun Bhandari vs. State of U.P. (supra) and has contended that even if respondent No.2 has a remedy before the Civil Court, he is entitled to launch a criminal case where there is sufficient material to indicate that he was cheated by

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the accused. While countering the learned Senior Counsel’s claim that the learned Magistrate erred in treating the report as charge sheet, he would contend that though Investigating Officer has submitted a report in the form of charge sheet, it can be treated in law as a report submitted under Section 202. Referring to the principles laid down by the Hon’ble Apex Court in the case of Vijayendra Kumar vs.

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State of Rajasthan (supra) , he would vehemently argue and contend that the criminal proceedings cannot be quashed on the ground that complainant has a civil remedy. He has also placed reliance on the judgment rendered by the Hon’ble Apex Court in the case of Lalitha Kumara vs. Government of UP (supra) and has contended that even if there is a direction under Section 202 to the police to investigate, registration of FIR is obligatory and therefore, he would contend that there is no procedural error as claimed by the petitioner. He has also placed reliance on the dictum laid down by the Hon’ble Apex Court in the case of Pradeep

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S.Wadeyar vs. State of Karnataka (supra) .

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Heard learned Senior Counsel appearing for the petitioner and learned HCGP for the

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respondent/State.

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It is borne out from the records that

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learned Magistrate after having recorded sworn statement of the complainant was of the opinion that material on record is not sufficient to proceed against the petitioner and other accused. It is in this background, the Magistrate exercising power under Section 202 directed the jurisdictional Police Station to hold an enquiry and submit a report. On reading Section 202 of Cr.P.C., what can be gathered is that investigation under Section 202 is of limited nature. The Investigating Officer while complying directions issued under Section 202 is not entitled to exercise the preliminary powers of investigation as envisaged under chapter XII of Cr.P.C. In the course of investigation under Section 202 of Cr.P.C., the police officer is not required to verify the defence version of the accused.

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The scope of ambit of enquiry under Section 202 of Cr.P.C. was succinctly laid down by the Hon’ble Apex Court in the case of Chandra Deo Singh vs. Prokash Chandra Bose and Another² , which reads as follows:

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“For determining the question whether any process is to be issued or not, what the Magistrate has to be satisfied is whether there is sufficient ground for proceeding and not whether there is sufficient ground for conviction. Whether the evidence is adequate for supporting the conviction can be determined only at the trial and not at the stage of enquiry. As stated in subsection (1) of S.202 itself, the object of the enquiry is to ascertain the truth or falsehood of the complaint, but the Magistrate making the enquiry has to do this only with reference to the intrinsic quality of the statements made before him at the enquiry which would naturally mean the complaint itself, the statement on oath made by the complainant and the statements made before him by persons examined at the instance of the complainant.”

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2 AIR 1963 SC 1430

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Similar view was also expressed in

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National Bank of Oman vs. Barakara Abdul Aziz & Another³ . The Hon’ble Apex Court has held as follows:

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“9. The duty of a Magistrate receiving a complaint is set out in Section 202 Cr.P.C. and there is an obligation on the Magistrate to find out if there is any matter which calls for investigation by a criminal court. The scope of enquiry under this section is restricted only to find out the truth or otherwise of the allegations made in the complaint in order to determine whether process has to be issued or not. Investigation under Section 202 Cr.P.C. is different from the investigation contemplated in Section 156 as it is only for holding the Magistrate to decide whether or not there is sufficient ground for him to proceed further. The scope of enquiry under Section 202 Cr.P.C. is, therefore, limited to the ascertainment of truth or falsehood of the allegations made in the complaint :

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3 (2013) 2 SCC 488

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(i) on the materials placed by the complainant before the court;

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(ii) for the limited purpose of finding out whether a prima facie case for issue of process has been made out; and

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(iii) for deciding the question purely from the point of view of the complainant without al all adverting to any defence that the accused may have."

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When a complaint is presented before the Magistrate, he has two options. One is to pass order contemplated under Section 156(3). Second is to direct examination of the complainant on oath and the witness present, and proceed further in the manner provided under Section 202. In the present case on hand, the Magistrate has taken cognizance by recording statement of complainant. Therefore, a direction issued to the Investigating Officer to enquire cannot be treated as investigation under Section 156(1). After cognizance is taken, if Magistrate

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intends to seek any assistance of jurisdictional police station, it will be under Section 202. The Investigating Officer in such cases, is required to ascertain whether there is a prima facie case against the persons accused of the offences.

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If the learned Magistrate has directed for a preliminary enquiry by exercising power under Section 202, I am of the view that there is a procedural error at the hands of the Investigating Officer in registering crime and then submitting the charge sheet. In the present case on hand, the Magistrate has taken cognizance and has embarked upon procedure embodied in Chapter XV. Therefore, Section 202 is applicable to the present case on hand since some evidence is collected by the Magistrate in proceedings under Chapter XV. The Magistrate, however, found that the material collected is insufficient to take a decision and therefore, a direction is issued to the

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Investigating Officer. Therefore, what can be inferred from the law laid down by the Apex Court in the case of Devarapalli Lakshminarayana Reddy (supra) is that the object of an investigation under Section 202 is not to initiate a fresh case on police report but to assist the Magistrate in completing the proceedings already instituted upon a complaint before him.

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Therefore, the question that requires consideration at the hands of this Court is, whether learned Magistrate erred in issuing the process by treating the report as a charge sheet without applying his mind on the report submitted by the police officer.

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A Police Officer conducting investigation under Section 202 Cr.P.C. is a delegatee of the Magistrate and his powers of investigation are therefore circumscribed by limitations imposed upon the principal, that is, the Magistrate himself. If a

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Magistrate in the course of enquiry under Section 202 is not entitled to issue notice upon the accused, to appear and participate in the proceedings, the police officer as his delegatee cannot claim higher powers and issue notice upon the accused and interrogate him during the course of investigation under Section 202 of Cr.P.C. No doubt, the police officer under Section 202 is, however, entitled to interrogate the complainant and his witnesses and thereafter collect evidence by effecting searches and seizures for the purpose of determining the intrinsic truth in the allegation in the complaint.

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In the present case on hand, the Investigating Officer, in all probability, has exceeded his authority. An enquiry at the instance of the Magistrate under Section 202 is to enable the Magistrate to scrutinize the allegations made in the complaint with a view to prevent the person named

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therein as accused from being called upon to face an obviously frivolous complaint. But there is also another object behind this protection and the Magistrate is entitled to find out whether material in support of allegations made in the complaint, if found to be insufficient, can obviously seek assistance and order for enquiry by the Investigating Officer to elicit all facts not merely with a view to protect the interest of absent accused persons, but also with a view to bring to book a person or persons against whom grave allegations are made.

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The records clearly reveal that Magistrate has blindly accepted the report submitted by the Investigating Officer by treating it as charge sheet. Therefore, the question that requires consideration is, whether the issuance of process in the present case on hand is found to be bad in law and therefore, this Court needs to examine as to whether issuance of

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process can be faulted as there are several infractions of procedures.

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Issuance of process should not be

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mechanical nor should be made an instrument of operation for needless harassment. The responsibility and duties of Magistrate lie in finding out whether accused would be legally responsible for the offence charged with. The Magistrate, at the first instance, if finds that the materials are insufficient, on receipt of enquiry report, was required to independently apply his mind. The Magistrate at that stage, was required to be circumspect and judicious in exercising discretion.

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In the present case on hand, I am more than satisfied that the learned Magistrate has not taken all relevant facts and circumstances into consideration while issuing process to the present

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petitioner and other accused. Learned Magistrate has not even applied his mind to find out whether additional material is placed before the Magistrate after he directed investigation under Section 202. After receipt of direction issued by the learned Magistrate, the Investigating Officer has registered a crime which was impermissible and assuming power under Section 156(1), he has laid a charge sheet under Section 173 and the Magistrate placing reliance on the charge sheet has issued process. If the learned Magistrate has taken cognizance on a complaint, there is no scope for cognizance being taken afresh of the same offence on receipt of a police officer’s report.

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The object of enquiry under Section 202 is to find out what materials are there to support the allegations made in the complaint against a person. The object of enquiry is also to find out as to whether

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complaint on the face of it is devoid of any substance or prima facie case can be made out against accused on the material placed before him by the complainant. The manner in which the Magistrate in the present case on hand has blindly accepted the report submitted by the Investigating Officer defeats the very scope and object of Section 202. The object of an enquiry or investigation under Section 202 is to ensure that no person shall be compelled to answer a criminal charge unless Court is satisfied that there is a prima facie case for proceeding and issuing the process against the accused persons.

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Now let me examine as to whether a case is made out against the petitioner for the offence punishable under Section 420 even if the allegations in the complaint and the charge sheet are accepted in entirety.

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Before I advert to examine the materials on record to ascertain as to whether there is a primafacie evidence of criminal intention and initial deception on the part of the petitioner which would attract the provision of Section 420 of IPC, I deem it fit to refer para Nos.5 to 7 of the complaint, which reads as under;

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“5. The complainant submits that, the 6^th accused was negotiating to sell the said above property, at that time the 1st accused one P. Thangamani had approached and discussed with the complainant and offered the complainant to purchase the said property for that the complainant accepted the same and the 1st accused said that he is very close friend to the 6th accused Mr. Rajarathinam Nadar and the said Thangamani has got all the information and the said Rajarathinam has advised and requested the accused No.1 to sell his properties to anybody. On the said assurance of accused No.1, the complainant and one B.M.

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Raghupathy son of K. Munisway went to the Sivakasi, Virudhnagar District, Tamil Nadu for negotiating the said property on 7-10-2011, made a negotiations and the 6th accused had agreed to sell the said property, hence the complainant agreed to purchase the said property for which the complainant and 1st accused jointly entered into an Agreement of sale dated 25-1-2012 with the 6th accused for a total sale consideration of Rs.91,50,00,000/-. And the 1st accused has assured to the complainant that he has given 25 Crores cheque to the 6th accused on the date of agreement for that the 6th accused had also accepted and executed an Agreement of sale in favour of the complainant and 1st accused jointly and also the 1 accused assured to the complainant that after paying Rupees 25 Crores through cheque's as an advance amount on 7-10-2011 and original Agreement of sale is with the 1st accused and xerox copy of the same is with the complainant, for that, he has to collect amounts from the complainant, for that the complainant also accepted and paid

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the amount of Rs.3,16,00,000/- to the 1 accused on different modes of payments on different dates as follows:-.

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1. On 26-12-2011 Rs.10,00,000/- by way of cheque drawn on ING Vysys Bank

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2. By way of cash Rs.50,00,000/- on 26-12-2011

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3. On 22-9-2012 Rs.4,00,000/through RTGS cheque No.8064 from Axis Bank, Electronic city Branch, Bangalore

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4. RTGS. NEFT IFSC HDFC Bank, Rs.1,00,000/through Account No.10511570000766

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5. ING Vysya Bank, RTGS Rs.1,00,000/-dated 1-8-2013

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6. On 22-7-2012 by way of of Cash Rs.50,00,000/-

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7. On 29-4-2012 by way of Cash of Rs.1,50,00,000/-

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8. On 7-10-2013 by way of cash of Rs.50,00,000/-

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Totally Rs.3,16,00,000/(Rupees Three Crores Sixteen Lakhs only)

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6. The complainant submits that, subsequently on 19-4-2012 again Tangamani and Rajarathinam Nadar had negotiated with the complainant and come to the conclusion to execute Memorandum of Undertaking and give the authority to the complainant to sell the said property to any third parties on behalf of the 6^th accused. After entering into MOU, the complainant negotiating with so many purchasers cum buyers to sell the said property and also since from 7-10-2011 and he spent his whole time for transaction. The complainant was bringing so many purchasers, but the 1st and 6th accused by one way or the other were avoiding to negotiate with the purchaser and the accused No.1 and 6 are not ready to sell the said property, and they were avoiding to sell the said property for reasons best known to them and every time they were imposing so

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many conditions to sell the said property and its all is intentionally to avoid to sell the said property through the complainant. The 1st accused is purposefully misguiding to the 6th accused not to sell the said property through the complainant, after receiving the amount from the complainant, the character and nature of the accused No.1 and 6 is totally changed and they are trying to sell the said property to other purchasers directly, for that the complainant has made so many efforts to get the sale transaction and has issued so many SMS and phone calls Tax and email to the accused No.1 and 6 and at that time the accused No.1 to 4 have given so many replies that shortly we will negotiate and sale transaction will be completed through the complainant, but they have not come forward. The accused No.1 to 6 or their directors, the accused No.2 to 5 are claiming that they are also directors of the said Standard fire works and they have given so many SMS reply to the complainant SMS notice and stating that shortly they will settle the issue and sell the

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property through the complainant. Hence the purposefully accused No.2 to 5 also involving in this transaction at the instigation of accused No.1 and 6 thereby cheating the complainant they are postponing the sale transaction by one way or the other.

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7. The complainant submits that, subsequently the complainant knows that some of the purchasers are trying to purchase the said property through accused No.1 To 6 without the consent of the complainant and immediately the complainant has issued a reply/objection to the paper publication issued by Shobha Developers, in respect of the said property, not to purchase the said property without the consent of the complainant and the complainant has already paid an advance amount of Rs.3,16,00,000/- and he has spent his most of his precious time in searching the prospective purchaser to the said property and also he has safeguarded the property since from 7-10-2011, he has looked after the entire property. The accused No.1 is retaining 8

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cheques of the complainant le.,one cheque bearing No.445138 of Rs.2,00,00,000/- drawn on ING Vysya Bank, Bangalore and 7 blank signed cheques bearing Nos. 608055 to 608061 of Rs.5,00,00,000/each of Axis Bank, Bangalore, for security purpose.”

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It is worth to note that the present petitioner, who is arrayed as accused No.6 in the complaint, is now arrayed as accused No.2 as per the charge sheet laid by the Investigating Officer. The accused No.6 referred to in the complaint is in fact accused No.2 post filing of the charge sheet.

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On meticulous reading of the allegations in the complaint lodged by respondent No.2, it clearly discloses that the entire grievance of respondent No.2 – complainant is against accused No.1 and not against accused No.2.

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Therefore, on reading para Nos.5 and 6

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what can be gathered is that respondent No.2 – complainant claims that accused No.1 projected himself as a close friend of the present petitioner – accused No.2 and respondent No.1 – complainant has made payments as indicated in para No.5 on the assurance of accused No.1. The said allegations further indicate that the alleged payments are made to accused No.1 and not to the present petitioner.

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In para No.6, respondent No.2 has further alleged that accused No.1 is purposefully misguiding the present petitioner – accused No.2 not to sell the property to respondent No.2 – complainant. At para No.6, he has further alleged that accused No.1 and the present petitioner are intending to sell the property to the third parties, though he has made several efforts to secure sale deeds from accused Nos.1 and 2.

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On reading the allegations in the complaint,

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which are culled out supra, this Court is more than satisfied that the ingredients as found in Section 415 of IPC are not at all present. The entire allegation in the complaint hinges on the transaction between accused No.1 and respondent No.2 – complainant. The material on record does not indicate that there was inducement with a dishonest intention by the petitioner from inception.

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Even if allegations in the complaint are taken at face value as true, the basic essential ingredients of cheating insofar as petitioner - accused No.2 are missing. The allegations insofar as present petitioner are concerned are found to be bald, vague and are incapable of providing sufficient facts to constitute any offence under Section 420 of IPC insofar as petitioner is concerned.

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Now, the question that needs to be

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examined by this Court is as to whether allegation in the complaint constitute any criminal offence under Section 420 of IPC. The only allegation in the complaint is that accused No.1 has prevailed over the present petitioner – accused No.2 and therefore, the transaction is not concluded. The Hon’ble Apex Court in the case of UMA SHANKAR GOPALIKA VS. STATE OF BIHAR⁴ held that every breach of contract would not give rise to an offence of cheating and only in those cases of breach of contract would amount to cheating where there was any deception played at the very inception. The Hon’ble Apex Court has held that even if the intention to cheat has developed later on, the same cannot amount to cheating. The Hon’ble Apex Court in the case of HRIDAYA RANJAN

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4 (2005) 10 SCC 336

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PRASAD VERMA V. STATE OF BIHAR⁵ has held that

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mere breach of contract in itself cannot give rise to criminal prosecution for cheating and the said dispute at the most may give rise to civil liability of damages. The Hon’ble Apex Court in the case of VESA HOLDINGS (P) LIMITED VS. STATE OF KERALA⁶ held that unless the complaint discloses any criminal offence, the proceedings should not be encouraged when it is found to be malafide or otherwise an abuse of process of the Courts.

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It is relevant to refer the following

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judgments in support of the complaint, which is purely civil in nature, which are extracted as under;

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(i) R. Nagendar Yadav v. State of Telangana and Anr reported in (2022) SCC OnLine 1725.

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5 (2004)4 SCC 168

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6 (2015)8 SCC 293

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(ii) Madmeme LLC and Ors. v. Horse BPO Solutions Private Limited reported in 2018 13 SCC 374.

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(iii) M. Srikanth v. State of Telangana reported in (2019)10 SCC 373.

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(iv) Sri. Govindraj v State of Karnataka, in W.P No. 101203/2021.

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(v) Usha Chakraborty and Anr. v. State of West Bengal and Anr., reported in 2023 SCC OnLine SC 90.

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(vi) Vinod Natesan v. State of Kerala and Ors, reported in (2019) 2 SCC 401.

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(vii) Satishchandra Ratanlal Shah v. State of Gujarat and Anr. reported in (2019) 9 SCC 148.

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The Hon’ble Apex Court in the aforesaid judgments has categorically held that when the contents of the complaint, on plain reading, are found

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to be purely civil in nature, the Courts are bound to

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exercise jurisdiction under Section 482 of Cr.P.C and quash the proceedings. Thus, the essence of cheating is initial deception and dishonesty and not the subsequent inevitability of promiser to fulfill the promise or undertaking. As culled out supra, respondent No.2 – complainant's grievance is that accused No.1 is not permitting respondent No.2 – complainant to complete the transaction.

¶177

The material on record also discloses that the alleged entire payment is made to accused No.1 and not to the present petitioner, who is accused No.2 and therefore, any transaction between accused No.1 and respondent No.2, the present petitioner cannot be hauled upon the allegation of cheating.

¶178

Even if the entire allegation in the complaint are accepted, what emerges is that it is purely civil dispute arising out of contractual relationship between

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respondent No.2 and accused No.1 and therefore, respondent No.2 – complainant cannot launch a criminal case against the petitioner by converting into a criminal offence.

¶181

On a coalesce of the afore-quoted judgments of the Hon’ble Apex Court, what would unmistakably emerge is, for an offence punishable under Section 420 of IPC, there have to be the ingredients as found in Section 415 of the Indian Penal Code.

¶182

Respondent No.2 – complainant cannot be permitted to launch criminal proceedings against the present petitioner – accused No.2 to settle his scores insofar as accused No.1 is concerned. Respondent No.2 – complainant cannot be permitted to settle civil disputes and claims, which do not involve any criminal offence by applying pressure to the criminal

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prosecution insofar as petitioner – accused No.2 is concerned.

¶185

In the light of the observations made by this Court and considering the materials on record, this Court is of the view that this is a fit case to exercise inherent powers for securing ends of justice. The learned Magistrate has virtually misread the scope of enquiry under Section 202 of Cr.P.C. The entire basis of ordering enquiry under Section 202 of Cr.P.C is for want of sufficient materials. The Investigating Officer, while acting under Section 202 of Cr.P.C has exceeded his power by registering a crime. The learned Magistrate by treating the report as a final report has taken cognizance of the same and has come to the conclusion that it is a triable case. Even charge sheet does not disclose any offence insofar as petitioner is concerned.

¶186

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The learned Magistrate has also not taken note of the fact that power to order police investigation under Section 156(3) is different from the power to direct investigation conferred by Section 202(1) of Criminal Procedure Code.

¶188

In the present case, learned Magistrate having ordered enquiry under Section 202(1) was not at all competent to switch back to pre-cognizance stage and avail Section 156(3). If the learned Magistrate while ordering an enquiry under Section 202(1) deemed that the material on record is insufficient to take a decision, obviously erred in taking cognizance again by treating the report of an Investigating Officer as a charge sheet. The learned Magistrate erred in accepting the charge sheet submitted by the Investigating Officer under Section 202 of Cr.P.C.

¶189

¶190

In view of my findings on both counts, the present proceedings pending in C.C.No.13283/2016 on the file of the learned IX Additional Chief Metropolitan Magistrate, Bengaluru for the offence punishable under Section 420 read with Section 34 of Indian Penal Code are not sustainable and the same are liable to be quashed, insofar as petitioner - accused No.2 is concerned.

¶191

For the foregoing reasons, I proceed to pass

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the following;

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ORDER

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(i) The Criminal Petition is allowed;

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(ii) The proceedings pending in C.C.

¶196

No.13283/2016 on the file of the learned IX Additional Chief Metropolitan Magistrate, Bengaluru, for the offence punishable under Section 420 read with Section 34 of Indian Penal Code are hereby quashed,

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insofar as petitioner - accused No.2 is

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concerned.

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Sd/JUDGE

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Yennarkay R Rajaratnam v. State of Karnataka by

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Yennarkay R Rajaratnam v. State of Karnataka by

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