Allowed

Mrs G Chitra Poornima v. State by

Karnataka HC2 Feb 2024CRL.P/2720/2020

Case brief

AI extract

What is this about?

Petitioners sought quashing of an FIR and charge sheet for criminal breach of trust and cheating arising from a joint development agreement dispute. The court found the complainant suppressed that arbitration had concluded against it, held the prosecution gave criminal flavour to a civil dispute, and quashed the charge sheet.

What did the court decide?

Charge sheet dated 25.06.2020 in Crime No.97/2020 pending before the 4th ACMM, Bengaluru, quashed; respondent No.2 warned against initiating further proceedings concerning the JDAs.

Mrs G Chitra Poornima Vs State by — Contract and Commercial Disputes | Karnataka HC (2024)

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 2^nd DAY OF FEBRUARY, 2024

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BEFORE

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THE HON’BLE MR. JUSTICE R.NATARAJ

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CRIMINAL PETITION NO.2720 OF 2020

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BETWEEN:

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MRS. G. CHITRA POORNIMA, W/O LATE MR. GEORGE THANGIAH, AGED ABOUT 52 YEARS, RESIDING AT NO.6, COMMISSARIAT ROAD, BENGALURU-560 025.

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MR. VIJAYA SHEKAR THANGIAH S/O LATE MR. GEORGE THANGIAH, AGED 62 YEARS, RESIDING AT NO.6, COMMISSARIAT ROAD, BENGALURU-560 025

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Digitally signed by BS RAVIKUMAR Location: HIGH COURT OF KARNATAKA

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MRS. RACHEL CHITRA PRABHAKAR W/O MR. SATHI PRABHAKAR, AGED 59 YEARS, RESIDING AT NO.6, COMMISSARIAT ROAD, BENGALURU-560 025

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…PETITIONERS

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(BY SRI. K.G. RAGHAVAN, SENIOR ADVOCATE FOR SRI. HEGDE GANAPATI, ADVOCATE)

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AND:

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STATE BY ASHOK NAGAR POLICE STATION,

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ASHOK NAGAR, BENGALURU-560025. REPRESENTED BY STATION HOUSE OFFICER, SPP, HIGH COURT OF KARNATAKA, BANGALORE-1.

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NITESH INDIRANAGAR RETAIL PRIVATE LIMITED, 7^TH FLOOR, NITESH TIMESQUARE, NO.8, M.G. ROAD, BENGALURU-560 001 REPRESENTED BY MR. SWAMY K.B. GENERAL MANAGER-LEGAL

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…RESPONDENTS

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(BY SMT. WAHEEDA M.M., HIGH COURT GOVERNMENT PLEADER FOR RESPONDENT NO.1;

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SRI. K. SUMAN, SENIOR ADVOCATE FOR SRI. SIDDHARTH SUMAN, ADVOCATE)

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THIS CRIMINAL PETITION IS FILED UNDER SECTION 482 OF THE CODE OF CRIMINAL PROCEDURE, 1973 PRAYING TO QUASH THE FIR DATED 16.03.2020 (VIDE ANNEXURE-A) REGISTERED BY THE RESPONDENT NO.1 P.S., IN CR.NO.97/2020 PENDING BEFORE THE 4^TH A.C.M.M., AT BENGALURU FOR THE OFFENCE ALLEGED UNDER SECTIONS 406, 420 OF THE IPC AND ETC.

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THIS PETITION HAVING BEEN HEARD AND RESERVED FOR ORDER ON 15.12.2023 AND COMING ON FOR PRONOUNCEMENT OF ORDER THROUGH VIDEO CONFERENCE THIS DAY, THE COURT MADE THE FOLLOWING:-

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ORDER

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The petitioners have challenged the FIR registered by the respondent No.1 against them in Crime No.97/2020 pending consideration before the 4^th Additional Chief Metropolitan Magistrate, Bangalore, for the offences alleged under Section 406 and 420 of IPC. They have also sought to quash the complaint dated 16.03.2020 filed by the respondent No.2. They have challenged the consequent charge sheet dated 25.06.2020 filed by the respondent No.1 before the 4^th Additional Chief Metropolitan Magistrate, Bangalore, for the offences punishable under Section 406, 420 read with section 34 IPC.

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An investigation was launched by respondent No.1 against the petitioners in Crime No.97/2020 on the basis of information provided by respondent No.2 where, it was stated that the husband of petitioner No.1 and father of petitioner Nos.2 and 3 (Mr. George Thangaiah) was the owner of property bearing municipal No.21, 80' road,

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Indiranagar, Bangalore and four small adjacent plots totally measuring 2,20,497 sq.ft. The accused No.1 was stated to be the power of attorney of Mr.George Thangaiah. It was alleged that respondent No.1 approached Mr. George Thangaiah with a proposal to develop the property into a world class shopping mall at its cost, which after development could be owned by both in equal portions. The respondent No.2 alleged Mr.George Thangaiah and accused No.1 hatched a criminal conspiracy, in furtherance of which, they induced respondent No.2 to enter into various MOUs and JDAs where by they allegedly induced the respondent No.2 to part with Rs.105,50,00,000/-. The respondent No.2 alleged that Mr.George Thangaiah and the accused No.1 deliberately did not disclose a crucial fact that there were several issues related to the property such as some portion of it was a kharab land, while some portion was encroachment into the nalas. The respondent No.2 alleged that these defects in the title of the property was deliberately suppressed with a criminal intent to extract

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money from respondent No.2, which they misappropriated. The respondent No.2 claimed that it had issued a notice for appointment of an arbitrator and during the arbitration proceedings when accused No.1 was cross-examined whether she knew that the property lay within the redzone, she admitted it. However, this was not disclosed at the time of entering into MOUs and JDAs. The respondent No.2 alleged that it was unable to procure the required approvals and sanctions to develop the property as envisioned in the JDA, which resulted in delay in implementation of the project. The respondent No.2 alleged that after the death of Mr.George Thangaiah, his children joined hands with accused No.1 to cheat and defraud it. Thus, it alleged that due to such fraudulent acts, the accused had all misappropriated a sum of Rs.105,50,00,000/-.

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The respondent No.1 after conducting an investigation filed a charge sheet alleging the commission of offences punishable under Sections 406, 420 read with

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Section 34 of IPC. The Trial Court took cognizance of the said offences and registered CC No.6912/2020 and issued process to the petitioners. Being aggrieved by the registration of Crime No.97/2020 and the charge sheet, this petition is filed.

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The learned Senior counsel for the petitioners

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contended that the petitioners admitted the execution of the MOUs and JDAs as stated by respondent No.2 and also that they received Rs.105,50,00,000/- from respondent No.2. He contended that the property in question was an urban property which was assessed to tax by the Municipal Corporation and all revenue documents stood in the name

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of Mr.George Thangaiah. He submits that the respondent No.2 had represented that it was builder of high repute and transaction of this size could not have been finalised without a thorough check and a due diligence report. He submitted that the alleged defects in title of Mr.George Thangaiah were introduced by respondent No.2 to browbeat the petitioners and to shift the blame on them

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that it was due to such defect that the project could not commence. He submits that the respondent No.2 was not in a position to take up the development of the project, which perforced the petitioners to terminate the JDA's and initiated proceedings for arbitration of the dispute. He contended that the petitioners claimed damages before the arbitrator for non execution of the project in time, while the respondent No.2 sought specific performance of the MOUs and JDAs. The Arbitrator in terms of a reasoned award dated 25.04.2018 allowed the claim of the petitioners and rejected the claim of the respondent No.2. The learned Senior counsel contends that the fact of the award passed by the Arbitrator was not even mentioned in the complaint lodged with respondent No.1. He further submitted that the respondent No.2 had challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996 in Com A.S.153/2018. He contended that as per the award of the arbitrator, out of a sum of Rs.105,50,00,000/- a sum of Rs.51,05,00,000/- was appropriated towards damages and the remaining was

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refunded to the respondent No.2. He submits that the respondent No.2 having lost its claim before the arbitrator has launched the instant prosecution. He submits that the respondent No.2 has therefore abused the process of law in collusion with respondent No.1. He contends that respondent No.2 has attempted to give a civil dispute a criminal flavour to launch a false prosecution against the petitioners. In this regard he relied upon the following judgments:

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a) Dalip Kaur and Others V. Jagnur and Another, (2009) 14 SCC 696;

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b) Prof. R.K. Vijayasarathy and Another V. Sudha Seetharam and Another – 2019 SCC online 208;

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c) G. Sagar Suri and Another v. State of U.P. and Others – (2000) 2 SCC 636;

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d) Indian Oil Corporation v. NEPC India Ltd. And Others – (2006) 6 SCC 736;

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e) V.Y. Jose v. State of Gujarat and Another – (2009) 3 SCC 78;

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f) Vinod Natesan v. State of Kerala and others – (2019) 2 SCC 401 .

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He contended that respondent No.1 did not even take into consideration the award passed by the arbitrator, which indicated that the investigation done by respondent No.1 was thoroughly one-sided. He submitted that if there was any defect in title, the respondent No.2 should not have sought for specific performance before the arbitrator, which only meant that there was no defect in title of Mr. George Thangaiah and hence the allegations now made are newly invented and therefore the impugned prosecution is liable to be quashed.

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Per contra, the learned Senior counsel for respondent No.2 submitted that the investigating officer has unearthed some startling facts which indicate that part of the property owned by Mr. George Thangaiah was Government land. He referred to the report of the ADLR dated 04.11.2019 and contended that 'B' kharab land was also claimed by Mr. George Thangaiah. He also referred to a letter dated 13.11.2019 addressed by the Tahsildar recommending to the Deputy Commissioner to cancel the

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grant of land as well as the conversion of the land. He then referred to the report of the Revenue Inspector, where he reported that phut kharab of 0-13 guntas was wrongly granted and 0-16 guntas of kharab was wrongly converted for non-agricultural use. He then referred to a communication dated 17.12.2019 addressed by the Revenue Secretary to the Principal Secretary of Revenue Department to cancel grant of 0-13 guntas of kharab in Sy.No.2/2, 0-01 gunta in Sy.No.7/A3, 0-02 guntas in Sy.No.7/1B. He then referred to the letter dated 19.03.2020 addressed by the Tahsildar to the Additional DGP, MTF to take suitable action against the usurpers of the kharab land. He referred to a letter dated 08.06.2020 addressed by the Tahsildar to the Inspector of police, where it was stated that 'B' kharab of 0-19 guntas existed in the total extent of 5-38 acres. He then referred to the proceedings initiated against the petitioners before the Special Court for Prevention of Land Grabbing. He therefore contended that the investigation officer has conducted a thorough investigation and submitted a

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charge sheet. He submits that the contentions urged by the petitioners are their defences which they have to establish at a trial and therefore, cannot invoke the inherent jurisdiction of this Court. He submitted that the case does have criminal overtones and is not a civil dispute as contended and therefore, submits that this petition be dismissed.

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In reply, the learned Senior counsel for petitioners contended that the allegations made now are concocted for the purpose of launching an ill-designed prosecution. He submits that the order passed by the Revenue Secretary to cancel the grant is already quashed by this Court in W.P.No.8972/2020. Similarly, proceedings before the Special Court is also stayed. He therefore contends that the respondent No.2 is not leaving any stone unturned to harass the petitioners. Even otherwise, he contends that Mr. George Thangaiah has expired and these petitioners cannot be prosecuted for the alleged illegal acts of Mr. George Thangaiah.

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The learned High Court Government Pleader submitted that since the investigating officer has invested sufficient time and energy and has collected immense material to file a charge sheet, this Court may not exercise jurisdiction to quash the proceedings. He submits that the petitioners may as well approach the trial Court for their discharge. In reply, the learned senior counsel for the petitioners submitted that the proceedings initiated by the Revenue authorities for cancellation of grant is already set at naught in W.P. No.8972/2020. He also submits that the investigation launched by Bangalore Metropolitan Task Force (for short ‘BMTF’) Police Station is questioned in W.P. No.8073/2020 and this Court in terms of an order dated 29.06.2020 has stayed the proceedings. He therefore submits that the contentions urged by the learned senior counsel for the respondent No.2 to sustain the charge sheet are liable to be rejected.

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9. I have considered the submissions made by

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the learned senior counsel for the petitioner, learned

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senior counsel for the respondent No.2 and the learned High Court Government Pleader.

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It is evident from the records placed before this Court that the predecessors of the petitioners and the respondent No.2 had locked horns over the development of a property in terms of a JDA dated 11.02.2011 and Supplementary JDA dated 11.02.2014. The predecessor of the petitioners alleged non performance of the JDA and the Supplementary JDA and claimed that they stood terminated. The respondent No.2 therefore invoked the Arbitration Clause stipulated in the JDA and Supplementary JDA and initiated proceedings for appointment of an Arbitrator. Likewise, the predecessor of the petitioners invoked the Arbitration Clause to claim various reliefs. Consequent thereto, after an Arbitrator was appointed, the predecessors of the petitioner and the respondent No.2 made their respective claims before the Arbitrator. While the predecessor of the petitioners claimed that the JDA and the Supplementary Agreement was repudiated by him

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in terms of a letter dated 19.01.2015 in view of the breach of contract by the respondent No.2, the respondent No.2 contended to the contrary and alleged that it was the predecessor of the petitioners who had committed breach of contract and therefore sought for specific performance of the JDA and the Supplementary JDA.

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The Arbitrator after considering the mutual claims of the respondent No.2 and the predecessor of the petitioners held as follows:

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“The main prayer for specific performance of the development agreement and for other monetary reliefs sought for by the respondent No.2 is rejected. The alternate prayer is allowed in part directing the predecessor of the petitioners to pay a sum of Rs.42,45,00,000/together with interest at the rate of 9% p.a. from the date of the award till payment.

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The prayer of the predecessor of the petitioners is allowed in part awarding Rs.51,05,00,000/- as damages after adjusting the same out of the non refundable deposit and the interest thereon. The balance of

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Rs.42,45,00,000/- has to be refunded to the respondent No.2.”

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The award of the Arbitrator was passed on 25.04.2018 and the predecessor of the petitioners died on 24.12.2019. The award of the Arbitrator was challenged under Section 34 of the Arbitration & Conciliation Act, 1996 which was numbered as Com.A.S No.134/2018. The said petition was disposed of in terms of the judgment dated 23.02.2022 dismissing the challenge to the award of the Arbitrator by the respondent No.2. Subsequent thereto, certain proceedings were initiated for cancellation of the grant made in favour of the predecessor of the petitioners which culminated in an order dated 19.08.2020 cancelling the grant made on 26.12.1975 and the order dated 20.01.1976, by which, the land was converted for non agricultural purposes. This was challenged by the petitioners herein in W.P. NO.8972/2020 and this Court in terms of the dated 10.09.2020 allowed the writ petition and set aside the order dated 19.08.2020 and restored the grant made in favour of the predecessors of the petitioner.

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An appeal was filed by the State Government in W.A. No.552/2020 which was dismissed on 19.04.2021. A parallel proceeding was also initiated by the BMTF Police Station alleging that the predecessor of the petitioners had encroached into Government Kharab Land which is presently questioned by the petitioners in W.P. No.8073/2020 and the proceeding initiated by BMTF police station is stayed. The respondent No.2 has now chanced upon another method to harass the petitioners by lodging the instant complaint dated 16.03.2020 accusing the predecessors of the petitioners and the petitioner No.1 that it was induced into entering into various memorandum of understanding and JDA and had extracted Rs.105,50,00,000/-. The respondent No.2 alleged that several crucial facts indicating the defects in the schedule property were not disclosed, which affected the development of the project. Curiously, though the respondent No.2 referred to arbitration notices were exchanged between the parties and that the petitioner No.1 had admitted that she was aware that the property

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lay within a red zone and that she had suppressed it from the respondent No.2, the respondent No.2 did not disclose about the conclusion of the arbitration proceedings and the passing of an award. This therefore speaks voluminously of the conduct of the respondent No.2 in trying to keep the issue burning though it was found that it was the respondent No.2 who was responsible for the breach of the JDA and other incidental agreements. As rightly contended by the learned senior counsel for the petitioners, the process of criminal law cannot be misused to harass persons such as the petitioners and in the present case it is evident that the respondent No.2 has desperately attempted to give a criminal flavour to an otherwise civil dispute. This is one of the finest cases where this Court should exercise jurisdiction to set at naught the prosecution of the petitioners else it would be a licence to misuse the process of criminal law and the Courts.

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In view of the above, this petition is allowed.

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(i) The charges sheet dated 25.06.2020 filed by the respondent No.1 in Crime No.97/2020 pending consideration before the 4^th ACMM at Bengaluru is quashed.

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(ii) The respondent No.2 is warned not to initiate any such proceedings against the petitioners concerning the JDA dated 11.02.2011 and the supplementary JDA dated 11.02.2014, or the property involved therein, which are fully concluded by the award of the Arbitrator dated 25.04.2018.

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Any pending applications also stand disposed off.

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Sd/JUDGE

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bvv

Mrs G Chitra Poornima v. State by

Case brief

What is this about?

What did the court decide?

Mrs G Chitra Poornima v. State by

Case brief

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