Judgment:
This criminal petition has been taken out under Section 482 Cr.P.C by A-1-A.Ramesh Babu in Crime No.642 of 2011 of IV Town P.S., Dwaraka Nagar, Visakhapatnam city to quash the proceeding therein.
2(a). M/s. Akshaya Gold Farms and Villas (India) Limited-2nd respondent is a Public Company Limited registered under the Companies Act, 1956. It is engaged in the business of procuring lands and urban properties for development, construction and to sell plots, farm sites and villas etcetera to customers in the State of Andhra Pradesh. The petitioner-Aatmakru Ramesh Babu is one of the promoter Directors of the company. He negotiated with A-2-Gurram Janaki Ram, A-3-Bommidala Padma Lakshmi, A-4-Gobburu Mamatha and A-5-Gurram Venkata Rangam Babji for purchase of 14,850 square feet situated at Ward No.2, Block-2, T.S.No.90, Ongole. A-2 to A-5 agreed to sell the land admeasuring 14,850 sq. feet in favour of the complainant company. They received a total consideration of Rs.15,70,00,000/-. The petitioner-A-1 instead of obtaining registered sale deeds in favour of the company obtained a sale deed bearing Document No. 4648 of 2011 for a part of the property in favour of M/s. Vani Enterprises (A-6) in which he has substantial interest. Subsequently, A-1 obtained sale deeds in his individual name from A-2 to A-5, vide sale deeds dated 19-4-2011, Doc.No.4665/2011, 20/4/2011, Doc.No.4769/2011 and 20-4-2011, Doc.No.4770/20-11. The sale consideration has been flowed from the funds of the complainant company. A-1 instead of getting the sale deeds in the name of the company obtained sale deeds in the name of M/s. Vani Enterprises (A-6), wherein he has substantial interest, and also in his individual name. Thereby, A-1 in collusion with A-2 to A-6 played fraud on the complainant company and committed breach of trust rendering themselves liable for punishment for the offences punishable under Sections 120-B, 420 and 406 read with 120-B IPC.
2(b) The 2nd respondent-M/s. Akshaya Gold Farms and Villas (India) Limited presented a complaint before I Additional Chief Metropolitan Magistrate, Visakhapatnam. The learned Magistrate forwarded the complaint to the Station House Officer, IV Town P.S., Visakhapatnam under Section 156(3) Cr.P.C. Thereupon, the SHO, IV Town P.S., Dwaraka Nagar, Visakhapatnam registered a case in Crime No.642 of 2011 and issued F.I.R. Hence this petition by A-1-A.Ramesh Babu to quash the proceeding therein. For better understanding of the accusations made against the petitioner-A-1, I deem it appropriate to refer paras 7 and 8 of the complaint, which read as hereunder:-
“7. A retrospection of the whole episode and the events unfolded till now, to the shock of the complainant reveal that, Accused No.1 is hand in glove with the Accused No.2 to 6 and had carefully planned and deliberately and cheated the Company to a tune of 15.70 Crores by fraudulently getting the property registered in his individual (Accused No.1 and in the name of M/s. Vani Enterprises, represented by Accused No.6) instead of getting the same registered in the name of the complainant. The complainant further submits that now, the Accused No.1 is trying to move out of the company by sending his resignation letter and is trying to alienate the property to third parties and in which case the complainant sustains huge loss to the tune of several crores of amount. Thus, the complainant was cheated. The complainant, on account of various representations and inducements of the Accused No.1 to 5 was made to entrust the property i.e., the funds of the complainant coupled with its mandate to A1 to get the property registered in the name of the complainant. However, the Accused No.1, having conspired with the Accused No.2 to 5 as well as A6, breached the trust and confidence reposed by the Complainant and dishonestly misappropriated and converted the same by getting the Sale Deeds registered in his name for his own use and also for the use and benefit of A6 and M/s. Vani Enterprises in violation of the directions of the Complainant and thus failed to discharge the trust. Thereby, made the Complainant to suffer loss to the value of the said property agreed to be sold by Accused No.2 to 5 in favour of the Complainant as per the Agreement of Sale. Further, A1, A5 and A6 by getting the sale deed executed in the name of M/s. Vani Enterprises exposed the complainant to long drawn litigation to get the Sale Deed cancelled and protect its financial and other interests.
8. The Director of the Company, Mr. Ramesh Babu Aatmakuri, (Accused No.1) had, with a criminal intention of cheating the Complainant, conspired with Accused No.2 to 6 and had committed an act of Fraud, Criminal misappropriation of property, cheating and Criminal Breach of Trust with full knowledge that he is not supposed to get the complainant’s properties registered in his individual name, deceived the Complainant and fraudulently got the property registered in his individual name and committed an offence u/s 120B , 420 and 406 R/W 120B of Indian Penal Code and other provisions of law”.
3. Heard Sri T.Bali Reddy, learned senior counsel appearing for the petitioner/A-1 and Sri C.Padmanabha Reddy, learned Senior Counsel appearing for the 2nd respondent-complainant.
4. Sri T.Bali Reddy, learned senior counsel submits that the disputes between the petitioner and the 2nd respondent are purely civil in nature and their disputes came to be settled by virtue of Memorandum of Understanding (MoU) dated 17-12-2010 and if there is any violation of the MoU, the remedy available to the 2nd respondent-complainant is by way of approaching the civil Court for enforcement of specific performance of the terms of the MoU. Learned counsel took me to the contents of the MoU laying much emphasis on clauses 14 to 17, which read as hereunder:-
“14. The Second Party agrees to pay all the Voucher incomes that are due to the outgoing Directors till date and the same shall be paid in the normal course of time. Henceforth, the First Party shall not be eligible for any Voucher incomes.
15. It is clearly agreed by all the parties that, the property purchased in Ongole and registered in the name of A.Ramesh Babu is to be transferred immediately on execution of this document, at the cost of the company, and the disputed property is to be cleared from all the disputes from all quarters and the same is to be transferred to the Company free from all encumbrances, Disputes etc.,
16. It is also clearly agreed by all the parties that, they will actively work hard towards selling the Ongole property at maximum possible price and from out of the proceeds, an amount of Rs.7.00 Crores shall be paid to the First Party by the Second Party. In case the property is sold for less than the cost price, the loss shall be borne by the First Party. It is also agreed by both the parties that, the selling price should mutually agreed only if the price is below the cost price.
17. This MoU is made under and shall be governed by and construed for all purposes in accordance with the laws of India. The Courts in Visakhapatnam shall have exclusive jurisdiction for the purposes of this Agreement.”
Learned senior counsel by referring the above terms of the agreement strenuously contends that the disputes between the parties relatable to sale transactions have been settled and if the terms of the MoU are not given effect, the aggrieved party has to workout his remedies by approaching the Civil Court and therefore, continuance of proceedings in Crime No.642 of 2011 against the petitioner amounts to abuse of process of Court.
5. Sri C.Padmanabha Reddy, learned senior counsel appearing for the 2nd respondent-complainant submits that the petitioner/A-1 having purchased the property on behalf of the 2nd respondent-complainant and as the sale consideration has been flown from the company’s funds, the conduct of the petitioner in obtaining sale deeds in his individual capacity from A-2 to A-5 and also in the name of A-6, wherein he has substantial interest indicates that he played fraud and committed criminal breach of trust in which case, further proceedings in Crime No.642 of 2011 cannot be interdicted by this Court at this stage, in exercise of power under Section 482 Cr.P.C.
6. The principle underlying exercise of jurisdiction by the High Court under Section 482 of the Code of Criminal Procedure is now well settled, viz., the allegations contained in the complaint petition even if given the face value and taken to be correct in its entirety, do not disclose any offence or not is the question. The legal position is well settled that if an offence is disclosed, the Court will not normally interfere with an investigation into the case and will permit investigation into the offence alleged to be completed. If the FIR, prima facie, discloses the commission of an offence, the Court does not normally stop the investigation, for, to do so would be to trench upon the lawful power of the police to investigate into cognizable offences. It is also settled by a long course of decisions of the Supreme Court that for the purpose of exercising its power under section 482 Cr.P.C. to quash an FIR or a complaint, the High Court would have to proceed entirely on the basis of the allegations made in the complaint or the documents accompanying the same per set; it has no jurisdiction to examine the correctness or otherwise of the allegations, vide decision of the Supreme Court in Satvinder Kaur v. Government of NCT of Delhi ((1999) 8 SCC 728).
7. Every High Court has inherent powers to act ex debito justitiae to do real and substantial justice, for the administration of which alone it exists, or to prevent abuse of the process of the court. Inherent powers under section 482 Cr. P. C. can be exercised: (i) to give effect to an order under the Code; (ii) to prevent abuse of the process of court, and (iii) to otherwise secure the ends of justice. Inherent powers under section 482 Cr. P. C. though wide have to be exercised sparingly, carefully and with great caution and only when such exercise is justified by the tests specifically laid down in this section itself. Authority of the court exists for the advancement of justice. If any abuse of the process leading to injustice is brought to the notice of the court, then the Court would be justified in preventing injustice by invoking inherent powers in absence of specific provisions in the Statute.
8. In State of Karnataka v. L. Muniswamy ((1977) 2 SCC 699) the Supreme Court observed that the wholesome power under section 482 Cr.P.C. entitles the High Court to quash a proceeding when it comes to the conclusion that allowing the proceeding to continue would be an abuse of the process of the court or that the ends of justice require that the proceeding ought to be quashed. The High Courts have been invested with inherent powers, both in civil and criminal matters, to achieve a salutary public purpose. A court proceeding ought not to be permitted to degenerate into a weapon of harassment or persecution. The ends of justice are higher than the ends of mere law though justice must be administered according to laws made by the legislature.
9. A three-judge Bench of the Supreme Court in Inder Mohan Goswami v. State of Uttaranchal (AIR 2008 SC 251) has examined scope and ambit of section 482 of the Criminal Procedure Code and observed that the inherent powers under section 482 should be exercised for the advancement of justice. If any abuse of the process leading to injustice is brought to the notice of the court, then the court would be fully justified in preventing injustice by invoking inherent powers of the court.
10. I have given my anxious consideration to the rival contentions of the parties. Indisputably, the petitioner as one of the Directors of the 2nd respondent-company purchased the property from A-2 to A-5 under an agreement of sale dated 17-12-2010. Not only the petitioner but also four other persons, namely, Srinivasa Rao S/o M.Rama Rao, Srinivasa Rao S/o Talluri Hari, Harinadh Babu S/o Devaki Krishnaiah and Subrahmanyam S/o Boghi Seetharamaswamy represented the 2nd respondent-company in the agreement of sale. Payments made to the landowners (A-2 to A-5) are out of the funds of the 2nd respondent-company. As per the terms of the agreement of sale, sale deeds are required to be obtained in the name of the company. The petitioner obtained registered sale deeds from A-2 to A-5 in his individual name. He also obtained a sale deed in respect of part of the property covered under the agreement of sale in favour of A-6-Vani Enterprises, wherein he has substantial interest. The material brought on record prima facie, establishes that the petitioner having paid the sale consideration out of the funds of the 2nd respondent-company, obtained registered sale deeds in his individual name.
11. Section 405 IPC defines criminal breach of trust and Section 406 deals with punishment for criminal breach of trust. The essential ingredients to constitute the offence of criminal breach of trust are:-
(1) Entrusting any person with property or with any dominion over property;
(2) The person entrusted
(a) Dishonestly misappropriating or converting to his own use that property; or
(b) Dishonestly using or disposing of that property wilfully suffering any other person so to do in violation.
(i) of any direction of law prescribing the mode in which such trust is to be discharged, or
(ii) of any legal contract made touching the discharge of such trust.
The offence consists of any one of four positive acts, namely, misappropriation, conversion, user or disposal of property.
12. The funds of the company were entrusted to the petitioner for purchase of the property from the landowners/A-2 to A-5. He having entered into an agreement of sale to purchase the property for the 2nd respondent-company proceeded to obtain registered sale deeds in his individual name as if the sale consideration has been paid out of his own funds. The conduct of the petitioner prima facie constitutes criminal breach of trust. Of course, a contention has been advanced by the learned senior counsel appearing for the petitioner that the petitioner and the 2nd respondent-complainant settled their disputes and pursuant to the settlement, MoU has been arrived at on 4-6-2011 and in case of failure of any of terms of the MoU, the petitioner has to workout his remedies by approaching competent civil Court. No doubt, the aggrieved party to the MoU can approach the civil Court for enforcement of his rights. It is well settled that the courts are not prevented from taking cognizance of the offence merely because on the same facts, a civil suit can be filed if the allegations in the complaint disclose criminal offence. The complaint should not be dismissed merely because civil liability also arises. For the purpose of quashing a complaint, it is necessary to consider whether the allegations in the complaint prima facie make out an offence or not. It is not necessary to scrutinize the allegations for the purpose of deciding whether such allegations are likely to be upheld in the trial. Any action by way of quashing complaint is an action to be taken at the threshold before the evidence is led in support of the complaint. It is, therefore, necessary to consider whether on the facts of allegations, a criminal offence is constituted or not. Overall view of the complaint averments is that the petitioner having been entrusted with the funds of the 2nd respondent-complainant to purchase the property in the name of the company misused the funds to purchase the property in his individual name. The fact of his obtaining registered sale deed in his individual name is evidenced by the registered document and also admission of the same in the MoU. Such is the material available on record, further proceedings in Crime No.642 of 2011 against the petitioner /A-1 cannot be interdicted at this stage by this Court in exercise of power under Section 482 of Cr.P.C.
13. Accordingly, the Criminal Petition is dismissed.