Full Judgment Text
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NOS. 733-734 OF 2009
[ARISING OUT OF S.L.P. (CRIMINAL) NOS. 7687-7688 OF 2007]
K. ASHOKA … APPELLANT
Versus
N.L. CHANDRASHEKAR & ORS. …
RESPONDENTS
J U D G M E N T
S.B. SINHA, J.
1. Leave granted.
2. N.G.E.F. Employees House Building Cooperative Society Limited
(for short, “the society”) is a society incorporated and registered under the
Karnataka Cooperative Societies Act, 1959 (for short, “the Act”).
Appellant herein was a Director of the society. He filed a complaint
petition alleging inter alia that the respondents herein who were the
office-bearers of the society, earned a huge amount for themselves by
alloting a site bearing No. 509 measuring 30’ x 40’ for a sum of Rs.
2,40,000/- to one Gopal, a name lender who in turn, sold the said site for
a sum of Rs. 28,00,000/- to one Hanumanthegowda by a deed of sale
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dated 3.7.2006. However, in the sale deed, the consideration amount was
shown as Rs.10,20,000/-.
It was contended that the respondents in connivance with the said
Gopal made illegal gain as the market value of the said property was
about Rs.28 lakhs.
3. The following facts are admitted.
The land in question was acquired in the year 1985-86. The society
formed a layout and sites were allotted to its members. However, few
sites remained vacant. One of the persons whose lands were acquired for
the society, namely, Munivenkatappa (father of Gopal) allegedly had
requested the society to release one acre of land for his personal use,
pursuant whereto, the society resolved to release 337” x 132” of land in
favour of his family. Another application was filed by M. Gopal, son of
said Munivenkatappa, in terms whereof request was again made to the
said society for allotment of the land. The said request was received on
27.3.2006 and allotment of a site bearing No. 509 measuring 30’ x 40’ for
a sum of Rs.2,40,000/- was made and a deed of sale was executed in his
favour on 7.4.2006. A possession certificate was also issued.
Within a period of three months, said Gopal sold the said property
in favour of Hanumanthegowda for a sum of Rs.28,00,000/-. However, in
the sale deed, the consideration amount was shown as Rs.10,20,000/-.
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4. Indisputably, a complaint was filed before the Joint Registrar of
Cooperative Societies to cause an investigation thereinto. On or about
29.12.2006, a report was submitted by him opining that the office bearers
of the society, namely, the respondents herein in connivance with Gopal
and by making him a tool in their hands, allotted the site which was sold
for a sum of Rs. 27,60,000/-. A recommendation for recovery of the
amount from the office bearers of the society was also made. In his
report, it was furthermore stated:
“There is no site called No.509 in the approved
plan of the Society. The Society has not
produced any documents/records to show that
the said Site No. 509 is released by BDA. The
site No. 142 is existing and the same is allotted
to one Smt. Shailaja Swamy and registered the
same in her name by the Society as on
23/2/1995 itself. The certified copy of the Sale
Deed is produced herewith and marked as
“Annexure 13”.
As per the Orders of the Hon’ble High
Court of Karnataka, it has come to know that
the alternative/another site was given to Smt.
Shailaja Swamy during the period of Special
Officer. The copy of the same is marked as
“Annexure 14”. It is further come to know that
Smt. Shailaja Swamy had approached the
Hon’ble High Court of Karnataka by filing a
writ petition against the Society on the grounds
that the alternative site allotted to him cannot be
made Khatha in her name because the said site
is a C.A. site, which has been allotted and
registered to her by the Society. When this
matter is going on, how can the Society allot the
same i.e. No. 142 by naming it as Site No. 509
and illegally allotting to Sri Gopal and
registering the same by the Society. This is an
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illegal act committed by the Board of
Directors.”
5. Respondents, however, contend that the said enquiry was
conducted without hearing them and other office bearers of the Society;
no notice had been issued to them and no opportunity of being heard or to
participate in the enquiry proceedings had been provided. It is
furthermore contended that the proceedings before the Joint Registrar is
still pending.
6. Thereafter, on the basis of the report submitted by the Joint
Registrar, a complaint petition under Section 200 of the Code of Criminal
Procedure (for short, “the Code”) in respect of commission of an offence
under Section 420 read with Section 34 of the Indian Penal Code (for
short, “the IPC”) was filed by the appellant, inter alia, alleging:
“10. The Complainant further submits while
allotting site No. 509 to Sri Gopal the
Accused have played a big fraud on the
society. They do not know that there is
already a site bearing No. 142 which is
existing on the same land. The Accused
have shifted site No. 509 on site No. 142
and registered the same in favour of Sri
Gopal. The Complainant has obtained a
certified copy of site No. 142 and site No.
509 and surprised to find both the
schedules one and the same. The sub
registrar K R Puram Bangalore who is
having the copy of approved plan of
Sadananda Nagar Layout with him should
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have observed this fraud and objected for
registering this site. While shifting any
site by the society in the approved plan
the society will have to obtain permission
from the commissioner TPM Bangalore
Development Authority which the
Accused have failed to do the same.
BDA has not released this site at all.
11. The Complainant humbly submits Sri
Gopal or any of his family members are
not eligible for any site from the society
since the society has already given 1.00
acre of land to their family way back in
1986 itself. The accused have made Sri
Gopal as Benami Owner and allotted a
site in his favour at Rs.200/- per square
feet and sold the same through him at Rs.
2,500 per square feet which is the market
value at Sadananda Nagar Layout and
distributed Rs.28,00,000 which is a big
booty among all. This is a clear case of
misuse of their position as office bearers
and directors, cheating, fraud and
working against the interest of the
society.”
7. The said complaint petition filed by the appellant was registered as
CC No. 22069 of 2007 in the Court of Xth Additional Chief Metropolitan
Magistrate, Mayohall, Bangalore. The learned Magistrate took
cognizance of the offence under Section 420 read with Section 34 of the
IPC and issued summons to the respondents.
8. Respondents thereafter filed an application under Section 482 of
the Code being Criminal Petition Nos. 838 and 910 of 2007 in the High
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Court of Karnataka at Bangalore for quashing the entire criminal
proceedings initiated by appellant. By reason of the impugned judgment,
the said petition has been allowed by the High Court, holding:
“12. At the very outset, it may be mentioned
that according to the complainant, there is no
site bearing No. 509 in the layout formed by the
Society. It is also submitted that the site bearing
No. 142 is already sold but the boundaries of
that site is mentioned to the site bearing No.
509. The complainant has not made the said
Gopal allottee either as witness or an accused.
Taking into consideration the facts of the case,
the first aggrieved person would be the allottee
Sri Gopal, as the site already sold is allotted to
him. It is stated that the site is sold by Mr.
Gopal to Hanumanthe Gowda. Thus, the said
purchaser Hanumanthe Gowda would have been
another aggrieved party to sue the vendor Mr.
Gopal. There is no material placed on record to
show that said Gopal has sold the site to Mr.
Gowda. There is no material placed on record
to show that said Gopal has sold the site to Mr.
Hanumanthe Gowda for a sum of
Rs.28,00,000/- and that money was got
distributed among the accused. All the
averments made in the complaint are nothing
but imaginary. It is crystal clear that the
respondent – complainant wants to settle his
score against the accused/members of the
society by abuse of process of law. Learned
Magistrate erred in taking cognizance for the
offence alleged against the accused. It is a fit
case for quashing the proceedings.”
9. Mr. G.V. Chandrashekar, learned counsel appearing on behalf of
appellant would urge:-
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i. Appellant being a member of the society and having an
interest in the running of the affairs thereof could maintain
the aforementioned complaint petition.
ii. The allegations made in the complaint petition disclosed a
cognizable offence and, thus, the High Court committed a
serious error in passing the impugned judgment.
iii. Although Gopal or for that matter Hanumanthegowda had
not been made as accused, they can be summoned at a later
stage wherefor such an application can be filed in the inquiry
or trial.
iv. Section 415 of the IPC providing for commission of an act of
cheating also in respect of the property, the High Court
committed a serious error in opining that no case has been
made out for issuance of summons against the respondents.
10. Mr. S.N. Bhat and Ms. Kiran Suri, learned counsel appearing on
the behalf of the respondents, on the other hand, would contend:
i. No deception within the meaning of Section 415 of the IPC
having been committed by the respondents, the learned
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Magistrate committed a serious error of law in taking
cognizance of an offence under Section 420 of the IPC.
ii. The allegations made in the complaint petition even if they
are taken at their face value and accepted in their entirety
would merely disclose a case of misuse of power making
allotment in favour of Gopal at a lower price, which being an
offence within the meaning of the Act, only a complainant in
terms of the provisions thereof was maintainable.
iii. No reliance could be placed on the report of the Joint
Registrar by the learned Magistrate as the matter is sub
judice before the High Court.
iv. The complaint petition filed by the appellant is an abuse of
the process of the court inasmuch as he filed the complaint
petition after he lost the election.
11. It is now a well settled principle of law that the High Court in
exercise of its inherent jurisdiction under Section 482 of the Code may
quash a criminal proceeding inter alia in the event the allegations made in
the complaint petition even if they are taken at their face value and
accepted in their entirety does not disclose commission of a cognizable
offence.
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12. Some of the principles which would be attracted for invoking the
said jurisdiction have been laid down in Indian Oil Corpn. vs. NEPC
India Ltd. & ors. [(2006) 6 SCC 736], are:
“(i) A complaint can be quashed where the
allegations made in the complaint, even if they
are taken at their face value and accepted in
their entirety, do not prima facie constitute any
offence or make out the case alleged against the
accused.
For this purpose, the complaint has to be
examined as a whole, but without examining the
merits of the allegations. Neither a detailed
inquiry nor a meticulous analysis of the material
nor an assessment of the reliability or
genuineness of the allegations in the complaint
is warranted while examining prayer for
quashing of a complaint.
(ii) A complaint may also be quashed where it is
a clear abuse of the process of the court, as
when the criminal proceeding is found to have
been initiated with maladies/malice for
wreaking vengeance or to cause harm, or where
the allegations are absurd and inherently
improbable.
(iii) The power to quash shall not, however, be
used to stifle or scuttle a legitimate prosecution.
The power should be used sparingly and with
abundant caution.
(iv) The complaint is not required to verbatim
reproduce the legal ingredients of the offence
alleged. If the necessary factual foundation is
laid in the complaint, merely on the ground that
a few ingredients have not been stated in detail,
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the proceedings should not be quashed.
Quashing of the complaint is warranted only
where the complaint is so bereft of even the
basic facts which are absolutely necessary for
making out the offence.
(v) A given set of facts may make out : (a)
purely a civil wrong; or (b) purely a criminal
offence; or (c) a civil wrong as also a criminal
offence. A commercial transaction or a
contractual dispute, apart from furnishing a
cause of action for seeking remedy in civil law,
may also involve a criminal offence. As the
nature and scope of a civil proceedings are
different from a criminal proceeding, the mere
fact that the complaint relates to a commercial
transaction or breach of contract, for which a
civil remedy is available or has been availed, is
not by itself a ground to quash the criminal
proceedings. The test is whether the allegations
in the complaint disclose a criminal offence or
not.”
13. The primary allegation against the respondents in the complaint
petition does not make out an offence only under the provisions of
Section 109 of the Act as contended by Mr. Bhat but also other offences.
A legal embargo in filing a complaint is contained in Section 109(6) of
the Act, which reads as under:-
“ 109. (6) . If any person—
(i) not eligible to become a member under Section 17
applies to a co-operative society for admission as a
member, or becomes a member, or after ceasing to be
a member under sub-section (2) of that section acts as
or exercises any rights or privileges of a member of
any such co-operative society;
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(ii) exercise the rights of a member in contravention of the
provisions of Section 19;
(iii) willfully fails to furnish the information or document
in contravention of the provisions of sub-section (3) of
Section 87;
(iv) grants a lease of the mortgaged property in
contravention of sub-section (1) of Section 95,
shall be punishable with imprisonment for a
term which may extend to three months or with
fine which may extend to three thousand
rupees.”
14. The allegations made in the complaint petition disclose
commission of a cognizable offence. A conspiracy is said to have been
entered into for putting the society and consequentially the members to a
great loss. A conspiracy is also said to have been hatched for the
aforementioned purpose as a result whereof not only an allotment was
made in favour of a person who was not entitled thereto but also allotted
plot was assigned in favour of a third party for a huge sum.
15. Whether the allegations made in the complaint petition are correct
or not have to be considered during trial. The High Court in its impugned
judgment proceeded inter alia on the premise that the appellant has no
locus standi. It may be true that Gopal and Hanumanthegowda had not
been impleaded as accused but that by itself may not be a ground for
quashing the order of cognizance taken against the respondents. If the
role played by them in regard to that part of the conspiracy is only to
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make Gopal a member and got the land allotted in his name by way of
camouflage, appellant as a member of the society had a locus standi to
file a complaint.
16. The High Court furthermore, in our opinion, is not correct to opine
that no document has been produced by the appellant to show that Gopal
made an assignment of the land in favour of Hanumanthegowda.
Evidently, no document can be produced for the purpose of showing that
the actual amount of consideration for the said transaction amounted to
Rs.28,00,000/- although ostensibly the amount of Rs.10,20,000/- has
been shown to be amount of consideration in the registered document. It
may be true that the question as to whether the report of the Registrar can
be relied upon for the purpose of showing as to how the act of cheating
has been committed by the respondents is a matter which must be
considered at the time of trial but there cannot be any doubt whatsoever
that so long as the report is not set aside, the same could form the basis
for forming of an opinion at least for the purpose of proceeding against
the respondents that they manipulated the records of the cooperative
society to make unlawful gain for themselves and causing unlawful loss
to the society.
In Indian Oil Corpn. (supra) whereupon Ms. Suri has placed strong
reliance, this Court in the facts and circumstances of the case therein
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although opined that no case of “criminal breach of trust” as defined
under Section 405 of the IPC has been made out, holding:
“32. The essential ingredients of the offence of
‘cheating’ are: (i) deception of a person either
by making a false or misleading representation
or by other action or omission, (ii) fraudulent or
dishonest inducement of that person to either
deliver any property or to consent to the
retention thereof by any person or to
intentionally induce that person to do or omit to
do anything which he would not do or omit if he
were not so deceived and which act or omission
causes or is likely to cause damage or harm to
that person in body, mind, reputation or
property.”
Noticing some earlier decisions, it was opined:
“36. In this case, the complaints clearly allege
that the accused with fraudulent intention to
cheat and defraud the IOC, had induced IOC to
resume supply of aircraft fuel on cash and carry
basis, by entering into a further agreement dated
20.9.1997 and undertaking to clear the
outstanding amount of Rs. 18 crores
approximately within the time stipulated in the
Hypothecation Agreements. The sum and
substance of the said allegation read with other
averments extracted above, is that NEPC India,
having committed default in Page 3170 paying
the sum of Rs. 18 crores, entered into a fresh
agreement dated 20.9.1997 agreeing to clear the
outstanding as per a fresh schedule, with the
dishonest and fraudulent intention of pre-
empting and avoiding any action by IOC in
terms of the hypothecation deeds to take
possession of the aircrafts. Though the supplies
after 20.9.1997 were on cash and carry basis,
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the fraudulent intention is alleged to emanate
from the promise under the said agreement to
make payment, thereby preventing immediate
seizure (taking possession) of the aircrafts by
IOC. This allegation made in addition to the
allegation relating to removal of engines, has
been lost sight of by the High Court. All that is
to be seen is whether the necessary allegations
exist in the complaint to bring the case within
Section 415. We are clearly of the view that the
allegations in the complaint constitute such an
offence. We are not concerned with the proof of
such allegations or ultimate outcome of trial at
this stage.”
17. The opinion of the High Court that the averments made in the
complaint petition are imaginary is not based on any material. Even
assuming that the complainant had a score to settle against the accused,
the same by itself may not be a ground to quash the entire criminal
proceedings particularly in view of the fact that at least a prima facie case
has been established in view of the report of the Registrar.
18. Section 109 of the Act provides for commission of offences under
the said Act. Therein, no statutory embargo has been placed for a court to
take cognizance of an offence under the provisions of IPC. If the
allegations made in the complaint petition or in the first information
report make out a case under the IPC, Section 111 of the Act, to which
our attention has been drawn, would constitute no bar for maintenance
thereof being applicable only in respect of offences committed under the
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said Act. The said statutory interdict therefore cannot be extended in
regard to commission of an offence under any other Act.
19. For the reasons aforementioned, the impugned judgment of the
High Court cannot be sustained, which is set aside accordingly. The
appeals are allowed. It is made clear that we have not entered into the
merit of the matter and, thus, all contentions of the parties shall remain
open.
……………….…..………….J.
[S.B. Sinha]
.………………..……………J.
[Cyriac Joseph]
New Delhi;
APRIL 15, 2009