Jurisdiction of Criminal Court is not Permissible to be Invoked for Enforcement of Breach of Promise of an Agreement [CASE LAW]

The Indian Penal Code, 1860 - Sections 406, 420 and 120B - To constitute an offence of criminal breach of trust it is essential that the prosecution has to show first of all that the accused was entrusted with some property or with any dominion or power over it.

It has to be established further that in respect of the property, so entrusted, that there was dishonest misappropriation or dishonest conversion or dishonest use or disposal in violation of a direction of law or legal contract, by the accused himself or by someone which he willingly suffered to do. The beneficial interest in the property in respect of which criminal breach trust is alleged to have been committed, must be in some person, other than the accused and the latter must hold it on account of some person or in some way for his benefit. Section 405 contemplates the creation of relationship, whereby the owner of the property makes it over to another person to be retained by him until certain contingency arises or to be disposed of by him on the happening of certain events. So making over of property in a sense of law is a prerequisite prior to hurling allegation of having committed any criminal breach of trust. The unilateral claim of compensation alleging claim of possession over the case property, sought to be established by the complainant/opposite party, would not be itself decisive for our present purpose, supportive of prosecution under Section 405 IPC. The required criminal intention to cheat not having occurred to exist at the very initial stage of entering into transaction, which however, might have developed later on, the same cannot amount to cheating

Criminal Law - Jurisdiction of the criminal Court is not permissible to be invoked for enforcement of breach of promise of an agreement. Civil Court is there to provide adequate remedy having taken care of the violation of the terms of agreement, if there be any, in accordance law.

The Code of Criminal Procedure, 1973 - Section 482 – The Indian Penal Code, 1860 - Sections 406, 420 and 120B - the inherent jurisdiction to quash a proceeding may be exercised under three circumstances, (i) to give effect to an order under the Code (ii) to prevent abuse process of Court (iii) to otherwise secure the ends of justice.

Embarking upon an enquiry from the materials produced with an aim to ascertain the required criminal intention, supportive of prosecution under Section 406/420 IPC is limited to the extent of finding it out a prima facie case, while exercising power under section 482 of the Code of Criminal Procedure. It is also not desirable that Court must weigh the materials produced with necessary evaluation for passing a decision, required under Section 482 Cr. P.C. Due appraisal of the averments contained in the FIR/complaint in its real perspective is the prerequisite to the extent of making out a prima faice case against the accused persons.

Facts of the Case

Whether the revisionist/accused persons entered into a further sale transaction during the pendency of the civil suit, or whether the revisionist enjoyed the compensation value after some of the case properties being acquired by governmental authority committing breach of the terms of the agreement, and whether the revisionist/ accused persons created third party interest with respect to the case property during subsistence of an order of the Court, and more so in contravention of the terms of the agreement, are the matters to be appropriately adjudicated upon by the civil Court providing adequate remedy therefor. Since any exercise undertaken to colourise a civil dispute into a criminal case is always deprecated by catena of decision of the Apex Court, for the alleged failure of the terms of the agreement pertaining to the enjoyment of the compensation for a portion of the case property having been acquired by governmental authority, the instant proceeding, if allowed to be continued, would ultimately result in an abuse of the process of the Court. Upon consideration of the facts and circumstances together with the averments contained in the complaint, and also upon applying the test whether the allegations in the complaint disclosed a criminal offence or not, even if the averments are all taken at their face value and accepted in their entirety, the basic ingredients transpiring culpability/criminal intention, so as to constitute a prima facie case revealing commission of offence under Section 406/420 IPC could not be found to exist against the revisionist/accused persons. The dispute being purely civil in nature criminal proceeding should not be allowed to be continued any more for redressing the grievance, if there be any.

In the High Court at Calcutta

Criminal Revisional Jurisdiction Appellate Side

Present: The Hon’ble Justice Subhasis Dasgupta.

Judgement On : 01.04.2019

CRR No. 3280 of 2018

Suvra Dey & Ors. Vs. State of West Bengal & Anr.

For the Petitioners : Mr. Ayan Bhattachayra, Adv. Mr. Arik Banerjee, Adv. Mr. Shaunak Ghosh, Adv. Mr. Basabraj Chakraborty, Adv.

For the Opposite Party No.2 : Mr. Kallol Mondal, Adv. Mr. Noelle Dey, Adv. Mr. Krishan Ray, Adv. Mr. Souvik Das, Adv.

For the State : Mr. Binoy Kumar Panda, Adv. Mr. Subham Bhakat, Adv.

Subhasis Dasgupta, J:-

This is an application under Section 482 of the Code of Criminal Procedure praying for quashing of a chargesheet in connection with Airport Police Station Case No. 99 of 2008, now pending before the learned Chief Judicial Magistrate Barasat, North 24 Parganas.

On the basis of a complaint forwarded to police under Section 156(3) Cr. P.C, Airport Police station undertook investigation registering a case being No. 99 dated 28.6.08 and ultimately submitted chargesheet under Section 406/420/120B IPC against the revisionist accused person.

Learned advocate for the revisionist submitted that the memorandum of understanding executed by way of an agreement for sale dated 22nd December, 2004 had been admittedly entered into between the parties for execution of a deed of sale of transfer of 11.46 acres, corresponding to 34 Bighas 8 Cottahs 9 Chittacks (approx) land against a valuable consideration, as shown in the agreement, subject to compliance of certain prerequisite conditions by the opposite party no.2. as embodied in the agreement itself, which the OP No.2 having failed to comply, the revisionists could not be fastened with a charge under Section 406/420/120B of the IPC. According to the terms of agreement, the OP No.2 was under obligation to take out a clearance from the Urban Land Ceiling Authorities in order to facilitate the proposed sale, which could not be procured due to apathy exhibited on the part of the OP No.2, rendering non-performance of the obligation with respect to the terms, required to be performed by revisionist, became in capable of being performed. The prerequisite obligations not having been duly discharged by OP No.2/complainant, the deed of conveyance, as proposed to be executed could not be made. The terms incorporated in the agreement for sale being contingent upon performance of such obligations of OP No.1/complainant inclusive of holding joint measurement of the land together with obtainment of Urban Land Ceiling clearance, the allegation ofhaving committed criminal breach of trust together with cheating in consequence of a deep rooted conspiracy, according to revisionist, could not be made out form the averments contained in the complaint petition.

The further allegation of having misappropriated compensation, received from the government, for the acquisition of some of the land, agreed to be sold by executing a deed of conveyance, would not be sustainable in the given context of the case, particularly when the terms of the agreement dated 21.12.04 conspicuously authorised ‘Vendor’ to receive compensation for the land being acquired providing clause therefor that “It is specifically agreed by and between the parties that in the case of any portion of the premises mentioned in the schedule- B is acquired by the government/local bodies, HDICO or any other agency either for the construction of road or for development of the area or for any public purposes, the Vendors will be entitled to entire compensation for such acquisition”. The entire premises of the complainant case, if completely accepted on their face value, the required culpability, attributable to the acts of the revisionist, could not be ascertainable, without which the continuation of the proceeding would be an abuse of the process of Court, revisionists contended.

Learned lawyer for the revisionists also argued with all emphasis that as there was breach of the prerequisite obligations, committed by the OP No.2, in terms of the agreement already entered into between the parties, so the revisionists having understood the reluctant attitude on the part of the OP No.2 rescinded the memorandum of understanding by serving a validnotice on February 3, 2008 forwarding a cheque of Rs.60 lakh in due discharge of his bona fide, so as to get the agreement for sale rescinded and in spite of that a civil suit had already been instituted for specific performance of contract, alleging breach of terms of agreement contained therein. The cheque had been refunded by the OP No.2 for the reasons best known to him. Thus the pending proceeding, according to revisionists, if allowed to continue any more, would ultimately result in abuse of the process of the Court.

The learned advocate for the OP No.2, submitted that a proceeding already instituted on a police report ought not to be quashed in exercise of the inherent power in a case, where the complaint disclosed commission of any offence, or the allegation was not frivolous, vexatious or oppressive, and mala fide as well. The inherent power, according to OP No.2, should not be exercised to stifle a legitimate prosecution. Admittedly a civil suit (T.S No.09/2008 of Ld. Civil Judge (Senior Division) 2nd Court, Barasat) had already been instituted with prayer for specific performance of contract, alleging breach of the terms of the agreement. It was thus proposed by the OP No.2 that what a party had been deprived of by an act of cheating, could be remedied by a civil action. The same deprivation, based on denial, by way of deception, emerging from an act of cheating would also attract criminal liability. The culpability at the present circumstances of the case, according to OP No.2, could not be easily and readily ascertainable, for which trial is necessary with collection of evidence to be adduced by either of the parties to this case.

Thus, according to OP No.2, since a civil proceeding had already been initiated for breach of contract providing the remedy available under the civil laws, the same would not itself be an ground to quash the criminal proceeding, as the allegations made in the complaint provided prima facie materials to constitute the alleged offence. The defences that might be available and established in the trial should not be allowed to be taken as grounds for quashing the chargesheet at the threshold, learned advocate for the OP No.2 argued.

Learned advocate representing the State/opposite party submitted that at this stage this Court should not embark upon an enquiry for ascertainment of required intention, supportive of prosecution under Sections 406/420 IPC without conducting full trial in the given set of a facts, particularly when the OP No.2 was alleged to have been cheated not only by transferring the land, agreed to be sold even after receiving substantial amount of money in part performance of the agreement, but also by wrongful misappropriation of the compensation, received from Government after the acquisition of land during the subsistence of agreement, having committed specific breach of the terms of the agreement.

Salient facts involved in this case may however, be adverted to for addressing the issue, now under consideration, requiring decision in this case.

The OP No.2 entered into an agreement dated 21.12.04 by way of memorandum of understanding proposing to sale huge land at a consideration, specifically shown in body of the agreement. In partperformance of such agreement, the revisionist received as many as Rs.64,91,537 in all on different dates. It was specifically agreed by and between the parties that in case any portion of the premises, mentioned in scheduled B, is acquired by the Government/local bodies, HIDCO or any other agent either for the construction of road, or for development of the area, or if any public purpose, the vendors will be entitled to entire compensation for such acquisition. The case as made out in the complaint is that accused persons in exercise of their dishonest intention engineered a plan of conspiracy, and approached the complainant/OP No.2 providing lucrative offers to enter into the said agreement for sale of land. The accused persons received a total amount of Rs.64,91,537/- and even after receipt of such hefty amount declined to fulfil the promise on the part of the revisionist by executing a deed of sale. Subsequently, in January, 2008 the complainant/OP No.2 could discover that suppressing the agreement, the revisionist accused persons had already received the compensation from the government for acquisition of the land involved in the agreement. The accused persons were further alleged to have sold and attempted to make sale of rest of the property involved in the agreement ignoring the terms of agreement, that already entered into between the parties. Thus for nonexecution of deed of sale and also for misappropriation of compensation in violation of the terms of the agreement, the criminal law was set in motion.

It is trite law that the inherent jurisdiction to quash a proceeding may be exercised under three circumstances, which may be mentioned hereinbelow:

(i) to give effect to an order under the Code

(ii) to prevent abuse process of Court

(iii) to otherwise secure the ends of justice.

Embarking upon an enquiry from the materials produced with an aim to ascertain the required criminal intention, supportive of prosecution under Section 406/420 IPC is limited to the extent of finding it out a prima facie case, while exercising power under section 482 of the Code of Criminal Procedure. It is also not desirable that Court must weigh the materials produced with necessary evaluation for passing a decision, required under Section 482 Cr. P.C. Due appraisal of the averments contained in the FIR/complaint in its real perspective is the prerequisite to the extent of making out a prima faice case against the accused persons.

There were two things basically urged to be decided in this revisional application of which first one is the non-performance or breach of the promise or violation of the terms contained in connection with an agreement for sale, for the enforcement of which, a civil suit had already been filed. The civil suit instituted was for specific performance of the contract for having committed breach of the terms of the agreement, said to have been entered into between the parties. The second point, so far raised, is for misappropriation of compensation by the revisionist/accused persons in violation of the terms of the agreement, which was alleged to be an outcome of the deception practiced by the revisionist/accused persons by makingsuppression of relevant facts relating to the transaction, already entered into between the parties.

Now it is settled principle of law that jurisdiction of the criminal Court is not permissible to be invoked for enforcement of breach of promise of an agreement. Civil Court is there to provide adequate remedy having taken care of the violation of the terms of agreement, if there be any, in accordance law. A status quo order is still operative with regard to the case property involved in this case till the decision of the pending suit. In the pending civil suit evidence of the defendant is now under the process of collection. Civil Court is there to adjudicate the issue pertaining to the violation of the terms of the agreement if there be any, with reference to the available relief sought for. So far alleged violation of the terms of agreement or for alleged breach of contract, or for alleged non-performance of obligation in terms of the agreement, criminal Court has got nothing to do. Now the question requiring decision is whether some deprivation, based on denial, alleged to have been made by way of deception, consequent upon the terms of the agreement, relating to appropriation of compensation for some portion of land, agreed to be sold, being acquired by Government authority, would amount to an act of cheating incidental to the alleged criminal breach of trust or not.

Argument was advanced by the revisionist submitting that every breach of contract would not give rise to 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. Relying on a decision reported in (2005) 10 SCC 336 delivered in the case of Uma ShankarGopalika vs. State of Bihar and Another it was asserted by the revisionist that if the intention to cheat was developed later on, the same would not amount to cheating. Banking upon such decision, it was contended by the revisionist that the agreement for sale already entered into between the parties, being contingent upon the performance of some obligations, necessarily to be discharged by the private opposite party, the allegation of having committed cheating could not even be deducible revealing the required criminal intention to exist at the very initial stage, when the transaction was entered into between the parties. Adverting to an unreported decision of 2019(3) SCALE delivered in the case of Satishchandra Ratenlal Shah vs. State of Gujarat and Anr., it was focused by the revisionist with all emphasis that mere inability to return the compensation amount, received from the governmental authority for the acquisition of the land, would not give rise to criminal prosecution of cheating, unless dishonest intention was shown to exist right at the beginning of the transaction.

The revisionist had taken further shelter to a decision reported in (2019) 2 SCC 401 delivered in the case of Vinod Natesan vs. State of Kerala and Ors. wherein and whereunder it was decided that for breach of the contract for alleged violation of the terms of the agreement, the necessary ingredients could not be elicited from the averments and allegations contained in the complaint. The proceeding was accordingly allowed to be quashed upon consideration the dispute to be civil in nature.

For present purpose Para 3 of the complaint petition may be referred here which is mentioned as hereinbelow.

“3. That the said agreement dated 21.12.2004 is provided with one of the following important clauses:

“……..It is specifically agreed by and between the parties that in case any portion of the premises mentioned in the Schedule – B is acquired by the government/local bodies, HIDCO or any other agency either for the construction of road or for development of the area or for any public purpose the Vendors will be entitled to entire compensation for such acquisition……..”

In the circumstances all rights including compensation for acquisition of the part or full of the property is the asset/property of the Complainant. The Accused persons have no right, title or interest in the said acquisition of the property under the said agreement.

The averment contained in para 8 of the complaint needs to be look into, wherein it was alleged that revisionist accused persons after entering into a conspiracy received their share of compensation amount suppressing the agreement to the appropriate authority, while granting award after acquisition of some of the land involved in the case property. There left nothing mentioned about the date, when the award was passed, the date on which the award was distributed to the revisionist/accused person, and the date on which the notice was given for acquisition of some of the land involved in the case property in order to reveal the required intention,attributable to the alleged act and conduct of revisionists, supportive of a prosecution under Section 406/420 Cr. P.C.

From a xerox copy of a deed dated 2.2.08 produced at the instance of the OP No.2, executed by and between Mrs. Subhra De and 31 others and Day to Day Vinimay Pvt. Ltd and 70 others (called as purchasers), it appears that about 3.230 acres of land had been acquired by HIDCO from three (03) plots already involved in the case property from Mouza Gopalpur, J.L. No.2, Police station Rajarhat, South 24 Paragans after serving a special notice under Sub-Section (3) & (4) of Section 9of Act-I of 1894, issued by the Collector North 24 Paragans, published in the Government Gazette on 23.11.2005 to the occupiers having interest in the land with a direction requiring the title holders of the land to visit to the office of Derozio Memorial Collage at Rajarhat on 23.03.2006. Thereafter award notice was given on 17.04.2007 in connection with land acquisition Case No. LA- 4/54/05-06 in respect of R.S Dag Nos 3699,3700,3702 and 3705 requiring the rightful title holders of the plots already acquired to collect the awarded sum on 24.04.2007. The awarded sum was thus described to the respective awardee. The agreement now under reference alleging to have denied the compensation, payable to complainant/OP No.2 consequent upon the terms of agreement, as embodied therein, was admittedly entered into between the parties on 21.12.04. There was sufficient reflection in the agreement, that Rajarhat Gopalpur Municipality and/or HIDCO or District Board might moot a proposal formulating scheme for constructing a road running the proposed land, agreed to be sold, and in the event if any such acquisition is made bygovernmental authority, the owners of the property would be entitled to get compensation at the rate, to be decided by the appropriate authorities. There was further reflection in the agreement that the OP No.2/complainant held enquiries/investigation in order to ascertain the marketable title of the property proposed to be sold, and upon reaching satisfaction the complainant entered into the impugned agreement.

It was specifically agreed between the parties that during the subsistence of this memorandum of understanding or during the extended period of the agreement, the vendors shall not negotiate and/or enter into any agreement or understanding with any third party in respect of the properties mentioned in the schedule, provided, however, the vendors would be at liberty to make fresh negotiation with any other parties, if the purchaser committed any breach of the terms of conditions, as above, for which the vendors would be compelled to give formal notice for terminating MOU by registered post with AD. The moment when agreement for sale was entered into between the parties, neither any gazette publication was made for acquisition of the some of the properties involved in the case property, nor any tangible action was undertaken by the governmental authority in order to ascertain the required culpability of revisionists, suggestive of a prosecution under Section 406/420 IPC.

Relying on a decision reported in (2002) 3 SCC 89 delivered in the case State of Karnataka vs. M. Devendrappa and Anr. learned advocate for the OP No.2 submitted that the averments contained in the complaint sufficiently made out the offence to have been committed punishable underSection 406/420 IPC, irrespective of the civil suit already filed by complainant/OP impleading revisionist/accused person and some transferee purchasers as defendants therein with a prayer for specific performance of the contract. In order to establish the stand, as raised by private OP No.2, shelter was taken to a decision reported in (2012) 3 SCC 132 delivered in the case of Lee Kun Hee President, Samsung Corporation, South Korea and Ors. Vs. State of Uttar Pradesh and Ors. The argument was accordingly raised that since complainant/private OP No.2 suffered deprivation with regard to his rightful compensation, to which he was entitled to in terms of the agreement, already entered into between the parties, enjoyment and distribution of compensation amongst the revisionist accused persons causing denial thereof to complaint/OP No.2 by way of deception practised, would amount to cheating and as such criminal liability would not be allowed to go away. The culpability of the revisionist in the given set of facts would be based decided after entering into trial with a collection of the evidence, and the same cannot be reached at this stage, learned advocate for the opposite party proposed.

Capitalising the decision reported in (2006) 6 SCC 736 delivered in the case of Indian Oil Corporation vs. NEPC India Ltd. and Ors. learned lawyer for the private OP No.2 persuaded to make the Court understand that for the peculiarity of the circumstances involved in the case, in order to reveal the required criminal intention, what is the crux of the alleged offence, the probable defence, that might be put forth, could not be considered for quashing the proceeding, which was absolutely matter of trialand accordingly the same might be available during the trial. The learned advocate for the State/opposite party took a stand that the facts and circumstances together with the averments contained in the complaint disclose a criminal offence punishable under Section 406/420 IPC, and as such, there could not be any quashing as proposed.

As has already mentioned that the notice for acquisition of the land together with the notice of award was issued during the post agreement period, so the moment, when the agreement was entered into between the parties proposing for a sale of the case properties against a valuable consideration, the mens rea, i.e the required criminal intention, was conspicuously found absent there. According to own perception of the complainant/opposite party, as soon as the property was under an agreement, the complainant/ proposed purchasers would acquire all such rights and liabilities of the properties, held under the agreement.

To constitute an offence of criminal breach of trust it is essential that the prosecution has to show first of all that the accused was entrusted with some property or with any dominion or power over it. It has to be established further that in respect of the property, so entrusted, that there was dishonest misappropriation or dishonest conversion or dishonest use or disposal in violation of a direction of law or legal contract, by the accused himself or by someone which he willingly suffered to do. The beneficial interest in the property in respect of which criminal breach trust is alleged to have been committed, must be in some person, other than the accused and the latter must hold it on account of some person or in some way for hisbenefit. Section 405 contemplates the creation of relationship, whereby the owner of the property makes it over to another person to be retained by him until certain contingency arises or to be disposed of by him on the happening of certain events. So making over of property in a sense of law is a prerequisite prior to hurling allegation of having committed any criminal breach of trust. The unilateral claim of compensation alleging claim of possession over the case property, sought to be established by the complainant/opposite party, would not be itself decisive for our present purpose, supportive of prosecution under Section 405 IPC. The required criminal intention to cheat not having occurred to exist at the very initial stage of entering into transaction, which however, might have developed later on, the same cannot amount to cheating, as has already decided in the case of Uma Shankar Gopalika (supra). Whether the revisionist/accused persons entered into a further sale transaction during the pendency of the civil suit, or whether the revisionist enjoyed the compensation value after some of the case properties being acquired by governmental authority committing breach of the terms of the agreement, and whether the revisionist/ accused persons created third party interest with respect to the case property during subsistence of an order of the Court, and more so in contravention of the terms of the agreement, are the matters to be appropriately adjudicated upon by the civil Court providing adequate remedy therefor. Since any exercise undertaken to colourise a civil dispute into a criminal case is always deprecated by catena of decision of the Apex Court, for the alleged failure of the terms of the agreement pertaining to the enjoyment of the compensation for a portion of the case property havingbeen acquired by governmental authority, the instant proceeding, if allowed to be continued, would ultimately result in an abuse of the process of the Court. Upon consideration of the facts and circumstances together with the averments contained in the complaint, and also upon applying the test whether the allegations in the complaint disclosed a criminal offence or not, even if the averments are all taken at their face value and accepted in their entirety, the basic ingredients transpiring culpability/criminal intention, so as to constitute a prima facie case revealing commission of offence under Section 406/420 IPC could not be found to exist against the revisionist/accused persons. The dispute being purely civil in nature criminal proceeding should not be allowed to be continued any more for redressing the grievance, if there be any.

The chargesheet submitted in this case is accordingly quashed in connection with Air Port Police Station Case No. 99 of 2008, now pending before the learned Chief Judicial Magistrate Barasat, North 24 Parganas in connection with GR No.1526/08.

The revisional application succeeds.

Urgent photostat certified copy of this order, if applied for, be furnished to the appearing parties upon compliance with all formalities.