Chandigarh: The Punjab and Haryana High Court has quashed a criminal case registered against a property dealer in connection with an alleged property sale dispute, holding that a civil dispute arising out of a failed sale transaction cannot be given the colour of a criminal offence merely to pressurise the accused.
Justice N.S. Shekhawat allowed the petition filed by Praveen Chanda @ Pravin Chanda under Section 482 of the Code of Criminal Procedure (CrPC) and quashed FIR No. 0427 dated 13.10.2019, registered at Police Station DLF Phase-I, Gurugram, under Sections 406, 420 and 120-B IPC, along with all consequential proceedings against the petitioner.
The High Court observed that the petitioner was only acting as a property dealer and had signed the agreement to sell merely as a witness. Since he had neither received any money from the complainant nor was he the owner of the property, continuation of criminal proceedings against him would amount to abuse of the process of law.
Background Of The Case
The FIR was registered on the complaint of Radhika, wife of Sandip Tandon, against Kshama Puri, R.B. Puri and the present petitioner. The allegations arose from an agreement relating to sale of a residential property.
According to the complainant, Kshama Puri and R.B. Puri had agreed to sell their house for a sale consideration of ₹4 crore. The parties were introduced through the petitioner, who was working as a property dealer.
The sellers allegedly informed the complainant that an outstanding loan amount of approximately ₹69.53 lakh was pending against the property and that the same had to be cleared before execution of the sale deed.
The complainant alleged that payments were made towards the transaction, including payment of the outstanding loan amount through a demand draft in favour of DHFL Limited. However, despite the agreed date for execution of the sale deed, the sellers allegedly failed to complete the transaction.
The complainant claimed that when the sellers did not appear for execution of the sale deed before the Sub-Registrar, he was allegedly cheated, resulting in registration of the FIR under Sections 406, 420 and 120-B IPC.
Petitioner’s Defence Before High Court
The petitioner approached the High Court seeking quashing of the FIR and all subsequent proceedings.
His counsel argued that the petitioner was neither the owner of the property nor the seller in the transaction. He had not received any part of the consideration amount paid by the complainant.
It was submitted that the agreement to sell dated 13.02.2019 was executed between the complainant and Kshama Puri and R.B. Puri, while the petitioner had only signed the document as a witness.
The petitioner argued that the entire sale consideration was received by the actual owners and no monetary benefit was obtained by him.
It was further submitted that after the dispute arose, the complainant had already filed civil proceedings for specific performance and permanent injunction against the actual sellers.
Subsequently, the complainant entered into a compromise with the legal representative of the original accused persons, and the FIR already stood quashed against Varun Puri by another Bench of the High Court.
The petitioner contended that continuing criminal proceedings only against him, despite settlement of the dispute with the main parties, would amount to misuse of the criminal justice system.
State Opposes Quashing Of FIR
The State opposed the petition and argued that serious allegations were made against the petitioner.
The State submitted that the allegations required examination during trial and therefore the FIR should not be quashed at the initial stage.
However, the counsel appearing for the complainants could not dispute certain important facts, including that the petitioner was only a property dealer in the transaction and had not received any payment from the complainants.
It was also admitted that the complainants had already settled their disputes with the principal accused persons and no other civil or criminal proceedings relating to the transaction were pending except the present criminal proceedings.
High Court Explains Scope Of Section 482 CrPC
The High Court examined the scope of its inherent powers under Section 482 CrPC.
The Court reiterated that Section 482 CrPC preserves the inherent jurisdiction of the High Court to pass appropriate orders to prevent abuse of the process of any court and to secure the ends of justice.
The Court referred to the Supreme Court judgment in Ajay Mitra vs State of Madhya Pradesh, which recognised that criminal proceedings can be quashed where the FIR does not disclose the commission of an offence or where continuation of proceedings would amount to abuse of process.
The Court also referred to the principles laid down in State of Haryana vs Bhajan Lal, where categories were identified in which criminal proceedings may be quashed, including cases where allegations even if accepted completely do not constitute an offence.
Criminal Law Cannot Be Used To Settle Civil Disputes
A significant observation made by the High Court was that parties cannot convert purely civil disputes into criminal cases merely to exert pressure.
The Court noted that the dispute primarily arose from a property transaction and the failure to execute the sale deed. Such disputes ordinarily fall within the domain of civil law.
The Court observed that criminal proceedings cannot be used as a tool for harassment or vengeance when the basic ingredients of criminal offences are not established.
The Court relied upon the principle that superior courts have a duty to prevent innocent persons from being subjected to unnecessary criminal prosecution based on untenable allegations.
No Criminal Liability Against Mere Witness To Agreement
The Court found that the petitioner had no role as seller or beneficiary in the transaction.
It was specifically noted that Kshama Puri and R.B. Puri had agreed to sell the property, while the petitioner had merely signed the agreement as a witness.
The Court also noted that the petitioner had not received any money from the complainant.
The Court held that criminal proceedings against a person who was neither responsible for execution of the sale deed nor beneficiary of the transaction could not be sustained.
Settlement With Main Accused Also Considered By Court
The Court also considered the fact that the principal accused persons had already settled the dispute with the complainants.
The legal representative of Kshama Puri and R.B. Puri had executed the sale deed in favour of the complainant after compromise.
The FIR had already been quashed against Varun Puri, who was the legal representative of the original accused persons.
In these circumstances, the High Court held that continuation of criminal proceedings only against the petitioner would serve no purpose and would amount to abuse of process.
High Court Allows Petition, Quashes FIR
After considering the facts and legal principles, the Punjab and Haryana High Court allowed the petition filed by Praveen Chanda.
The Court ordered that FIR No. 0427 dated 13.10.2019 registered under Sections 406, 420 and 120-B IPC at Police Station DLF Phase-I, Gurugram, along with all consequential proceedings, shall stand quashed qua the petitioner only.
The Court clarified that the order was limited to the petitioner and was passed considering his specific role in the transaction.
Legal Significance Of The Judgment
The judgment reinforces the settled principle that criminal proceedings cannot be initiated merely because a commercial or property transaction has failed.
The Court has once again highlighted that allegations of cheating require the existence of dishonest intention from the beginning of the transaction. A mere breach of contractual obligation or failure to complete a sale agreement does not automatically constitute a criminal offence.
The ruling will serve as a reminder that criminal law cannot be used as a substitute for civil remedies and that courts must prevent misuse of criminal proceedings against persons who have no direct role in the alleged offence.
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