Cheating

Case BriefsHigh Courts

Bombay High Court: Bharati Dangre, J., addressed a matter wherein a mother was cheated of an amount Rs 16,50,000 by a man who assured her that her son will be released on bail in 15 days.

A complaint was filed wherein she stated that her son 20 years of age was in love with a minor girl and an offence was registered against him by invoking relevant provisions of the Penal Code and POCSO Act. She tried to get him released on bail.

Later, she was introduced to the present applicant through some common friends of her son, who assured her to secure the release of her son on bail and the impression given was that his father was a well-known lawyer and he will guarantee that bail is secured in fifteen days. In the moment of desperation, the Complainant allege that, she parted with an amount of Rs 16,50,000/- in total, sometimes in cash and sometimes by way of cheques. However, when her son could not walk free and when inquiries were made with the Applicant, who gave evasive response, she lodged the complaint, which resulted in invocation of Section 420 of the IPC.

Prima facie, the offence was of ‘Cheating’, it seemed that cheating is for the purpose of manipulation of Court proceedings and what had been assured was that the settlement will be worked and the term ‘settlement’ can very well be appreciated in light of the nature of the proceeding.

It is not uncommon feature that when the matter is pending before the particular Court, the parties indulge into transaction under the guise of ‘settlement’ and sometimes it so happens, even without the knowledge of counsel on record, who may prefer to argue the case on its merit. This tendency of guaranteeing the decision to come in favour of one party or the other, amounts to maligning a particular Judge and at large, the institution itself by giving an impression that justice can be bought and the Prosecutors and Judges can be sold.

 For the above-stated, High court held that vexatious attempts are rampant and the same need to be nipped in the bud.

Bench observed that the offence punishable was under Section 420 IPC, the nature of allegations levelled against applicant complainant was duped for an amount on assurance that bail will be sought by effecting ‘settlement’ makes the offence grave and the particular fact disentitled the applicant to be released on bail.

Hence, application was rejected. [Minol Anil Hudda v. State of Maharashtra, Criminal Bail Application no. 920 of 2021, decided on 21-09-2021]

Advocates before the Court:  

Mr A.I.Mookutiar with Mr Adnan A. Mookutiar i/b Mr Sanjay Bhatia for the Applicant.

Ms J.S.Lohokare, APP for the State.

Case BriefsHigh Courts

Kerala High Court: Shircy V., J., dismissed the bail application of one Sessy Xavier, the infamous fake lawyer. The Bench stated,

“The illegal activities adopted by her that too before the court of law has to be dealt with an iron hand. If leniency is taken, just considering the fact that she is a young lady, it will be a shame for the whole Judicial system and would shake the confidence of the public in judicial system.”

Background

The allegation against the petitioner was that the petitioner, who was not a law graduate, had fraudulently approached the Bar Association, Alappuzha with someone else’s enrolment number and secured membership.  She had also submitted applications before the civil courts and thus her name was also included in the panel of Commissioners and was appointed as Commissioner in so many cases. She was also said to have appeared before the Sessions courts for the accused as State brief. Shockingly, she had contested the election of the Bar Association and was elected as an office bearer of the Association.

Thus, apprehending arrest in the case registered against her under Sections 417, 419 and 420 of the IPC, the petitioner had approached the Court seeking anticipatory bail. The definite case of the petitioner was that she never appeared as an Advocate or attended the courts as an Advocate wearing the uniform prescribed for a lawyer. But she joined only as a law intern in the office of an Advocate at Alappuzha.

Eligibility of an Advocate

Section 24 (1) (c) of the Advocates Act, 1961 says that a person who has obtained a degree in law is qualified to be admitted as an Advocate, if he fulfills the conditions narrated therein. Therefore, only a person holding a Law Degree is entitled to get his name enroled in the roll as an Advocate and only after enrolment as an Advocate, one could practise the profession of law as an Advocate as reflected in the Act. Admittedly, this petitioner was not holding a degree in law and so she never enrolled as an Advocate before the Bar Council of Kerala. Rejecting the argument of the petitioner she had only joined the office of a Senior Advocate as law intern, the Bench stated the same appeared to be a false statement as revealed from the records.

Opinion and Analysis

Noticeably, the petitioner never completed her course in LL.B, though she was a student at Law Academy Law College at Thiruvananthapuram for a short period but clandestinely produced the enrolment number of another Advocate and the said number was exhibited by her as her roll number in all her activities as an Advocate before the courts. Hence, prima facie, the petitioner had not only cheated the Bar Association, the District judiciary, the general public, but also the entire judicial system.

“Doubtless that the gravity of the offences alleged against her is grave and serious in nature…The allegations levelled against her are highly serious and sensitive having grave repercussions in the society.”

The held that the Advocates’ first responsibility is towards their clients and then to the courts. So, misrepresenting or presenting as an Advocate before a client and obtaining his/her brief as if she is an Advocate, itself would amount to cheating towards the public. Noticing that she had also functioned as the librarian of the Bar Association and she was in charge of the records of the association, the Bench directed the Bar Associations to cross check and verify with the Bar council before admitting a new member, so that such incidents could be prevented in future. The Bench stated,

“If leniency is taken, just considering the fact that she is a young lady, it will be a shame for the whole judicial system and would shake the confidence of the public in judicial system.”

Conclusion

Since, application submitted by her for admission before the association was also found missing from the records along with some other applications submitted the investigating agency was directed to go deep into the matters so as to ascertain what were the offences committed by the petitioner apart from the offences she had been booked by the prosecution.

Hence, holding that to probe into those details, definitely custodial interrogation of the petitioner was essential and inevitable, her bail application was dismissed. [Sessy Xavier v. State of Kerala, Bail Appl. No. 5868 of 2021, decided on 17-09-2021]

Kamini Sharma, Editorial Assistant has reported this brief.

Appearance by:

For the Petitioner: By Adv Roy Chacko

For the State of Kerala: Adv. P.K. Vijayakumar, Sr. Pp Smt. Sreeja V

For Addl. Respondent 3: Adv. B Pramod

Case BriefsSupreme Court

Supreme Court: In a case where the detenu was accused of committing a series of criminal offences from October, 2017 to December, 2019 such as cheating in the guise of providing good profit to people by investing their money in stock market and collecting huge amounts to the tune of more than Rs. 50 lakhs, the bench of RF Nariman and Hrishikesh Roy, JJ quashed the detention and held that in such a case,

“… at the highest, a possible apprehension of breach of law and order can be said to be made out if it is apprehended that the Detenu, if set free, will continue to cheat gullible persons. This may be a good ground to appeal against the bail orders granted and/or to cancel bail but certainly cannot provide the springboard to move under a preventive detention statute.”

The case that revolved around Section 3(2) of the Telangana Prevention of Dangerous Activities Act, 1986[1], led to a wider discussion on the true import of “public order” and the Court held that a possible apprehension of breach of law and order cannot be a ground to move under a preventive detention statute.

The Court explained,

“When a person is preventively detained, it is Article 21 and 22 that are attracted and not Article 19. Further, preventive detention must fall within the four corners of Article 21 read with Article 22 and the statute in question. To therefore argue that a liberal meaning must be given to the expression ‘public order’ in the context of a preventive detention statute is wholly inapposite and incorrect. On the contrary, considering that preventive detention is a necessary evil only to prevent public disorder, the Court must ensure that the facts brought before it directly and inevitably lead to a harm, danger or alarm or feeling of insecurity among the general public or any section thereof at large.”

Public order is defined in the Explanation to Section 2(a) of the Telangana Prevention of Dangerous Activities Act to be a harm, danger or alarm or a feeling of insecurity among the general public or any section thereof or a grave widespread danger to life or public health.

Explaining that the expressions ‘law and order’, ‘public order’, and ‘security of state’ are different from one another, the Court said that,

“Mere contravention of law such as indulging in cheating or criminal breach of trust certainly affects ‘law and order’ but before it can be said to affect ‘public order’, it must affect the community or the public at large.”

Further, while it cannot seriously be disputed that the Detenu may be a “white collar offender” as defined under Section 2(x) of the Telangana Prevention of Dangerous Activities Act, yet a Preventive Detention Order can only be passed if his activities adversely affect or are likely to adversely affect the maintenance of public order.

In the case at hand, what was alleged in the five FIRs pertained to the realm of ‘law and order’ in that various acts of cheating are ascribed to the Detenu which are punishable under the three sections of the Penal Code set out in the five FIRs. A close reading of the Detention Order showed that the reason for the said Order is not any apprehension of widespread public harm, danger or alarm but is only because the Detenu was successful in obtaining anticipatory bail/bail from the Courts in each of the five FIRs. In such circumstances, the Court held that,

“If a person is granted anticipatory bail/bail wrongly, there are well-known remedies in the ordinary law to take care of the situation. The State can always appeal against the bail order granted and/or apply for cancellation of bail. The mere successful obtaining of anticipatory bail/bail orders being the real ground for detaining the Detenu, there can be no doubt that the harm, danger or alarm or feeling of security among the general public spoken of in Section 2(a) of the Telangana Prevention of Dangerous Activities Act is make believe and totally absent in the facts of the present case.”

[Banka Sneha Sheela v. State of Telangana, 2021 SCC OnLine SC 530, decided on 02.08.2021]

*Judgment by: Justice RF Nariman

Know Thy Judge| Justice Rohinton F. Nariman

For petitioner: Advocate Gaurav Agarwal

For State: Senior Advocate Ranjit Kumar

[1] Telangana Prevention of Dangerous Activities of Boot-leggers, Dacoits, Drug-Offenders, Goondas, Immoral Traffic Offenders Land-Grabbers, Spurious Seed Offenders, Insecticide Offenders, Fertiliser Offenders, Food Adulteration Offenders, Fake Document Offenders, Scheduled Commodities Offenders, Forest Offenders, Gaming Offenders, Sexual 1 Offenders, Explosive Substances Offenders, Arms Offenders, Cyber Crime Offenders and White Collar or Financial Offenders Act, 1986

Case BriefsHigh Courts

Bombay High Court: The Division Bench of V.K. Jadhav and Shrikant D. Kulkarni, JJ., observed that,

“…in the case of cheating, the intention of cheating right from the inception is important.”

Instant matter was directed towards quashing the FIR registered for the offence punishable under Sections 420, 323, 504, 506 of Penal Code, 1860.

Respondent 2 dealt used to sell onion collected from small farmers in the wholesale market on commission. Allegedly the applicants had purchased a huge quantity of onion. Respondent 2 submitted that the amount to the tune of Rs. 30,77,431/- towards the price of purchased onion remained unpaid.

Even after repeated demands for the said amount, applicant did not pay the said amount.

Analysis, Law and Decision

High Court expressed that the power of quashing the criminal proceeding should be exercised very sparingly and with circumspection and that too in a rarest of rare cases.

Court is not justified in embarking upon the inquiry as to the reliability or genuineness or otherwise of the allegations made in the F.I.R. or the complaint and that extraordinary or inherent powers do not confer an arbitrary jurisdiction on the Court to act according to its whim and caprice. 

Court noted that respondent 2 did not dispute about the filing of the complaints against the deceased for having committed the offence punishable under Section 138 NI Act.

Bench was surprised to note that the allegations were made against the deceased alone with the specific contention that he was the proprietor and in that capacity, he had issued the cheques for the balance amount.

Adding to the above, Court observed that it was not stated in those complaints that deceased Selvakumar, being a power of attorney, had issued the cheques in favour of respondent 2 for the balance amount on behalf of the firm and therefore, since he being the signatory of the cheques, the complaints under Section 138 of the Negotiable Instruments Act, 1881 came to be filed against him.

After the death of the deceased, respondent 2 changed his stand and instituted the suit wherein the applicants have been implicated as defendants.

In Court’s opinion, respondent 2 had filed the complaint with some ulterior motive and mala fide intention.

“…lodging of the complaint in the police station with some mala fide intention is nothing but an attempt to convert a civil dispute into a criminal dispute.” 

In Supreme Court’s decision of Anand Kumar Mohatta v. State (NCT of Delhi), (2019) 11 SCC 706, it was ruled that where a civil dispute is converted into a criminal case to harass the accused, the exercise of power to quash criminal proceedings warranted.

Dispute in the present matter was purely of civil nature and it did not constitute a criminal offence.

Hence, Court opined that the F.I.R. lodged by respondent 2 is nothing but an abuse of the process of the court and the same is necessary to be quashed and set aside in the interest of justice.

In view of the above discussion, criminal application was disposed off. [Thirumalai Prabhu R v. State of Maharashtra, 2021 SCC OnLine Bom 874, decided on 18-06-2021]

Advocates who appeared in this case:

Advocate for Applicants: Mrs. Sonawane Sunita G.

APP for Respondent No. 1-State: Mr. G.O. Wattamwar

Advocate for Respondent No. 2: Mr. Rahul R. Karpe

Case BriefsDistrict Court

Abhinav Pandey, MM, Tis Hazari Court directs Delhi Police to lodge FIR and investigate allegations of fraud in crypto transactions.

Complainant sought directions to the police for registration of FIR and commencement of investigation, into the offences alleged by the complainant to have been committed by the accused.

It was submitted by the complainant that he deals in the sale and purchase of bitcoins, and while doing that he always takes proof of identity before entering into any trade transactions and that he also pays taxes on the gains that he makes in such trade.

Further, it was added that the accused had purchase bitcoins on several occasions, and he used to transfer funds to the bank account of the complainant, in return for which, complainant used to transfer bitcoin to the accused’s virtual wallet on the online transaction portal “Binance”.

Complainant submitted that his bank accounts were frozen on the ground of his transaction in bitcoins to be marked as illegal transactions.

On confronting accused on the legality of the money paid by the accused against bitcoins, the accused admitted that the payments were a ‘scam’ and further he refused to return the bitcoins transferred by the complainant.

Complainant states that he was cheated by the accused and Court intervention was sought in view of the same.

Analysis, Law and Decision

Bench on perusal of the facts and submissions of the matter opined that its jurisdiction was made out in view of the provisions of Section 179, 180 and 182 of CrPC, and due to the absence of any material filed by the police to suggest to the contrary.

CRUX

Whether the complainant himself was carrying out a lawful activity, and whether he himself has come to this Court with clean hands?

Bench noted that RBI in its’ circular dated 6-04-2018 had cautioned the users, holders and traders of virtual currencies while directing the banks and financial institutions regulated by it, not to deal in virtual currencies and not to provide services eg. maintaining accounts, registering, trading, settling, clearing, giving loans and accepting VCs as collaterals, opening accounts of exchanges dealing with them etc., for facilitating any person or entity in dealing with virtual currencies.

Though, the above-stated circular was set aside by the Supreme court in its decision of Internet & Mobile Assn. of India v. Reserve Bank of India, (2020) 10 SCC 274.

But another fact observed by the Court was that the above decision of the Supreme Court did not adjudicate upon the legality of the virtual currency and there was no specific legislation too, as on date, specifically dealing with the legality and regulation of cryptocurrency.

Further, the Bench remarked that the cryptocurrency transaction will comply with the general law in force including PMLA, IPC, FERA, NDPS Act, Tax laws, and with the RBI regulations regarding KYC (know your customer), CFT (Combating of funding of terrorism) and AML (Anti-money laundering requirements).

KYC is the responsibility of the intermediary and cannot be left to the individuals be it institutional transfer or person to person trade, with the intermediary shying away from the responsibility to ensure legitimacy of the source of money and establishment of real identity of the parties.

BINANCE

Responsibility of ‘BINANCE’ is to ensure adequate safeguards against activities such as ‘mixing’ and other random cryptocurrency exchanges, which change the identity of bitcoins being held by a virtual wallet, making tracing of any illegal proceeds and any bitcoins, purchased through it, extremely difficult.

Legal and Regulatory Escape: Is there an existence?

Proceeding to make some more significant observations, Court stated that the opportunistic activities, aimed at exploiting the lack of legal regulation, with utter disregard to the identity of parties, sources and destination of funds, and illegal purposes e.g. terrorism, narcotics, illegal arms, cross-border illegal transactions for which it may be used, still do not enjoy any route for legal and regulatory escape.

Therefore, the aforementioned aspects have to be investigated in detail, and any negligence or complicity of the online VC transaction portal “BINANCE” in perpetration of hiding the proceeds of crime, and in the funding of any illegal activities through cryptocurrency has to be inquired into.

Culpability of accused

Prima facie the screenshots of the conversation with the accused imply the knowledge of the accused regarding the source of money.

Bench noted that the accused was already an accused in two other cybercrime FIRs, hence,

it is quite possible that apart from being involved in the aforesaid cyber offences, the accused may have hid the factum of illegality of money from the complainant, thereby inducing him to deliver bitcoins in exchange of money, while being aware of the fact that it may, sooner or later come under the radar of the banking system, and so it is better to get rid of the same, purchase bitcoins and multiply/ mix transactions to hide its source, and to encash it from ‘safe haven’ countries, where there is absence or lack of regulations.

 As per the Court, there was a possibility that the complainant was unaware of the designs of the accused and fell into his trap.

But complainant’s possibility of giving his consent in the entire gamut of activities could not be ruled out since he did not reveal the complete facts to the Court as he went on accepting the amount from different accounts which may not have been a mere lack of caution or due diligence.

In one of the WhatsApp conversations annexed alongwith the complainant, the accused is seen advising the complainant to clear his bank accounts immediately on receipt of any consideration against sale of bitcoins, and the complainant fails to be alarmed, thanks the accused for such advice, and admits that he immediately converts any such consideration back to cryptocurrency.

 Yet, the complainant on being fully aware of the legal consequences has approached the Court.

While concluding the matter, Bench held that cognizable offence under Sections 403, 411 and 420 of Penal Code, 1860 were prima facie committed and the real culprits need to be identified.

Bench made another crucial observation that the possibility of the complainant, accused and the online intermediary, being hand in glove cannot be denied too, whereby the accused may have been involved in hacking/cyber-crimes against unsuspecting persons, and transferring the same immediately to the complainant against bitcoins, thus creating a chain of transactions difficult to follow up till the amount is invested in any illegal activity, or is withdrawn in a ‘safe haven’ jurisdiction. The exchange intermediary may either be involved, or may just be keeping its eyes shut to all such activities carried out through it.

Lastly, the Court stated that it is possible that any of the said persons/intermediaries may come out to be innocent or just negligent, hence there is a need for police investigation to be extremely technical.

Registration of FIR does not mean that the accused is to be automatically arrested, and the concerned provisions of CrPC shall apply.

Status of investigation to be informed on 6-08-2021. [Hitesh Bhatia v. Kumar Vivekanand, Case No. 3207 of 2020, decided on 1-07-2021]

Counsel for the Complainant: Mr. Bharat Chugh and Advocate Sai Krishna.

Case BriefsSupreme Court

Supreme Court: Answering the “hotly debated” question as to in what circumstances and categories of cases, a criminal proceeding may be quashed either in exercise of the extraordinary powers of the High Court under Article 226 of the Constitution, or in the exercise of the inherent powers of the High Court under Section 482 CrPC, the bench of Indu Malhotra* and Ajay Rastogi, JJ has held that in the matter of exercise of inherent power by the High Court, the only requirement is to see whether continuance of the proceedings would be a total abuse of the process of the Court

“… the exercise of inherent power of the High Court is an extraordinary power which has to be exercised with great care and circumspection before embarking to scrutinise the complaint/FIR/charge-sheet in deciding whether the case is the rarest of rare case, to scuttle the prosecution at its inception.”

The Court observed that in order to exercise powers under Section 482 CrPC, the complaint in its entirety shall have to be examined on the basis of the allegation made in the complaint/FIR/charge-sheet and the High Court at that stage was not under an obligation to go into the matter or examine its correctness. Whatever appears on the face of the complaint/FIR/charge-sheet shall be taken into consideration without any critical examination of the same. The offence ought to appear ex facie on the complaint/FIR/charge-sheet and other documentary evidence, if any, on record.

“The Criminal Procedure Code contains a detailed procedure for investigation, framing of charge and trial, and in the event when the High Court is desirous of putting a halt to the known procedure of law, it must use proper circumspection with great care and caution to interfere in the complaint/FIR/charge-sheet in exercise of its inherent jurisdiction.”

The Court was dealing with a case where a property, belonging to 2nd Respondent was mortgaged with State Bank of Patiala and the total legal liability payable to the Bank was Rs. 18 crores. In order to clear the said dues, 2nd respondent hatched a conspiracy with a broker so as to cheat and defraud the appellants/complainants and to further misappropriate the amounts paid by the complainants as part of the deal, the 2nd respondent breached the trust of the appellants/complainants deliberately and falsely stating to the appellants/complainants that the 2nd respondent would be liable to pay a sum of Rs. 25.50 crores to the complainant if the deal is not carried forward by the 2nd respondent.

While an FIR was lodged in the case at hand for offence of cheating, arbitral proceedings were also initiated at the instance of the appellants/complainants.

On a careful reading of the complaint/FIR/charge-sheet, the Court noticed that the ingredients of the offences under Sections 406 and 420 IPC cannot be said to be absent on the basis of the allegations in the complaint/FIR/charge-sheet.

“… whether the allegations in the complaint are otherwise correct or not, has to be decided on the basis of the evidence to be led during the course of trial. Simply because there is a remedy provided for breach of contract or arbitral proceedings initiated at the instance of the appellants, that does not by itself clothe the court to come to a conclusion that civil remedy is the only remedy, and the initiation of criminal proceedings, in any manner, will be an abuse of the process of the court for exercising inherent powers of the High Court under Section 482 CrPC for quashing such proceedings.”

The Court noticed that the facts narrated in the present complaint/FIR/charge-sheet indeed reveal the commercial transaction but that is hardly a reason for holding that the offence of cheating would elude from such transaction. In fact, many a times, offence of cheating is committed in the course of commercial transactions and the illustrations have been set out under Sections 415, 418 and 420 IPC. So far as initiation of arbitral proceedings is concerned, there is no correlation with the criminal proceedings.

The Court, hence, held that the issue involved in the matter under consideration is not a case in which the criminal trial should have been short-circuited. The High Court was not justified in quashing the criminal proceedings in exercise of its inherent jurisdiction. The High Court has primarily adverted on two circumstances,

(i) that it was a case of termination of agreement to sell on account of an alleged breach of the contract and

(ii) the fact that the arbitral proceedings have been initiated at the instance of the appellants.

The Court held that both the alleged circumstances noticed by the High Court are unsustainable in law.

[Priti Saraf v. State of NCT of Delhi, 2021 SCC OnLine SC 206, decided on 10.03.2021]

*Judgment by: Justice Indu Malhotra

Appearances before the Court by:

For appellants: Senior Advocate Mukul Rohatgi,

For Second Respondent: Senior Advocate P. Chidambaram,

For State: Additional Solicitor General  Aishwarya Bhati

Case BriefsHigh Courts

Bombay High Court: Sandeep K. Shinde, J., addressed a matter wherein the appellant challenged the conviction and sentence passed by Additional Sessions Judge for his conviction under Section 417 of Penal Code, 1860.

In the present matter, it has been stated that the appellant was convicted under Section 417 of the Penal Code, 1860.

Prosecutrix while working on the construction site be-friended with the accused and in a short span, they engaged in sexual relations, more than one time.

Further, she alleged that the appellant did not disclose his marital status but presuming, he would marry her, she submitted to his sexual desires on more than one occasion, by the time she learnt that the appellant was married, she was pregnant.

In 1990, prosecutrix lodged a complaint about the offence punishable under Section 376 IPC, pending investigation, prosecutrix delivered a baby girl.

Trial Court upon appreciating the evidence of the prosecutrix, recorded the finding, that it was a consensual act and, thus, acquitted the accused of the offence punishable under Section 376 of the IPC. Trial Judge, however, convicted the accused of the offence punishable under Section 417 of the IPC and sentenced to suffer rigorous imprisonment for six months.

Analysis and Decision

Bench while analysing the facts and circumstances of the case noted that prosecutrix submitted in her testimony that she was living on construction site and be-friended with the accused, whereafter they fell in love with each other.

Further, Court observed that the evidence of the prosecutrix did not suggest that the appellant made a false promise to marry her. Hence, it cannot be said that the appellant lured the prosecutrix to engage in sexual relations with him on the false promise of marrying her.

Question for consideration:

Whether conviction of the accused under Section 417 of the IPC is sustainable?

“…here was no ‘promise to marry’ nor intentional deception by misrepresentation or deceitfulness practised before establishing physical relationship with prosecutrix.”

In fact prosecutrix’s evidence suggested that she presumed that the appellant was not married and further assumed that he would marry her.

Therefore, the absence of ‘dishonest concealment of fact’, which is an essential ingredient of offence, within the meaning of explanation, appended to Section 415 of IPC, a conviction under Section 417 of IPC is not sustainable.

Lastly, Court concluded by stating that the impugned conviction and sentence by the Additional Sessions Judge be quashed and set aside. [Jagdish Raghunath Mankar v. State of Maharashtra, 2021 SCC OnLine Bom 269, decided on 24-02-2021]

Advocates who appeared before the Court:

Advait M. Sethna appointed advocate with Pravan A. Gohil with Eshaan Saroop for the appellant.

Sharmila Kaushik, APP for the Respondent- State.

Read more:

[Section 417 IPC] Punishment for cheating.—Whoever cheats shall be punished with imprisonment of either description for a term which may extend to one year, or with fine, or with both.

[Section 415 IPC] Cheating.—Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived 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, is said to “cheat”.

Explanation.—A dishonest concealment of facts is a deception within the meaning of this section.

Case BriefsHigh Courts

Madras High Court: N. Anand Venkatesh, J., while addressing a matter expressed that:

“…a transaction hit by lis pendens would not result in the same being rendered void or illegal or of no effect. It will only be subject to the result of the litigation and the purchaser would be bound by the same.”

The instant case was with regard to the property originally belonging to a partnership firm which was subsequently dissolved and the same was said to have been vested on the de facto complainant by virtue of decree. Thereafter the building in the property was demolished to put up new construction and a joint venture agreement was also entered into with a developer.

But since the agreement did not go through the property continued to be vacant.

Prosecution’s case was that the petitioner’s vendor had trespassed into the property and had created documents and managed to obtain a patta.

Petitioner knew about the dispute between the parties and the pending criminal case against the vendor, yet they entered into the sale agreements and agreed to purchase properties including the property belonging to respondent 2. Ultimately, a registered sale Deed was executed in favour of the petitioners by undervaluing the property, after which the petitioners started taking steps to take possession of the property and on coming to know of the same, respondent 2 gave a complaint on the basis of which an FIR was registered against the vendor and petitioners.

Analysis and Decision

Bench noted that the petitioners came into the scene in 2016 when they entered into a sale agreement with the vendor Mr Iqbal. On agreeing to purchase certain items of properties which also included the subject property for a total sale consideration of Rs 4 crores.

Further, it was seen that out of the total sale consideration of Rs 4 crores, more than ninety percent of the sale consideration has been paid by way of RTGS transfer from the bank account maintained by the Petitioners. Thereafter, the patta has also been transferred in favour of the Petitioners. That apart, there was also a name transfer by the Corporation in the property tax records from the name of Mr Iqbal to the names of the Petitioners, respectively.

FIR was registered for the offences of making a false document and cheating. Without undertaking the exercise of a mini investigation, it had to be seen whether the offence was made out against the petitioners or not?

Dispute was with regard to the right and title over the subject property between respondent 2 and the vendor of the petitioners.

Vendor of the petitioners was positively claiming a right and title over the subject property and he believed that he was the owner of the property.

Further, it was observed that at the time when the sale deed was executed, in favour of the

Petitioners, and at the time when the parties entered into an agreement of sale, the suit filed by the 2nd Respondent had been dismissed for default, hence no compelling material was available that could have prevented the petitioners from purchasing the subject property.

Property was free from any encumbrance after it was purchased by Mr Iqbal in the year 2010.

It is now a well-settled position of law that even when a document is executed by a person claiming a property which is not his, that does not by itself satisfy the requirements of a false document as defined under Section 464 IPC. If it does not satisfy the requirements of Section 464 IPC, there is no forgery and if there is no forgery, automatically neither Section 467 nor Section 471 IPC will be attracted. 

For the above position of law, Supreme Court referred to the decision in Mohd. Ibrahim v. State of Bihar, (2009) 8 SCC 751, Sheila Sebastian v. R. Jawaharaj, 2018 (3) MLJ (Crl) 39.

Even in the extreme case of branding the Petitioners as speculative buyers of the subject property, knowing fully well about the dispute in title over the subject property, that by itself does not amount to an offence of cheating, forgery and making of false document.

Allegations made by respondent 2 did not make out any offence against the petitioners and the continuation of investigation against the petitioners would be an abuse of process of law, which requires interference of the Court.

Hence in view of the above discussion, present petition was allowed.[Dr Subba Somu v. Inspector of Police, 2021 SCC OnLine Mad 877, decided on 01-03-2021]

Advocates who appeared before the Court:

For Petitioners: Mr ARL. Sundaresan, Senior Counsel and Mr R. Umasuthan

For 1st Respondent: Mr A. Natarajan, State Public Prosecutor for R1

Asstd: by Mr M/Mohamed Riyaz Additional Public Prosecutor

Mr G. Mohanakrishnan Mr S. Janarthanan for R 2

Case BriefsHigh Courts

Chhattisgarh High Court: Gautam Chourdiya, J., upheld the decision of the trial court in a matter with regard to Section 379 Penal Code, 1860.

The present appeal was filed under Section 374(2) of Criminal Procedure Code, 1973 challenging the legality, validity and propriety of the Judgment passed by the Additional Sessions Judge, whereby the appellant stands convicted under Section 379 of the Penal Code, 1860.

Complainant was working as a Secretary at Gram Panchayat and on the same day after the meeting, he went to the bank and withdrew a sum of Rs 12, 250. Thereafter, while he was returning home, on the way accused and co-accused met him and all of them together went to have mutton and consumed liquor.

From there, they reached the place near nursery where they stopped the motorcycle and both the accused started quarrelling with the complainant and after threatening him of life, assaulted upon him by stone and committed marpeet with him, as a result of which sustained injuries on his body and became unconscious.

After the above incident, accused and co-accused looted the amount of Rs 12,250 from complainant’s possession and fled from there.

Complainant lodged FIR against the accused and co-accused. Accused was arrested and achrge sheet was filed against the accused persons under Sections 307, 394 read with 34 and 397 of IPC.

Trial Court acquitted the co-accused of the said offence and convicted and sentenced the accused.

Counsel for the appellant submitted that the appellant had been falsely implicated in the case. No witness had seen the incident. Complainant lodged the FIR after the delay of 2 days. Hence the impugned judgment of conviction and order of sentence deserves to be set aside and the appellant be acquitted of the charges.

Bench held that in the totality of facts and circumstances of the present case, it stands proved beyond all reasonable doubt that it is the accused who looted complainant’s money. No explanation was given by the accused regarding the seizure of money from him and he did not claim anywhere in his statement that the said amount belonged to him.

It is a well settled principle of law that statements of police officers cannot be discarded or looked with suspicion merely because they are involved in the investigation.

If their statements are found free from the suspicion of falsity and have a ring of truth, they can safely be relied upon.

In the instant case, defence did not allege that the investigating officer was in any way inimical to the accused or was having any ill-will against him.

With regard to the delay in lodging FIR, the same happened due to the complainant was admitted in the hospital in an unconscious condition.

In view of the above-stated, High Court opined that conviction of the appellant under Section 379 IPC awarded by the trial court was just and proper warranting not interference by the Court.

The appeal being without any substance was liable to be dismissed. [Raju v. State of Chhattisgarh, 2020 SCC OnLine Chh 433, decided on 19-10-2020]

Case BriefsHigh Courts

Orissa High Court: S. K. Panigrahi J., granted bail and directed the petitioner company to pay the amount in accordance with the manner indicated.

The facts of the case as per the FIR lodged alleging charges under Sections 406/420/120-B of Penal Code, 1860 read with Section 6 of the Odisha Protection of Interests of Depositors (in Financial Establishments) Act, 2011 (O.P.I.D.) are that, one Biswa Bhushan Biswal husband of the petitioner herein, 6-7 years back approached the informant and introduced himself as a land broker doing business in plotting, land development, construction of buildings and flats through his company B. N. Infra Services Pvt. Ltd. where petitioner is the Managing Director. Br. Biswal insisted the informant to invest in the company and promised him assured returns vide agreement dated 19-5-2014, pursuant to which disbursal of Rs 1,89,00,000 was made by the informant. Biswas defaulted with return payments and consented to give one of his plots having Plot No. 3/441 to the informant in case of further default in payment vide a written letter. The said plot was later revealed to be already sold to someone else, subsequent to which another agreement dated 25-01-2017, wherein Biswas committed to pay Rs 1,76,00,000 out of which Rs 1 Lac was paid at the time of signing. The petitioner issued 10 cheques each amounting to Rs 1,50,00,000 which were dishonored by the bank due to insufficient funds. Thereafter FIR was lodged and during the investigation, Mr. Biswal and petitioner were arrested and later filed for bail which was rejected by Trial Court. Aggrieved by the same, an instant bail petition has been filed for seeking regular bail under Section 439 CrPC, 1973.

Counsel for the petitioner D.P. Dhal submitted that the petitioner is a housewife and Biswas is responsible for managing the day to day affairs of the company. It was further submitted that the company is a real estate company and hence comes within the ambit of Real Estate Regulation & Development Act, 2016 and Odisha Real Estate (Regulation and Development) Rule, 2017, hence Section 6 of the O.P.I.D. Act will not be attracted. He also prayed for the relief of bail to be granted.

Counsel for the respondent opposed all the arguments and stated that the instant case makes out for a clear offence of cheating and fraud and provisions of the O.P.I.D Act will squarely apply in the present case.

The Court after hearing both sides observed that characteristics of the agreement entered into between the parties is in the nature of an “agreement to sale” of a flat that was to be constructed by the defaulting petitioners company and hence is a simple flat buyer agreement. It was also observed that the defaulting company is registered under the Companies Act, 1956 and its MOA and AOA clearly states that it is not a “Financial Establishment” instead comes under the purview of the Real Estate (Regulation and Development) Act, 2016.

The Court also observed that it is imperative that the background of the Act needs to be understood before dealing with the legislation.

Whether the instant case falls under O.P.I.D Act or not?

Section 2 (d) of O.P.I.D Act defines “Financial Establishment” as a company registered under the Companies Act carrying on the business of receiving deposits under any scheme or arrangement or in any other manner.

It clearly states that in MOA and AOA it has to be mentioned that the primary business is receiving “deposits” pursuant to any “scheme or arrangement”. On a conjoint reading of Sections 2(d), 3 and 5 of O.P.I.D Act it is clear that the business should be in the nature of accepting or receiving “deposits”.
Section 10 of O.P.I.D Act provides for attachment of the Financial Establishments in case of default payment. Hence the operation of Section 10 of the Act would result in a piquant situation where one lone buyer while claiming refund of his deposit would cause the attachment of the other flats so constructed, irrespective of the fact as to whether such flats have been transferred to other transferees by the builder and corresponding rights thereupon have been created or not.

In case of flat buyer agreement, it provides for the consideration to be paid for the flat/apartment purchased which are sale transactions and are mandatorily registerable under the relevant laws wherein the question of the return of deposit or payment of interest on such deposits does not arise.

The Court relied on various judgments titled Viswapriya [India] Limited v. Government of T.N, 2015 SCC OnLine Mad 10349 and Prasan Kumar Patra v. State of Odisha, 2019 SCC OnLine Ori 93 and held that an inevitable situation will invariably arise when the provisions of the O.P.I.D Act are invoked in real estate transactions especially where a builder has constructed multiple flats/apartments. This kind of situation could not have been the intention of the legislature considering the practices, problems and complexities involved in the real estate sector. Hence the instant case is a classic example of a transaction gone awry which has been strenuously given the color of a criminal offence.

The Court also relied on a judgment titled Tetra Pak India (P) Ltd. v. Tristar Beverages (P) Ltd., 2015 SCC OnLine Bom 4707 and held that though a case of breach of trust may be both a civil wrong and a criminal offence there would be certain situations where it would predominantly be a civil wrong and may or may not amount to a criminal offence and giving colour of criminal case to dispute which is otherwise purely civil and commercial in nature would tantamount to an abuse of the process of court.

The Court further directed the State Government to give wide publicity to the provisions of the said RERA Act, 2016 in order to injunct any such unnecessary litigations arising out of builder-buyer relations.

In view of the facts and overall circumstances, the bail was granted.[Mahasweta Biswal v. State of Odisha, 2020 SCC OnLine Ori 633, decided on 25-08-2020]

Arunima Bose, Editorial Assistant has put this story together

Case BriefsHigh Courts

Orissa High Court: S.K. Panigrahi, J., while addressing a matter with regard to money laundering by way of ponzi schemes, stated that,

“Act of money laundering is done in an exotic fashion encompassing a series of actions by the proverbial renting of credibility from the innocent investors.”

Petitioner has sought bail in a complaint case pending before Sessions Judge, Special Court under PMLA.

Cheating

Case under Sections 406, 420, 468, 471 and 34 of Penal Code and Sections 4, 5 and 6 of Prize Chits and Money Circulation Schemes (Banning) Act, 1978 was registered on the basis of a complaint alleging that the complainant had been cheated and defrauded by alluring to invest Rs 10,000 in the attractive investment scheme of Fine Indiasales (P) Ltd.

Complainant further submitted that he had introduced 20 more people to invest in the said scheme.

Complainant neither received the financial product nor the product voucher as per the agreement with FIPL.

FIPL collected huge amounts of money from the public and ultimately duped huge amount from innocent public by giving false assurance of high return for their deposit of money.

In view of the above, complainant requested for an investigation.

FIPL floated a fraudulent scheme

According to the investigation it was found that, FIPL had floated a fraudulent scheme with a terminal ulterior motive to siphon off the funds collected from public.

Ponzi Scheme

The advertised scheme of FIPL, ex-facie appeared to be a bodacious Ponzi scheme, inducing the susceptible depositors by way of misrepresentation, promising immediate refund in case of any default and timely payment of return on the part of FIPL.

Investigation prima facie established that the accused persons connected with  FIPL not only criminally conspired and cheated the depositors but also lured them into the scheme with a rogue mindset.

Machiavellian Layering | Shell Companies

Investigation revealed that the said money, stained with the sweat, tears and blood of multitudes of innocent people has since been moved around and subjected to Machiavellian layering through a myriad of shell companies and bogus transactions.

The collected amount was immediately transferred to different bank accounts of individuals as well as firms under the management and control of the Promotors/Directors/Shareholders of the said FIPL which is nothing but an act of sheltering.

Money Laundering

Modus Operandi adopted while transferring the prodigious sum of ill-gotten wealth with the singular intention of concealing the original source of funds and to project the tainted money as untainted ex facie constitute the offence of money laundering.

Court’s Observation

On the cursory look, Court prima facie observed that dishonesty, untruth and greed eroded the faith of common investors.

One of the significant stages of money laundering is “layering”, and in the present case, multiple use of corporate vehicles was done and the amount was layered further.

The act money laundering involves the process of placement, layering and integration of “proceeds of crime” as envisaged under Section 2 (u) of the Act, derived from criminal activity into mainstream fiscal markets and transmuted into legitimate assets.

“…laundering of tainted money having its origins in large scale economic crimes pose a solemn threat not only to the economic stability of nations but also to their integrity and sovereignty.”

Proceeds of Crime

Petitioner along with others attempted to project the “proceeds of crime” as untainted money by transferring the same to different bank accounts in a bid to camouflage it and project it to be genuine transactions.

Financial Terrorism

Bench added to its analysis that, offence of money laundering is nothing but an act of “financial terrorism” that poses a serious threat not only to the financial system of the country but also to the integrity and sovereignty of a nation.

Supreme Court’s opinion

Supreme Court of India has consistently held that economic offences are sui generis in nature as they stifle the delicate economic fabric of a society.

Faustain bargain

Perpetrators of such deviant “schemes,” including the petitioner in the present case, who promise utopia to their unsuspecting investors seem to have entered in a proverbial “Faustian bargain” and are grossly unmindful of untold miseries of the faceless multitudes who are left high and dry and consigned to the flames of suffering.

Reputational Damage of the Country

Abuse of financial system in the manner that occurred in the present case can inflict the reputation of the country in the world of business and commerce.

Alleged offence of money laundering committed by the petitioner is serious in nature and the petitioner’s role is not unblemished.

Hence, Court refused bail to the accused/petitioner. [Mohammad Arif v. Directorate of Enforcement, Govt. of India, 2020 SCC OnLine Ori 544 , decided on 13-07-2020]

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Case BriefsHigh Courts

Uttaranchal High Court: Lok Pal Singh, J., addressed an application that sought to quash criminal proceedings under Sections 420, 468, 471 of Penal Code, 1860 and Section 66(D) of Information Technology Act pending in Judicial Magistrate Court.

In the present matter, a complaint was lodged against the applicant that he committed forgery for purpose of cheating by using as genuine the forged and fraudulent document with the intention to cause damage to the Trust and hacked the information stored in the computer.

A charge-sheet was submitted by against the applicant in respect of selfsame offences. Further, Magistrate took cognizance and summoned the applicant to face the trial in respect to the mentioned offences.

Siddhartha Singh, applicant for the counsel submitted that the applicant was an old trustee and was appointed as the President of Kailashanand Mission Trust. He submitted that proceedings against the applicant are nothing but the outcome of the revengeful activity of the complainant and his associates. Complainant concealed the fact of the applicant being the President of the Trust and went on to lodging an FIR against him in the name of him being an “Unknown Hacker”.

According to the applicant’s counsel, the entire proceedings are nothing but an abuse of process of law and Court.

Senior Advocate, Rakesh Thapliyal on behalf of the complainant due to nefarious activities of the applicant, Swami Kailashanand was annoyed with him and by way of a resolution of trust, he cancelled all rights of the applicant and even removed him from the post of Manager of Trust.

He further submitted that various complaints were filed against the applicant for forging Trust’s letter pad, seals and receipt book and resolutions.

Applicant’s Counsel while relying on the Supreme Court case in, International Advanced Research Centre for Powder Metallurgy and New Materials (ARCI) v Nimra Cerglass Technics (P) Ltd., (2016) 1 SCC 348, argued that in order to bring a case for offence of cheating, it is not merely sufficient to prove that a false representation was made, but it is further necessary to prove that the representation was false to the knowledge of accused and was made in order to deceive complainant.

According to the ruling in Supreme Court case of Amit Kapoor v. Ramesh Chander, (2012) 9 SCC 460, in which certain principles in respect of exercise of jurisdiction under Section 482 CrPC are laid down, one of the principles which hold significance in the present matter is following:

“…Court should apply the test as to whether the uncontroverted allegations as made from the record of the case and the documents submitted therewith prima facie establish the offence or not.”

Thus, in the present matter, High Court stated that in view of the above, a bare perusal of FIR as well as the charge sheet, it is apparent that foundation of criminal offence is laid against the applicant. Jurisdiction under Section 482 CrPC should not be exercised to stifle or scuttle the legitimate prosecution. Court stated that in the present case, this is not the stage to quash the charge sheet.

Hence, Since, prima facie case is made out against the applicant, the Magistrate has rightly taken cognizance and summoned the applicant to face the trial in respect of the offences complained of against him. [Vijay Kumar Gupta v. State of Uttarakhand, Criminal Misc. Application No. (C-482) No. 1087 of 2016, decided on 18-12-2019]

Case BriefsHigh Courts

Kerala High Court: Alexander Thomas, J. disposed of a matter wherein a complaint was lodged against the petitioner accusing of committing rape and cheating.

In the present case, the complainant, a married lady whose divorce proceedings were still underway had advertised in the matrimonial column of a newspaper seeking a response from interested persons in respect of her marriage proposal. The petitioner responded to the same by agreeing to marry the complainant. Based on the assurance, both the parties shared an intimate relationship and indulged in sexual intercourse. However, later, the petitioner showed disinterest in the marriage proposal.

It has been stated by the complainant that the petitioner had taken Rs 2 lakhs from her and also her gold ornaments coming to 35 sovereigns and that she has been cheated and that she had given her consent to have sexual intercourse with the petitioner only on the basis of the assurance that he would marry her and that the petitioner has committed the abovesaid offences.

The complainant was filed under Section 376 of the Penal Code, 1860.

The Counsel representing the petitioner, V. John Mani, submitted that the complainant had suppressed facts from the petitioner by seeking marriage from the petitioner despite being a married woman at that point of time as the divorce proceedings were still underway and thus, it was the petitioner who had been cheated. Further, it was submitted that there was a falsification of facts when the complainant stated that the petitioner had borrowed money and gold ornaments, since, the complainant had extracted amount more than five lakhs from the petitioner.

In addition to the above, it was stated that the arrest and detention of the petitioner is absolutely illegal and ultra vires and that going by the admitted allegations in the FIS, the Police has committed a serious illegality in arresting the petitioner and that the arrest and detention of the petitioner is against the binding decisions of the Supreme Court and various High Courts in respect of the legal position relating to the lawful arrest of the accused persons in such cases.

The public prosecutor for the state, T.R. Renjith contended that the Police was given 3 days time for custodial interrogation of the petitioner, after his remand and that the petitioner has not co-operated with the investigating officer in respect of the recovery of the gold ornaments alleged to have been taken by the petitioner from the lady and that the petitioner is likely to threaten or intimidate the complainant, if he is let out on bail.

High Court upon perusal of the facts and circumstances of the case expressed its dissatisfaction with the police authorities arresting the petitioner for the period of time in a case wherein the complainant herself had requested for marriage proposals despite not being lawfully declared as divorced from the former marriage.

Adding to the above, Court stated that, “the petitioner has got a specific case that the lady has suppressed the fact that she was twice married and that though she had secured divorce in respect of her first marital relationship, divorce proceedings are still pending in respect of her second marital relationship, etc. The Police is duty-bound to investigate the crucial aspects as to whether the lady is twice married as alleged by the petitioner. If that be so, it is for the Police authorities to take serious note of such aspects which has been suppressed by the lady defacto complainant in her FIS.”

Thus, bail was granted to the petitioner, however with certain conditions of not committing any offence while on bail, not interacting with the complainant or tampering with evidence. [Prasanth Nelson v. State of Kerala, 2019 SCC OnLine Ker 2934, decided on 18-09-2019]

Case BriefsHigh Courts

Bombay High Court: S.S. Shinde, J. denied to quash the charges under Sections 376 and 420 IPC as prayed by the petitioner and further the Court ordered for a trial to take place on the basis of evidence recorded.

The present petition was filed to quash the charges against the petitioner in a case pending before the Sessions Court for Borivali Division at Dindoshi-Goregaon, Mumbai. The charges were framed under Sections 376 and 420 of the Penal Code, 1860.

Contentions by the Counsels:

Counsel for the petitioner, Samarth S. Karmarkar submitted that in the FIR that was lodged by Respondent 1 alleging offence under Section 420 IPC, there was no whisper about an allegation in respect to sexual assault. Further, it was stated that, the supplementary statement of Respondent 1 was the only thing in which allegations against the petitioner are made out that under the pretext and promise, he would marry Respondent 1, extracted huge amount from Respondent 1 and sexually exploited her.

Per contra, N.B. Patil, APP, submitted that overwhelming evidence had been collected by the Investigating Officer during the investigation and evidence of prosecutrix assumes importance which has to be treated on a high pedestal, therefore the petition may be rejected.

The High Court on perusal of grounds and submission of the parties opined that only way to resolve the controversy arising is by way of appreciating the material collected during the course of investigation by way of trial.

Therefore, the Court held that, material collected during the investigation has to be tested during the trial and also the allegations made in the FIR along with the ones in the supplementary statement. Relying on the Supreme Court Judgment in Anurag Soni v. State of Chhattisgarh, 2019 SCC OnLine SC 509, it was observed that no case is made out to invoke extraordinary writ jurisdiction and the prayer of the petitioner has to accede. Trial Court shall not get influenced by observations made during the course of the trial. [Vishal Ramnayan Singh v. XYZ, 2019 SCC OnLine Bom 1141, decided on 26-06-2019]

Case BriefsHigh Courts

Uttaranchal High Court: R. C. Khulbe, J. refused to grant a bail where the applicant was charged under Sections 420, 467, 468 and 471 of Penal Code, 1860.

The prosecution stated that a complaint was lodged against the applicant mentioning that he was posted as Deputy Manager in Kalawati Nyas Dharamshala, Dehradun. The applicant used to stay in Dharamshala of the complainant every month for a few days. Applicant disclosed to the colleague of the complainant that there were vacancies in Secretariat of Government of India, Delhi for the post of Junior Clerk. The son of the complainant was unemployed and applicant demanded Rs 3 lakhs for getting employed the son of the complainant and demanded Rs 50,000 as advance. Further, it was alleged by the prosecution that the said complainant gave the advance money on the very same day. In the same way, other relatives of the complainant believed the complainant and gave money to the applicant. The complainant was accused of the fraudulently received amount of Rs 20 lakhs from the complainant and his relatives on the pretext of providing job to the son of the complainant and other relatives of the complainant.

The applicant alleged that he was falsely implicated in the crime and hence bail should be granted to him.

The Court found that, FIR stated the commission of a heinous crime and hence no bail was granted to the applicant.[Shambhu Nath v. State of Uttarakhand, 2019 SCC OnLine Utt 541, decided on 27-06-2019]

Case BriefsHigh Courts

Kerala High Court: The Bench of R. Narayana Pisharadi, J. quashed criminal proceedings against a person accused of cheating a bank holding that the case against him would be an abuse of process of the Court.

Petitioner herein was a customer of Bank of Baroda for many years. He introduced accused’s 1 to 3 to the said bank to enable them to open an account therein. Subsequently, the accused used credit/purchase facility given to them by the bank and obtained approximately Rs 1 crore from it. It was alleged that the accused had hatched a conspiracy to cheat the bank and cause loss to it. A case was registered against the accused and the petitioner under Section 120B, and Sections 420 and 406 read with Section 34 of the Penal Code, 1860. The instant petition was filed under Section 482 of the Code of Criminal Procedure, 1973 requesting quashing of proceedings against petitioner.

The Court noted that the only allegation against the petitioner was that he introduced accused to the bank to enable them to open an account. He did not falsely misrepresent the bank; there was no material indicating any transaction between the petitioner and other accused. No material was produced by the prosecution to prove that the introduction of accused to the bank, by the petitioner, was part of a conspiracy to cheat the bank. Therefore, no question of dishonest misappropriation of any amount by him arose.

It was held that it is a normal banking practice that a person who wants to open an account in a bank will have to get himself introduced by another account holder in the same bank. The mere act of introducing a person to a bank to enable such person to open an account in the bank, without anything more, does not attract the offence of cheating punishable under Section 420 IPC against the person who makes the introduction, even when the person introduced by him subsequently commits an act of cheating against the bank. Reliance in this regard was placed on Manoranjan Das v. State of Jharkhand, (2004) 12 SCC 90.

In view of the above, the petition was allowed. [K.J. Hubert v. Sub Inspector of Police, 2019 SCC OnLine Ker 1122, Order dated 04-04-2019]

Case BriefsHigh Courts

Kerala High Court: The Bench of T.V. Anil Kumar, J., while pronouncing an order quashed the criminal proceedings stating them to be of a civil dispute.

The facts of the case as presented in the present case are that, the prosecution case as against the petitioner is that, he after having obtained a mobile post-paid connection in his name, failed to discharge his liability for user charges for a period of 5 months. Allegation was that petitioner incurred a monetary liability of Rs 97,678 and after making a part payment of Rs 10, 580 he kept the balance in arrears. According to the prosecution, the default amounts to an offence of cheating punishable under Section 420 IPC.

Petitioner’s case is made out in the following manner, that the transaction in question is based on an agreement between the parties which turns the alleged liability to be purely of civil nature, due to which the petitioner sought consequential criminal proceedings to be quashed.

High Court on marshalling the materials on record, concluded by stating that, the transaction involved between the parties is of a civil dispute as a purported liability of the petitioner seems to have been arisen from breach of promise or agreement.

“Mere breach of trust or agreement will not by itself amount to a criminal offence under Section 420 IPC.”

Therefore, as the legal proposition does not match the materials on record as well as the allegations, the criminal proceedings require to be quashed in view of the above stated. [Abdul Hakkem v. State of Kerala, 2019 SCC OnLine Ker 974, Order dated 08-03-2019] 

Case BriefsHigh Courts

Jammu & Kashmir High Court: A Single Judge Bench of Sanjay Kumar Gupta, J., dismissed a bail petition filed by the petitioners under Section 497-A of the Code of Criminal Procedure, seeking bail in a matter involving offences under Sections 420,467, 468, 471 of the Ranbir Penal Code and Section 5(2) of J&K Prevention of Corruption Act, 2006.

The main issue that arose before the court was whether the petitioners are entitled to get bail in a matter involving alleged offences of corruption and cheating.

The Court observed that the petitioners were alleged to have made back-dated appointments in lieu of money from the beneficiaries. The petitioners had made back-dated appointments and as such, it is an action which is covered under the category of cognizable offences. The appointments made by the petitioner were allegedly illegal, also some of the appointees were students and the others were running their own businesses. Another serious allegation that was leveled against the petitioners was that they have tampered with the records of daily wage workers and have replaced their names with the names of appointees who were given appointment by the petitioners. The Court relied upon the judgment of State of A.P. v. Bimal Krishna Kundu, (1997) 8 SCC 104, wherein it was held that arming an accused with a bail order, when serious allegations of corruption are leveled against him/her, would hamper the investigation and would also impede the prospects of unearthing all ramifications involved in the conspiracy. 

The Court held that the allegations leveled against the petitioners were quite serious in nature and hence granting them bail would not be the appropriate thing to do. Further, all the aspects of the matter require detailed investigation and for that purpose custodial interrogation is also required. Resultantly, the bail petition was dismissed.[Mohd. Kubir Malik v. State of J&K, 2018 SCC OnLine J&K 788, order dated 03-11-2018]