Resultantly, Respondent filed 2 complaints i.e. a complaint u/s 156(3) of Cr.P.C. at New Delhi and a complaint which was eventually registered as FIR at Kolkata on the same cause of action. After conducting an investigation, Investigating Officer filed a report recommending the closure of the case. Respondent filed a Protest Petition against the Closure Report which was allowed and further investigation was directed. Later, cognizance, by the court of competent jurisdiction, was taken of the offence under Sections 406/420/120B of IPC. Being aggrieved and dissatisfied, the Appellant filed a quashing petition seeking quashing of FIR and consequential proceedings which was dismissed by HC.
This judgment is technically divided into three parts:-
Theory of Forum Shopping
Competence of HCs to Quash Criminal Proceedings
Laws relating to Criminal Breach of Trust and Cheating
1) Theory of Forum Shopping:-
Definition of Forum Shopping was referred to by the Hon’ble Court from Merriam Webster Dictionary which defines the term in the following manner:-
“The practice of choosing the court in which to bring an action from among those courts that could properly exercise jurisdiction based on the determination of which court is likely to provide the most favorable outcome”
The Hon’ble Court, while observing that forum shopping has been termed as a disreputable practice by the courts and has no sanction and paramountcy in law, has referred to its judgment delivered in the matter of Union of India & Ors. Vs. Cipla Ltd. & Anr. reported as (2017) 5 SCC 262, wherein it was held that “the principle that the court is required to adopt a functional test vis-a-vis the litigation and the litigant. What has to be seen is whether there is any functional similarity in the proceedings between one court and another or whether there is some sort of subterfuge on the part of a litigant. It is this functional test that will determine whether a litigant is indulging in forum shopping or not.”
Further, the Hon’ble Court referred to its judgment in the matter of Krishna Lal Chawla & Ors. Vs. State of UP & Anr.,(2021) 5 SCC 435, wherein, it was observed that filing of multiple complaints by the same party against the same accused in respect of the same incident is impermissible. Doing so will lead to the accused being entangled in numerous criminal proceedings. As such he would be forced to keep surrendering his liberty and precious time before the police and the courts, as and when required in each case.
Lastly, the Hon’ble Court referred to the judgment delivered in the matter of K. Jayaram & Ors. Vs. Bangalore Development Authority & Ors. reported as 2021 SCC OnLine SC 1194, wherein, it was observed that “It is necessary for us to state here that in order to check multiplicity of proceedings pertaining to the same subject-matter and more importantly to stop the menace of soliciting inconsistent orders through different judicial forums by suppressing material facts either by remaining silent or by making misleading statements in the pleadings in order to escape the liability of making a false statement, we are of the view that the parties have to disclose the details of all legal proceedings and litigations either past or present concerning any part of the subject-matter of the dispute which is within their knowledge. In case, according to the parties to the dispute, no legal proceedings or court litigations were or are pending, they have to mandatorily state so in their pleadings in order to resolve the dispute between the parties in accordance with the law.”
2) Competence of HCs to Quash Criminal Proceedings
The Hon’ble Court referred to the widely celebrated judgment in State of Haryana & Ors. Vs. Bhajan Lal & Ors., 1992 Supp (1) SCC 335, wherein, the Hon’ble Court reiterated and established the laws relating to quashing of criminal proceedings by illustrating the following cases to be eligible for quashing:-
“(1) Where the allegations made in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused.
(2) Where the allegations in the first information report and other materials, if any, accompanying the FIR do not disclose a cognizable offence, justifying an investigation by police officers under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section 155(2) of the Code.
(3) Where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused.
(4) Where the allegations in the FIR do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code.
(5) Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused.
(6) Where there is an express legal bar engrafted in any of the provisions of the Code or the Act concerned (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the Act concerned, providing efficacious redress for the grievance of the aggrieved party.
(7) Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge.”
Further, the Hon’ble Court referred to its judgment in the matter of Inder Mohan Goswami & Anr. Vs. State of Uttaranchal & Ors. (2007) 12 SCC 1, wherein, it was observed that “The High Court should normally refrain from giving a prima facie decision in a case where all the facts are incomplete and hazy; more so, when the evidence has not been collected and produced before the court and the issues involved, whether factual or legal, are of such magnitude that they cannot be seen in their true perspective without sufficient material. Of course, no hard and fast rule can be laid down in regard to cases in which the High Court will exercise its extraordinary jurisdiction of quashing the proceedings at any stage”
Lastly, the Hon’ble Court referred to a judgment in Indian Oil Corpn. v NEPC India Ltd. & Ors.19,(2006) 6 SCC 736, wherein, it was held that “any effort to settle civil disputes and claims, which do not involve any criminal offence, by applying pressure through criminal prosecution should be deprecated and discouraged.”
3) Laws relating to Criminal Breach of Trust and Cheating
a) Criminal Breach of Trust
Hon’ble Court has observed that the essential ingredients of the offence of criminal breach of trust are:-
The accused must be entrusted with the property or with dominion over it,
The person so entrusted must use that property, or;
The accused must dishonestly use or dispose of that property or wilfully suffer any other person to do so in violation,
of any direction of law prescribing the mode in which such trust is to be discharged, or;
of any legal contract made touching the discharge of such trust.
Hon’ble Court has further observed and held that “Entrustment” of property under Section 405 of the Indian Penal Code, 1860 is pivotal to constitute an offence under this. The words used are, ‘in any manner entrusted with property’. So, it extends to entrustments of all kinds whether to clerks, servants, business partners or other persons, provided they are holding a position of ‘trust’. A person who dishonestly misappropriates property entrusted to them contrary to the terms of an obligation imposed is liable for a criminal breach of trust and is punished under Section 406 of the Penal Code.”
The Hon’ble Court referred to its judgment in the matter of RK Dalmia Vs. Delhi Administration (1963) 1 SCR 253, wherein, it was held that “the word ‘property’ is used in the Code in a much wider sense than the expression ‘moveable property’. There is no good reason to restrict the meaning of the word ‘property’ to moveable property only when it is used without any qualification in Section 405.”
b) Cheating
Hon’ble Court has observed that the essential ingredients of the offence of cheating are:
Deception of any person
(A) Fraudulently or dishonestly inducing that person-
to deliver any property to any person: or
to consent that any person shall retain any property; or
(B) intentionally inducing that person to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property.
It was further observed that to establish the offence of Cheating in inducing the delivery of property, the following ingredients need to be proved:-
The representation made by the person was false
The accused had prior knowledge that the representation he made was false.
The accused made false representation with dishonest intention in order to deceive the person to whom it was made.
The act where the accused induced the person to deliver the property or to perform or to abstain from any act which the person would have not done or had otherwise committed.
[refer to Section 420 of IPC]
Hon’ble Court has referred to a judgment delivered in the matter of Prof. R.K. Vijayasarathy & Anr. Vs. Sudha Seetharam & Anr. (2019) 16 SCC 739, wherein, it was observed and held that “the ingredients to constitute an offence under Section 420 are as follows:-
i) a person must commit the offence of cheating under Section 415; and
ii) the person cheated must be dishonestly induced to;
a) deliver property to any person; or
b) make, alter or destroy valuable security or anything signed or sealed and capable of being converted into valuable security.
Thus, cheating is an essential ingredient for an act to constitute an offence under Section 420 IPC.”
Hon’ble Court has referred to its judgment in the case of Vesa Holdings Pvt. Ltd. & Anr. Vs. State of Kerala & Ors., (2015) 8 SCC 293, wherein, it was observed and held that “It is true that a given set of facts may make out a civil wrong as also a criminal offence and only because a civil remedy may be available to the complainant that itself cannot be ground to quash a criminal proceeding. The real test is whether the allegations in the complaint disclose the criminal offence of cheating or not. In the present case, there is nothing to show that at the very inception there was any intention on behalf of an accused person to cheat which is a condition precedent for an offence u/s 420 IPC. In our view, the complaint does not disclose any criminal offence at all. Criminal proceedings should not be encouraged when it is found to be mala fide or otherwise an abuse of the process of the courts. Superior courts while exercising this power should also strive to serve the ends of justice. In our opinion, in view of these facts allowing the police investigation to continue would amount to an abuse of the process of the court and the High Court committed an error in refusing to exercise the power under Section 482 Cr.P.C to quash the proceedings.”
Conclusion
Hon’ble Court, while concluding the judgment and quashing consequential criminal proceedings, has observed and held that “The order of the High Court is seriously flawed due to the fact that in its interim order, it was observed that the contentions put forth by the Appellant vis-à-vis two complaints being filed on the same cause of action at different places but the impugned order overlooks the said aspect and there was no finding on that issue. At the same time, in order to attract the ingredients of Section of 406 and 420 IPC it is imperative on the part of the complainant to prima facie establish that there was an intention on part of the petitioner and/or others to cheat and/or to defraud the complainant right from the inception. Furthermore, it has to be prima facie established that due to such alleged act of cheating the complainant (Respondent) had suffered a wrongful loss and the same had resulted in wrongful gain for the accused(appellant herein). In absence of these elements, no proceeding is permissible in the eyes of law with regard to the commission of the offence punishable u/s 420 IPC. It is apparent that the complaint was lodged at a very belated stage with the objective of causing harassment to the petitioner and is bereft of any truth whatsoever.”
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