Summary
The Supreme Court quashed an FIR and subsequent chargesheet arising from retention of a development-agreement deposit. Filing a chargesheet did not bar the High Court’s inherent power to prevent abuse of process. On these facts, neither transfer of the owner’s own property nor retention of the deposit pending the contractual refund contingency established criminal breach of trust. The prosecution converted a civil dispute into criminal pressure and was found mala fide.
Issues
- Whether filing a chargesheet prevents consideration of a petition seeking quashing.
- Whether the property transfer or retention of the contractual deposit disclosed criminal breach of trust.
- Whether the prosecution constituted abuse of process.
Provisions considered
- Section 482, Code of Criminal Procedure, 1973Inherent power is not confined to the FIR stage and remains available after a chargesheet to prevent abuse of process or secure justice. (¶¶ 15, 16, 17, 26, 27, 28)
- Sections 405 and 406, Indian Penal Code, 1860The offence required the relevant entrustment and dishonest misappropriation, use or disposal contrary to law or the governing contract. Those ingredients were absent on the stated transaction and refund terms. (¶¶ 18, 20, 21, 22, 23)
Held
- The filing of a chargesheet during the proceedings did not make the quashing challenge untenable. The Court could examine the FIR, chargesheet and documents to determine whether an offence was disclosed. (¶¶ 15, 16, 17)
- The property belonged to the appellant; its transfer to his wife could not constitute breach of trust on the asserted basis because the complainant had not entrusted that property to him. (¶ 18)
- The deposit was contractually returnable on handing over the owner’s constructed share, an event that had not occurred. The facts disclosed no dishonest use or disposal contrary to law or contract; the dispute was civil in nature. (¶¶ 20, 21, 22, 23)
- Criminal prosecution could not be used to pressure settlement of this civil dispute. The Court found the proceeding mala fide and a fit case for quashing under the stated Bhajan Lal categories. (¶¶ 25, 26, 27, 28, 29)
- The amendment seeking quashing of the subsequent chargesheet was allowed. Both FIR and chargesheet were quashed and the High Court judgment set aside. (¶¶ 30, 31)
Result
Appeal and amendment application allowed. High Court judgment set aside; FIR dated 20 August 2014 and chargesheet dated 3 August 2018 quashed.