Summary
The complainant alleged that in 2013 he had transferred Rs.1.5 crore to his elder brother's spinning mill company and paid Rs.20 lakh in cash to be made a partner in his niece's family's Nissan car dealership, was never inducted, and was abused, threatened and restrained when he went to their house in May 2019 to demand his money back. The Supreme Court quashed the FIR under Sections 420, 342, 294(b) and 506(1) IPC, holding that on the complainant's own version none of the accused had induced him to part with money, the six-year unexplained delay showed the criminal process was being used as a recovery device after the civil limitation had lapsed, the uncorroborated cash payment claim had no sanctity, and the May 2019 incident at the accused's own house, reported only after the accused had complained against the complainant, did not disclose the alleged offences.
Issues
- Whether the allegations in the FIR, taken at their highest, disclosed the ingredients of cheating under Section 420 IPC against the accused-appellants when the money was admittedly transferred to the complainant's brother's company on the brother's suggestion.
- Whether an unexplained delay of about six years in lodging the FIR over a 2013 transaction, after the limitation for a civil suit had lapsed, indicated abuse of the criminal process.
- Whether the allegations about the incident of 22 May 2019 at the accused's house disclosed offences under Sections 294(b), 342 and 506(1) IPC.
- Whether the High Court should have quashed the FIR in exercise of its inherent power under Section 482 CrPC.
Provisions considered
- Section 420, Indian Penal Code, 1860The offence requires that the accused induced the victim to part with property or valuable security and that the inducement was made at the inception with intent to defraud. On the admitted allegations the investment was made on the suggestion of the complainant's own brother (accused No.5) and the Rs.1.5 crore went to the brother's company, so no inducement by the appellants was alleged and the ingredients were wholly missing. (¶¶ 22, 23, 25, 31)
- Sections 294(b) and 506(1), Indian Penal Code, 1860Even accepting the complainant's version, the incident occurred in the accused's own house where the complainant had gone with relatives; verbal exchanges in the heat of the moment, and the words attributed to the accused, did not constitute the ingredients of obscene utterance or criminal intimidation. (¶¶ 27, 32)
- Section 342, Indian Penal Code, 1860The allegation that the complainant and his companions were wrongfully restrained was found to be a ploy to add gravity to the case and settle scores. (¶¶ 28, 32)
- Section 482, Code of Criminal Procedure, 1973Following Iqbal v. State of U.P., where an accused alleges that proceedings are manifestly frivolous, vexatious or instituted for vengeance, the court must look at the FIR with care, read between the lines and consider the attending circumstances rather than the averments alone. Applying this, the FIR was found to be manifestly frivolous and lodged with an ulterior motive, and was quashed. (¶¶ 29, 30, 34)
- Section 160, Code of Criminal Procedure, 1973Noted that the police had issued summons to the complainant under Section 160 in connection with the accused's prior complaint of 22 May 2019, and that the impugned FIR was lodged only after receipt of those summons. (¶ 27)
- Section 40A(3), Income Tax Act, 1961A cash payment of Rs.20 lakh, as alleged, would have been in the teeth of Section 40A(3) as it stood in 2013; absent any averment that the amount came from valid, accounted sources or corroboration by verified account statements, the allegation had no sanctity in law. (¶ 26)
Held
- On the complainant's own case the suggestion to invest in the car dealership came from his elder brother (accused No.5) and the Rs.1.5 crore was transferred to the brother's company; none of the accused-appellants gave any inducement or promise. Since Section 420 IPC requires inducement, made at the inception with intent to defraud, to part with property or valuable security, its ingredients were entirely absent from the highest allegations in the FIR. (¶¶ 22, 23, 25, 31)
- An unexplained delay of about six years in lodging an FIR about a 2013 investment, after the limitation for a civil suit had expired, showed that the complaint lacked bona fides and that the complainant sought to use the police as recovery agents instead of invoking the civil court. (¶¶ 24, 31)
- A claim of a cash payment of Rs.20 lakh must be corroborated by properly verified account statements to be reliable; such a payment would also contravene Section 40A(3) of the Income Tax Act as it then stood. Where the complainant did not even allege that the money came from valid or accounted sources, the allegation had no sanctity in law and appeared fabricated, particularly as no written acknowledgement or business profile was sought before investing Rs.1.7 crore. (¶ 26)
- The allegations concerning the incident of 22 May 2019 were unbelievable: it occurred at the accused's house where the complainant had gone with relatives, the accused had lodged their own complaint about that incident the same day, the complainant filed his FIR only twelve days later after receiving police summons on the accused's complaint, and in any event the words and conduct attributed to the accused did not constitute offences under Sections 294(b), 506(1) or 342 IPC. (¶¶ 27, 28, 32)
- When an accused invokes Section 482 CrPC or Article 226 alleging that the FIR is manifestly frivolous, vexatious or lodged to wreak vengeance, the court must examine the FIR closely and consider the overall circumstances leading to its registration, not merely whether its averments recite the ingredients of the offence. The present FIR fell in that category and its continuation would be a gross abuse of the process of law. (¶¶ 29, 30, 34)
Result
Appeals allowed. The Madras High Court's order dated 27 September 2022 set aside; FIR No. 21 of 2019 dated 4 June 2019 and all proceedings arising from it against the accused-appellants quashed as an abuse of the process of law. Pending applications disposed of.