PUNIT BERIWALA versus THE STATE OF NCT OF DELHI AND ORS.

Summary

The Delhi High Court had quashed an FIR under Sections 467, 468, 471, 420 and 120B IPC against two members of an HUF who had signed as witnesses a 2004 receipt-cum-agreement to sell executed by a family member describing himself as Karta, when (as later revealed by a 2021 sale deed) one of them was the real Karta. The Supreme Court held that at the quashing stage the complaint must be taken as true, and so read it disclosed cognizable offences: the gravamen was their knowing participation in the misrepresentation, not mere attestation. The pendency of a civil suit, the handing over of 'paper' possession and delay were no grounds to quash, there being no limitation for offences punishable with over three years' imprisonment and the limitation period in any event running from knowledge. Cross-FIRs about the same transaction call for comprehensive investigation. FIR revived.

Issues

1. Whether the High Court was justified in quashing the FIR against respondent nos. 2 and 3 and whether a cognizable offence was prima facie made out against them from the complaint.
2. Whether a receipt recording earnest money and the terms of sale is an 'oral' agreement, or a contract capable of specific performance.
3. Whether the institution of a civil suit for specific performance bars investigation of cognizable offences arising from the same transaction.
4. Whether delay in registration of the FIR justified quashing, having regard to Sections 468 and 469 CrPC.
5. Whether the handing over of part possession of a servant quarter negated dishonest intention at the inception of the transaction.
6. How cross-FIRs relating to the same transaction should be investigated.

Provisions considered

• Section 482, Code of Criminal Procedure, 1973The power to quash is to be exercised sparingly and with circumspection; the court must take the averments in the complaint as true, consider only whether they disclose a cognizable offence, and not interfere at the investigation stage save in exceptional cases (Neeharika Infrastructure). Measured against these parameters the High Court's quashing order was set aside. (¶¶ 1, 29, 30, 31, 46)
• Sections 420, 467, 468, 471 and 120B, Indian Penal Code, 1860Taking the complaint as true, respondent nos. 2 and 3, knowing that Bhai Manjit Singh was not the Karta of the HUF (respondent no. 2 was), allowed him to misrepresent himself as Karta and execute the receipt-cum-agreement to sell, inducing the appellant to pay Rs. 1,64,50,000; this disclosed cognizable offences and a conspiracy to cheat, warranting investigation. (¶¶ 31, 32, 46)
• Section 468, Code of Criminal Procedure, 1973No period of limitation is prescribed for offences punishable with imprisonment exceeding three years; the offences alleged being so punishable, delay in lodging the FIR could not be a ground to quash it. (¶¶ 8, 37, 40)
• Section 469, Code of Criminal Procedure, 1973The period of limitation commences from the first day on which the offence comes to the knowledge of the person aggrieved. The misrepresentation about the Karta came to the appellant's knowledge on 28.12.2021 when he obtained the sale deed in favour of J.K. Paper Limited, and the complaint was filed on 12.01.2022, so prima facie there was no delay. (¶¶ 7, 38, 39)

Held

• The premise of the respondents and the impugned order that the agreement to sell was oral is contrary to the facts and untenable in law. Following the Delhi High Court's decision in Nanak Builders, a document titled 'receipt' that contains the essential ingredients of a contract is a contract of which specific performance can be sought; it is the substance and not the form that matters. (¶ 27)
• Mere institution of civil proceedings is not a ground for quashing an FIR or for holding the dispute to be merely civil; the availability of a remedy for breach of contract does not make the civil remedy the only one, and the fact that the offence was committed during a commercial transaction does not by itself show that the complaint did not warrant investigation and, if necessary, trial. (¶ 28)
• The power to quash a complaint or FIR must be exercised sparingly and with circumspection, believing the averments to be true; save in exceptional cases where non-interference would cause miscarriage of justice, courts should not interfere at the stage of investigation. The parameters laid down in Neeharika Infrastructure govern. (¶¶ 29, 30)
• The Single Judge's conclusion that the complaint did not disclose offences against respondent nos. 2 and 3 was factually incorrect. Taken as true, the complaint alleged that they, knowing that Bhai Manjit Singh had no authority to contract for the HUF because respondent no. 2 was its Karta, allowed him to represent himself as Karta with dishonest intent, by which deception the appellant parted with Rs. 1,64,50,000 between April 2004 and January 2005 on receipts some of which they witnessed. The gravamen is the misrepresentation by all three accused, not the mere act of signing as witnesses, an aspect the Single Judge neither dealt with nor examined; at this stage all three can be said to have acted in conspiracy to cheat. (¶¶ 31, 32)
• The defence that intention to cheat was absent at inception because part possession of the servant quarter was handed over inspires no confidence: the appellant alleged possession remained with the accused and was mere paper possession; a similar possession letter was later given to another purchaser, Ashok Gupta; the sale deed to J.K. Paper Limited made no reference to any such possession; and the respondents continued to deal with the property by a registered mortgage with possession, another agreement to sell and a sale deed executed by respondent no. 2 as Karta after the appellant's suit for specific performance was filed, which lends credence to the allegation of multiple transactions by deception. (¶¶ 33, 34, 35)
• Delay in registration of an FIR for offences punishable with more than three years' imprisonment cannot be the basis for interdicting a criminal investigation; delay matters only if the complainant fails to give a plausible explanation, which is for the trial court to decide after recording evidence (Skoda Auto Volkswagen). Here the deception at inception came to the appellant's knowledge only on 28.12.2021, the complaint was filed on 12.01.2022 within the period computed under Section 469 CrPC, and in any event Section 468 prescribes no limitation for such offences. (¶¶ 36, 37, 38, 39, 40)
• The Single Judge erred in concluding that the FIR was lodged only after the civil suit was stayed: the complaint to the Economic Offences Wing was filed on 12.01.2022, well before the Division Bench stayed the suit on 29.03.2022. (¶ 41)
• The accused took inherently contradictory stands, first denying any agreement to sell, then asserting that the advance had been returned, and finally registering a cross-FIR alleging that the payment receipts were forged. Given these contradictions and the pendency of cross-FIRs, the scope of investigation should not have been limited; extending the principle of Nathi Lal on cross cases, investigation of cross-FIRs should be comprehensive, since it will determine whether the receipts are genuine or forged and the complicity of respondent nos. 2 and 3 can be ascertained only when the investigation reaches its logical conclusion. (¶¶ 42, 43, 44, 45)
• The findings were rendered in the context of quashing and shall not bind the courts below while deciding the matter. (¶ 47)

Result

Appeal disposed of; impugned judgment of the Delhi High Court dated 17.10.2022 set aside; FIR No. 94/2022, Police Station Economic Offences Wing, Mandir Marg, New Delhi, under Sections 467, 468, 471, 420 and 120B IPC revived against respondent nos. 2 and 3; findings not to bind the courts below.