K. Ashoka Vs.
N.L.Chandrashekar & Ors.  INSC 743 (15 April 2009)
IN THE SUPREME COURT
OF INDIA CRIMINAL APPELLATE JURISDICTION CRIMINAL APPEAL NOS. 733-734 OF 2009
[ARISING OUT OF S.L.P. (CRIMINAL) NOS. 7687-7688 OF 2007] K. ASHOKA ...
APPELLANT Versus N.L. CHANDRASHEKAR & ORS. ...
S.B. SINHA, J.
Employees House Building Cooperative Society Limited (for short, "the
society") is a society incorporated and registered under the Karnataka
Cooperative Societies Act, 1959 (for short, "the Act").
Appellant herein was
a Director of the society. He filed a complaint petition alleging inter alia
that the respondents herein who were the office-bearers of the society, earned
a huge amount for themselves by alloting a site bearing No. 509 measuring 30' x
40' for a sum of Rs. 2,40,000/- to one Gopal, a name lender who in turn, sold
the said site for a sum of Rs. 28,00,000/- to one Hanumanthegowda by a deed of
sale 2 dated 3.7.2006. However, in the sale deed, the consideration amount was
shown as Rs.10,20,000/-.
It was contended that
the respondents in connivance with the said Gopal made illegal gain as the
market value of the said property was about Rs.28 lakhs.
following facts are admitted.
The land in question
was acquired in the year 1985-86. The society formed a layout and sites were
allotted to its members. However, few sites remained vacant. One of the persons
whose lands were acquired for the society, namely, Munivenkatappa (father of
Gopal) allegedly had requested the society to release one acre of land for his
personal use, pursuant whereto, the society resolved to release 337" x
132" of land in favour of his family. Another application was filed by M.
Gopal, son of said Munivenkatappa, in terms whereof request was again made to
the said society for allotment of the land. The said request was received on
27.3.2006 and allotment of a site bearing No. 509 measuring 30' x 40' for a sum
of Rs.2,40,000/- was made and a deed of sale was executed in his favour on
7.4.2006. A possession certificate was also issued.
Within a period of
three months, said Gopal sold the said property in favour of Hanumanthegowda
for a sum of Rs.28,00,000/-. However, in the sale deed, the consideration
amount was shown as Rs.10,20,000/-.
a complaint was filed before the Joint Registrar of Cooperative Societies to
cause an investigation thereinto. On or about 29.12.2006, a report was
submitted by him opining that the office bearers of the society, namely, the
respondents herein in connivance with Gopal and by making him a tool in their
hands, allotted the site which was sold for a sum of Rs. 27,60,000/-. A
recommendation for recovery of the amount from the office bearers of the
society was also made. In his report, it was furthermore stated:
"There is no
site called No.509 in the approved plan of the Society. The Society has not
produced any documents/records to show that the said Site No. 509 is released
by BDA. The site No. 142 is existing and the same is allotted to one Smt.
Shailaja Swamy and registered the same in her name by the Society as on
23/2/1995 itself. The certified copy of the Sale Deed is produced herewith and
marked as "Annexure 13".
As per the Orders of
the Hon'ble High Court of Karnataka, it has come to know that the
alternative/another site was given to Smt.
Shailaja Swamy during
the period of Special Officer. The copy of the same is marked as "Annexure
14". It is further come to know that Smt. Shailaja Swamy had approached
the Hon'ble High Court of Karnataka by filing a writ petition against the
Society on the grounds that the alternative site allotted to him cannot be made
Khatha in her name because the said site is a C.A. site, which has been
allotted and registered to her by the Society. When this matter is going on,
how can the Society allot the same i.e. No. 142 by naming it as Site No. 509
and illegally allotting to Sri Gopal and registering the same by the Society.
This is an 4 illegal act committed by the Board of Directors."
however, contend that the said enquiry was conducted without hearing them and
other office bearers of the Society;
no notice had been
issued to them and no opportunity of being heard or to participate in the
enquiry proceedings had been provided. It is furthermore contended that the
proceedings before the Joint Registrar is still pending.
on the basis of the report submitted by the Joint Registrar, a complaint
petition under Section 200 of the Code of Criminal Procedure (for short,
"the Code") in respect of commission of an offence under Section 420
read with Section 34 of the Indian Penal Code (for short, "the IPC")
was filed by the appellant, inter alia, alleging:
Complainant further submits while allotting site No. 509 to Sri Gopal the
Accused have played a big fraud on the society. They do not know that there is
already a site bearing No. 142 which is existing on the same land. The Accused
have shifted site No. 509 on site No. 142 and registered the same in favour of
Sri Gopal. The Complainant has obtained a certified copy of site No. 142 and
509 and surprised to
find both the schedules one and the same. The sub registrar K R Puram Bangalore
who is having the copy of approved plan of Sadananda Nagar Layout with him
should 5 have observed this fraud and objected for registering this site. While
shifting any site by the society in the approved plan the society will have to
obtain permission from the commissioner TPM Bangalore Development Authority
which the Accused have failed to do the same.
BDA has not released
this site at all.
11. The Complainant
humbly submits Sri Gopal or any of his family members are not eligible for any
site from the society since the society has already given 1.00 acre of land to
their family way back in 1986 itself. The accused have made Sri Gopal as Benami
Owner and allotted a site in his favour at Rs.200/- per square feet and sold
the same through him at Rs.
2,500 per square feet
which is the market value at Sadananda Nagar Layout and distributed
Rs.28,00,000 which is a big booty among all. This is a clear case of misuse of
their position as office bearers and directors, cheating, fraud and working
against the interest of the society."
said complaint petition filed by the appellant was registered as CC No. 22069
of 2007 in the Court of Xth Additional Chief Metropolitan Magistrate, Mayohall,
Bangalore. The learned Magistrate took cognizance of the offence under Section
420 read with Section 34 of the IPC and issued summons to the respondents.
thereafter filed an application under Section 482 of the Code being Criminal
Petition Nos. 838 and 910 of 2007 in the High 6 Court of Karnataka at
Bangalore for quashing the entire criminal proceedings initiated by appellant.
By reason of the impugned judgment, the said petition has been allowed by the
High Court, holding:
"12. At the very
outset, it may be mentioned that according to the complainant, there is no site
bearing No. 509 in the layout formed by the Society. It is also submitted that
the site bearing No. 142 is already sold but the boundaries of that site is
mentioned to the site bearing No.
509. The complainant
has not made the said Gopal allottee either as witness or an accused.
consideration the facts of the case, the first aggrieved person would be the
allottee Sri Gopal, as the site already sold is allotted to him. It is stated
that the site is sold by Mr. Gopal to Hanumanthe Gowda. Thus, the said purchaser
Hanumanthe Gowda would have been another aggrieved party to sue the vendor Mr. Gopal.
There is no material placed on record to show that said Gopal has sold the site
to Mr. Gowda. There is no material placed on record to show that said Gopal has
sold the site to Mr. Hanumanthe Gowda for a sum of Rs.28,00,000/- and that
money was got distributed among the accused. All the averments made in the
complaint are nothing but imaginary. It is crystal clear that the respondent -
complainant wants to settle his score against the accused/members of the
society by abuse of process of law. Learned Magistrate erred in taking
cognizance for the offence alleged against the accused. It is a fit case for
quashing the proceedings."
G.V. Chandrashekar, learned counsel appearing on behalf of appellant would
urge:- 7 i. Appellant being a member of the society and having an interest in
the running of the affairs thereof could maintain the aforementioned complaint
ii. The allegations
made in the complaint petition disclosed a cognizable offence and, thus, the
High Court committed a serious error in passing the impugned judgment.
iii. Although Gopal
or for that matter Hanumanthegowda had not been made as accused, they can be
summoned at a later stage wherefor such an application can be filed in the
inquiry or trial.
iv. Section 415 of
the IPC providing for commission of an act of cheating also in respect of the
property, the High Court committed a serious error in opining that no case has
been made out for issuance of summons against the respondents.
S.N. Bhat and Ms. Kiran Suri, learned counsel appearing on the behalf of the
respondents, on the other hand, would contend:
i. No deception
within the meaning of Section 415 of the IPC having been committed by the
respondents, the learned 8 Magistrate committed a serious error of law in
taking cognizance of an offence under Section 420 of the IPC.
ii. The allegations
made in the complaint petition even if they are taken at their face value and accepted
in their entirety would merely disclose a case of misuse of power making
allotment in favour of Gopal at a lower price, which being an offence within
the meaning of the Act, only a complainant in terms of the provisions thereof
iii. No reliance
could be placed on the report of the Joint Registrar by the learned Magistrate
as the matter is sub judice before the High Court.
iv. The complaint
petition filed by the appellant is an abuse of the process of the court
inasmuch as he filed the complaint petition after he lost the election.
is now a well settled principle of law that the High Court in exercise of its
inherent jurisdiction under Section 482 of the Code may quash a criminal
proceeding inter alia in the event the allegations made in the complaint
petition even if they are taken at their face value and accepted in their
entirety does not disclose commission of a cognizable offence.
of the principles which would be attracted for invoking the said jurisdiction
have been laid down in Indian Oil Corpn. vs. NEPC India Ltd. & ors. [(2006)
6 SCC 736], are:
"(i) A complaint
can be quashed where the allegations made in 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 the case alleged against the accused.
For this purpose, the
complaint has to be examined as a whole, but without examining the merits of
the allegations. Neither a detailed inquiry nor a meticulous analysis of the
material nor an assessment of the reliability or genuineness of the allegations
in the complaint is warranted while examining prayer for quashing of a
(ii) A complaint may
also be quashed where it is a clear abuse of the process of the court, as when
the criminal proceeding is found to have been initiated with maladies/malice
for wreaking vengeance or to cause harm, or where the allegations are absurd
and inherently improbable.
(iii) The power to
quash shall not, however, be used to stifle or scuttle a legitimate
The power should be
used sparingly and with abundant caution.
(iv) The complaint is
not required to verbatim reproduce the legal ingredients of the offence
alleged. If the necessary factual foundation is laid in the complaint, merely
on the ground that a few ingredients have not been stated in detail, 10 the
proceedings should not be quashed.
Quashing of the
complaint is warranted only where the complaint is so bereft of even the basic
facts which are absolutely necessary for making out the offence.
(v) A given set of
facts may make out : (a) purely a civil wrong; or (b) purely a criminal
offence; or (c) a civil wrong as also a criminal offence. A commercial
transaction or a contractual dispute, apart from furnishing a cause of action
for seeking remedy in civil law, may also involve a criminal offence. As the
nature and scope of a civil proceedings are different from a criminal
proceeding, the mere fact that the complaint relates to a commercial
transaction or breach of contract, for which a civil remedy is available or has
been availed, is not by itself a ground to quash the criminal proceedings. The
test is whether the allegations in the complaint disclose a criminal offence or
primary allegation against the respondents in the complaint petition does not
make out an offence only under the provisions of Section 109 of the Act as
contended by Mr. Bhat but also other offences.
A legal embargo in
filing a complaint is contained in Section 109(6) of the Act, which reads as
under:- "109. (6). If any person-- (i) not eligible to become a member
under Section 17 applies to a co-operative society for admission as a member,
or becomes a member, or after ceasing to be a member under sub-section (2) of
that section acts as or exercises any rights or privileges of a member of any
such co-operative society;
(ii) exercise the
rights of a member in contravention of the provisions of Section 19;
(iii) willfully fails
to furnish the information or document in contravention of the provisions of
sub-section (3) of Section 87;
(iv) grants a lease
of the mortgaged property in contravention of sub-section (1) of Section 95,
shall be punishable with imprisonment for a term which may extend to three
months or with fine which may extend to three thousand rupees."
allegations made in the complaint petition disclose commission of a cognizable
offence. A conspiracy is said to have been entered into for putting the society
and consequentially the members to a great loss. A conspiracy is also said to
have been hatched for the aforementioned purpose as a result whereof not only
an allotment was made in favour of a person who was not entitled thereto but
also allotted plot was assigned in favour of a third party for a huge sum.
the allegations made in the complaint petition are correct or not have to be
considered during trial. The High Court in its impugned judgment proceeded
inter alia on the premise that the appellant has no locus standi. It may be
true that Gopal and Hanumanthegowda had not been impleaded as accused but that
by itself may not be a ground for quashing the order of cognizance taken
against the respondents. If the role played by them in regard to that part of
the conspiracy is only to 12 make Gopal a member and got the land allotted in
his name by way of camouflage, appellant as a member of the society had a locus
standi to file a complaint.
High Court furthermore, in our opinion, is not correct to opine that no
document has been produced by the appellant to show that Gopal made an
assignment of the land in favour of Hanumanthegowda.
document can be produced for the purpose of showing that the actual amount of
consideration for the said transaction amounted to Rs.28,00,000/- although
ostensibly the amount of Rs.10,20,000/- has been shown to be amount of
consideration in the registered document. It may be true that the question as
to whether the report of the Registrar can be relied upon for the purpose of
showing as to how the act of cheating has been committed by the respondents is
a matter which must be considered at the time of trial but there cannot be any
doubt whatsoever that so long as the report is not set aside, the same could
form the basis for forming of an opinion at least for the purpose of proceeding
against the respondents that they manipulated the records of the cooperative
society to make unlawful gain for themselves and causing unlawful loss to the
In Indian Oil Corpn.
(supra) whereupon Ms. Suri has placed strong reliance, this Court in the facts
and circumstances of the case therein 13 although opined that no case of
"criminal breach of trust" as defined under Section 405 of the IPC
has been made out, holding:
essential ingredients of the offence of `cheating' are: (i) deception of a
person either by making a false or misleading representation or by other action
or omission, (ii) fraudulent or dishonest inducement of that person to either
deliver any property or to consent to the retention thereof by any person or to
intentionally induce 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
Noticing some earlier
decisions, it was opined:
"36. In this
case, the complaints clearly allege that the accused with fraudulent intention
to cheat and defraud the IOC, had induced IOC to resume supply of aircraft fuel
on cash and carry basis, by entering into a further agreement dated 20.9.1997
and undertaking to clear the outstanding amount of Rs. 18 crores approximately
within the time stipulated in the Hypothecation Agreements. The sum and
substance of the said allegation read with other averments extracted above, is
that NEPC India, having committed default in Page 3170 paying the sum of Rs. 18
crores, entered into a fresh agreement dated 20.9.1997 agreeing to clear the
outstanding as per a fresh schedule, with the dishonest and fraudulent
intention of pre- empting and avoiding any action by IOC in terms of the
hypothecation deeds to take possession of the aircrafts. Though the supplies
after 20.9.1997 were on cash and carry basis, 14 the fraudulent intention is
alleged to emanate from the promise under the said agreement to make payment,
thereby preventing immediate seizure (taking possession) of the aircrafts by
IOC. This allegation made in addition to the allegation relating to removal of
engines, has been lost sight of by the High Court. All that is to be seen is
whether the necessary allegations exist in the complaint to bring the case
within Section 415. We are clearly of the view that the allegations in the
complaint constitute such an offence. We are not concerned with the proof of
such allegations or ultimate outcome of trial at this stage."
opinion of the High Court that the averments made in the complaint petition are
imaginary is not based on any material. Even assuming that the complainant had
a score to settle against the accused, the same by itself may not be a ground
to quash the entire criminal proceedings particularly in view of the fact that
at least a prima facie case has been established in view of the report of the
109 of the Act provides for commission of offences under the said Act. Therein,
no statutory embargo has been placed for a court to take cognizance of an
offence under the provisions of IPC. If the allegations made in the complaint
petition or in the first information report make out a case under the IPC, Section
111 of the Act, to which our attention has been drawn, would constitute no bar
for maintenance thereof being applicable only in respect of offences committed
under the said Act. The said statutory interdict therefore cannot be extended
in regard to commission of an offence under any other Act.
the reasons aforementioned, the impugned judgment of the High Court cannot be
sustained, which is set aside accordingly. The appeals are allowed. It is made
clear that we have not entered into the merit of the matter and, thus, all
contentions of the parties shall remain open.
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