Case Note & Summary
The case arose from a dispute over a property sale. The complainant entered into an agreement to sell a house for Rs.54 lakhs and paid the full consideration. Later, he discovered that the property was mortgaged to Andhra Bank. He paid Rs.16,93,059 to the bank to redeem the mortgage and also paid registration charges of Rs.7,81,941 to get the sale deed executed in his name. Thereafter, he lodged a complaint under Section 420/34 IPC alleging that the sellers cheated him by not disclosing the mortgage. The police conducted a preliminary inquiry and initially found a prima facie case, but later, after further inquiry, concluded that the dispute was civil in nature and no FIR was registered. The complainant then filed a writ petition in the High Court seeking directions to register FIR and take action against the police officers. The High Court allowed the writ petition, directing the Commissioner of Police to take action against the officers and to take the preliminary inquiry to its logical conclusion, and imposed costs of Rs.25,000 on the State. The Supreme Court, on appeal, held that the criminal proceedings were an abuse of the process of law. The Court noted that the complainant, after knowing about the mortgage, voluntarily paid the bank and got the sale deed executed, which indicated that there was no deception. The Court also noted that the complainant had earlier filed an application under Section 156(3) CrPC which was rejected, and a private complaint under Section 200 CrPC was pending. The Supreme Court quashed the High Court's order and also quashed the criminal proceedings pending before the Magistrate, observing that the dispute was purely civil and the criminal machinery was being misused.
Headnote
A) Criminal Law - Abuse of Process - Civil Dispute - Section 420/34 IPC - The complainant, after knowing that the property was mortgaged, paid the mortgage money and got the sale deed executed. Thereafter, he filed a criminal complaint alleging cheating. The Supreme Court held that the criminal proceedings were an abuse of the process of law and quashed them, observing that the dispute was purely civil in nature and the complainant had already availed civil remedies. (Paras 4-4.3) B) Criminal Procedure Code - Registration of FIR - Preliminary Inquiry - Sections 154, 156(3), 200 CrPC - The police conducted a preliminary inquiry and initially opined that a cognizable offence was made out, but later, after further inquiry, concluded that the dispute was civil. The Supreme Court held that the police were justified in not registering the FIR and that the High Court erred in directing action against the police officers. (Paras 2-4.2) C) Criminal Law - Cheating - Section 420 IPC - Essential Ingredients - For an offence under Section 420 IPC, there must be fraudulent or dishonest intention at the time of making the promise. In this case, the complainant voluntarily paid the mortgage money and got the sale deed executed after knowing the mortgage, indicating no deception. (Paras 4-4.1)
Issue of Consideration
Whether the High Court was justified in directing registration of FIR and action against police officers when the dispute was essentially civil in nature and the complainant had already availed civil remedies.
Final Decision
The Supreme Court allowed the appeal, quashed the High Court's judgment and order dated 13.01.2017, and also quashed the criminal proceedings pending before the learned Magistrate in respect of the transaction in question.
Law Points
- Criminal proceedings cannot be used to settle civil disputes
- Abuse of process of law
- Section 420 IPC requires fraudulent intention from inception
- Police not bound to register FIR if no cognizable offence is made out after preliminary inquiry
