PRITI SARAF & ANR.versusSTATE OF NCT OF DELHI & ANR.

                       [2021] 2 S.C.R. 577                            577


                     PRITI SARAF & ANR.                               A
                                v.
               STATE OF NCT OF DELHI & ANR.
                 (Criminal Appeal No. 296 of 2021)
                        MARCH 10, 2021                                B
       [INDU MALHOTRA AND AJAY RASTOGI, JJ.]
       Code of Criminal Procedure, 1973 – s.482 – Scope and ambit
of – Commercial transaction – FIR against respondent no.2 and
one more person u/ss.420, 406 and 34 IPC – High Court quashed
                                                                      C
all the criminal proceedings – On appeal, held: To exercise powers
u/s.482, the complaint in its entirety shall have to be examined on
the basis of the allegation made in the complaint/FIR/charge-sheet
– At that stage, High Court not under an obligation to go into the
matter or examine its correctness – Whatever appears on the face
of the complaint/FIR/charge-sheet shall be taken into consideration   D
without any critical examination of the same – In the present case,
ingredients of the offences u/ss. 406 and 420, IPC cannot be said
to be absent on the basis of the allegations in the complaint/FIR/
charge-sheet – Sufficient material available to connect respondent
no.2 in the commission of crime – High Court not justified in
                                                                      E
quashing the criminal proceedings – Penal Code, 1860- ss.420,
406 & 34.
       Allowing the appeals, the Court
       Held: 1.1 To exercise powers under Section 482 CrPC,
the complaint in its entirety shall have to be examined on the
basis of the allegation made in the complaint/FIR/charge-sheet        F
and the High Court at that stage was not under an obligation to
go into the matter or examine its correctness. Whatever appears
on the face of the complaint/FIR/charge-sheet shall be taken into
consideration without any critical examination of the same. The
offence ought to appear ex facie on the complaint/FIR/charge-         G
sheet and other documentary evidence, if any, on record. [Para
23][588-D-E]
      1.2 The exercise of inherent power of the High Court is an
extraordinary power which has to be exercised with great care
                                                                      H
                               577
578            SUPREME COURT REPORTS                      [2021] 2 S.C.R.


A     and circumspection before embarking to scrutinise the complaint/
      FIR/charge-sheet in deciding whether the case is the rarest of
      rare case, to scuttle the prosecution at its inception. Whether
      the allegations in the complaint were true is to be decided on the
      basis of the evidence led at the stage of trial. [Paras 28, 30][590-
      F-G; 591-C]
B
            Nagpur Steel & Alloys Pvt. Ltd. v. P. Radhakrishna and
            Others 1997 SCC(Cri) 1073 – relied on.
             1.3 In the matter of exercise of inherent power by the High
      Court, the only requirement is to see whether continuance of the
C     proceedings would be a total abuse of the process of the Court.
      The Criminal Procedure Code contains a detailed procedure for
      investigation, framing of charge and trial, and in the event when
      the High Court is desirous of putting a halt to the known
      procedure of law, it must use proper circumspection with great
      care and caution to interfere in the complaint/FIR/charge-sheet
D     in exercise of its inherent jurisdiction. In the instant case, on a
      careful reading of the complaint/FIR/charge-sheet, it cannot be
      said that the complaint does not disclose the commission of an
      offence. The ingredients of the offences under Sections 406 and
      420 IPC cannot be said to be absent on the basis of the allegations
E     in the complaint/FIR/charge-sheet. Whether the allegations in
      the complaint are otherwise correct or not, has to be decided on
      the basis of the evidence to be led during the course of trial.
      Simply because there is a remedy provided for breach of contract
      or arbitral proceedings initiated at the instance of the appellants,
      that does not by itself clothe the court to come to a conclusion
F     that civil remedy is the only remedy, and the initiation of criminal
      proceedings, in any manner, will be an abuse of the process of
      the court for exercising inherent powers of the High Court under
      Section 482 CrPC for quashing such proceedings. This Court
      has perused the pleadings of the parties, the complaint/FIR/
G     charge-sheet and orders of the Courts below and have taken into
      consideration the material on record. The issue involved in the
      matter under consideration is not a case in which the criminal
      trial should have been short-circuited. The High Court was not
      justified in quashing the criminal proceedings in exercise of its

H
    PRITI SARAF & ANR. v. STATE OF NCT OF DELHI & ANR.                579


inherent jurisdiction. The High Court has primarily adverted on       A
two circumstances, (i) that it was a case of termination of
agreement to sell on account of an alleged breach of the contract
and (ii) the fact that the arbitral proceedings have been initiated
at the instance of the appellants. Both the alleged circumstances
noticed by the High Court are unsustainable in law. The facts
                                                                      B
narrated in the present complaint/FIR/charge-sheet indeed reveal
the commercial transaction but that is hardly a reason for holding
that the offence of cheating would elude from such transaction.
In fact, many a times, offence of cheating is committed in the
course of commercial transactions and the illustrations have been
set out under Sections 415, 418 and 420 IPC. So far as initiation     C
of arbitral proceedings is concerned, there is no correlation with
the criminal proceedings. That apart, the High Court has not even
looked into the charge-sheet filed against 2nd respondent which
was on record to reach at the conclusion that any criminal offence
as stated is prima facie being made out and veracity of it indeed
                                                                      D
be examined in the course of criminal trial. [Paras 31-34][591-G-
H; 592-A-C; 592-D-G; 593-C-D]
      Trisuns Chemical Industry v. Rajesh Agarwal and Ors.
      (1999) 8 SCC 686 : [1999] 2 Suppl. SCR 686 – relied
      on.
                                                                      E
      1.4 There was sufficient material available as manifests from
the record of criminal proceedings to connect the 2 nd respondent
in the commission of crime. The judgment of the High Court
impugned dated 15th March, 2019 is hereby set aside. [Paras
36, 38][593-G-H; 594-C]
                                                                      F
      State of Haryana and Ors. v. Bhajan Lal and Others
      (1992) Suppl 1 SCC 335 : [1990] 3 Suppl. SCR 259 –
      relied on.
      R.P. Kapur v. State of Punjab [1960] 3 SCR 388; M.
      Krishnan v. Vijay Singh & Anr. (2001) 8 SCC 645 :               G
      [2001] 4 Suppl. SCR 45; Joseph Salvaraj A. v. State of
      Gujarat and Ors. (2011) 7 SCC 59 : [2011] 8 SCR 815;
      Arun Bhandari v. State of Uttar Pradesh and Ors. (2013)
      2 SCC 801 : [2013] 3 SCR 961; Anand Kumar Mohatta
      and Anr. v. State (NCT of Delhi), Department of Home
      and Anr. (2019) 11 SCC 706 : [2018] 13 SCR 1028;                H
580     SUPREME COURT REPORTS                        [2021] 2 S.C.R.


A     Rajabhai Abdul Rehman Munshi v. Vasudev Dhanjibhai
      Mody [1964] 3 SCR 480; G. Narayanaswamy Reddy
      (Dead) by LRs. & Anr. v. Govt. of Karnataka and Anr.
      (1991) 3 SCC 261 : [1991] 2 SCR 563; G. Sagar Suri
      & Anr. v. State of U.P. and Ors. (2000) 2 SCC 636 :
      [2000] 1 SCR 417; Murari Lal Gupta v. Gopi Singh
B
      (2005) 13 SCC 699; Indian Oil Corporation v. NEPC
      India Ltd. and Ors. (2006) 6 SCC 736 : [2006] 3 Suppl.
      SCR 704; Harmanpreet Singh Ahluwalia and Ors. v.
      State of Punjab and Ors. (2009) 7 SCC 712 : [2009] 7
      SCR 563; Chandran Ratnaswami v. K.C. Palanisamy
C     and Ors. (2013) 6 SCC 740 : [2013] 17 SCR 853; VESA
      Holdings Private Limited and Anr. v. State of Kerala &
      Ors. (2015) 8 SCC 293 : [2015] 4 SCR 27; K. Subba
      Rao and Ors. v. State of Telangana Rep. by its Secretary,
      Department of Home & Ors. (2018) 14 SCC 452; Arnab
      Manoranjan Goswami v. State of Maharashtra and
D
      Others 2020 SCC Online SC 964 – referred to.
                       Case Law Reference
      [1960] 3 SCR 388             referred to         para 14
      [1990] 3 Suppl. SCR 259 relied on                para 14
E
      [1999] 2 Suppl. SCR 686 relied on                para 14
      [2001] 4 Suppl. SCR 45      referred to          para 14
      [2011] 8 SCR 815            referred to          para 14
      [2013] 3 SCR 961             referred to         para 14
F
      [2018] 13 SCR 1028          referred to          para 14
      [1964] 3 SCR 480             referred to         para 20
      [1991] 2 SCR 563             referred to         para 20

G     [2000] 1 SCR 417             referred to         para 20
      (2005) 13 SCC 699           referred to          para 20
      [2006] 3 Suppl. SCR 704 referred to              para 20
      [2009] 7 SCR 563             referred to         para 20
H
    PRITI SARAF & ANR. v. STATE OF NCT OF DELHI & ANR.                       581
                    [AJAY RASTOGI, J.]

      [2013] 17 SCR 853              referred to           para 20           A
      [2015] 4 SCR 27                referred to           para 20
      (2018) 14 SCC 452              referred to           para 20
      1997 SCC(Cri) 1073             relied on             para 27
      CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No.                   B
296 of 2021
      From the Judgment and Order dated 15.3.2019 of the High Court
of Delhi at New Delhi in Crl.Misc.(Main) No. 1718 of 2017.
      Mukul Rohatgi, Sr. Adv., Ms. Nupur Kumar, Hemant Manjani,
                                                                             C
M. Thangathurai, Sunil Fernandes, Ms. Nupur Kumar, Darpan Sachdeva,
Prastut Dalvi, Shubham Sharma, Advs. for the Appellants.
      Ms. Aishwarya Bhati, ASG., P. Chidambaram, Vikas Singh, Sr.
Advs., Ms. Vijayshree Pattnaik, Ms. Rekha Pandey, Ms. Sansriti Pathak,
Ms. Ameyavikrama Thanvi, B. V. Balaram Das, Ankur Chawla, Abhishek
                                                                             D
Puri, Ms. Aruna Gupta, Rohit Ranjan, Rakesh Kumar, Manish Kumar,
R. K. Mohit Gupta, Vinay Juneja, Advs. for the Respondents.
      The Judgment of the Court was delivered by
      RASTOGI, J.
      1. Leave granted.                                                      E

       2. The appellants who are the de-facto complainants in FIR No.
132/2017 dated 28th April, 2017 are questioning the order of the High
Court dated 15th March, 2019 passed in Criminal Miscellaneous Case
Nos. 1718/2017 and 7009/2017 whereby the learned Single Judge in
exercise of its jurisdiction under Section 482 of the Code of Criminal       F
Procedure(hereinafter being referred to as “CrPC”) taking cognizance
for the offence under Sections 420, 406 and 34 IPC quashed the orders
and set aside the criminal proceedings against 2nd respondent on the
foundation that the allegations made in the complaint/FIR does not
constitute offences under aforestated sections.                              G
      Brief facts of the case
       3. The factual matrix of the matter as reflected from the complaint
as alleged are that the subject property in question, i.e., 37, Friends
Colony(East), New Delhi is in the ownership of 2nd respondent. The
said property was mortgaged with State Bank of Patiala and the total         H
582             SUPREME COURT REPORTS                           [2021] 2 S.C.R.


A     legal liability payable to the Bank was Rs. 18 crores. That in order to
      clear the said dues, 2nd respondent hatched a conspiracy with broker
      Ashok Kumar so as to cheat and defraud the appellants/complainants
      and to further misappropriate the amounts paid by the complainants as
      part of the deal, the 2nd respondent breached the trust of the appellants/
      complainants deliberately and falsely stating to the appellants/
B
      complainants that the 2nd respondent would be liable to pay a sum of Rs.
      25.50 crores to the complainant if the deal is not carried forward by the
      2nd respondent. Keeping in view the overall scenario, agreement to sell
      was executed on 24th December, 2011 between the 2nd respondent and
      the 1st appellant. The 2nd respondent agreed to sell 1205.43 sq yds. of
C     the property in question for a total sale consideration of Rs. 63,28,50,750/
      -. At the time of execution, 1st appellant paid a sum of Rs. 12.50 crores
      vide cheque dated 24th December, 2011 drawn on HDFC Bank, New
      Friends Colony, Delhi. As per clause 3 of the said agreement to sell, 2nd
      respondent had to perform and complete three requirements which were
      compulsory in nature. The said requirements were to be completed by
D
      the 2nd respondent latest by 24th March, 2012 before any further amount
      is to be received by her from the 1st appellant/complainant.
              4. It was further alleged in the complaint that the three
      requirements in terms of clause 3 of the agreement to sell were not
      fulfilled by the 2nd respondent and even after there being a delay in
E     obtaining sanction plans, still the 1st appellant on demand made a payment
      of Rs. 5.40 crores by a cheque dated 23rd May, 2012 and to show her
      bonafides, the 2nd respondent handed over post-dated cheques worth
      Rs. 25.50 crores towards security for performance of agreement dated
      24 th December 2011. After the amount was received from the 1 st
F     appellant/complainant, 2nd respondent immediately cleared her outstanding
      legal liability of State Bank of Patiala and obtained NOC from the bank,
      however, the fact of obtaining NOC was never divulged by the 2 nd
      respondent to the complainants deliberately. This fact for the first time
      was disclosed by the 2nd respondent at the stage when post-dated cheques
      of Rs.25.50 crores handed over as security to the complainant were
G     rendered invalid.
             5. The intention of the 2nd respondent from the very inception to
      cheat and deceive the complainants/appellants is made out from the fact
      that the 2nd respondent had to complete the compulsory requirement on
      or before 24th March, 2012 but the first two requirements were completed
H     on 11th May, 2012 and 2 nd June, 2012 respectively and the third
    PRITI SARAF & ANR. v. STATE OF NCT OF DELHI & ANR.                        583
                    [AJAY RASTOGI, J.]

requirement was still not complete. At this stage, just to cheat the 1 st     A
appellant/complainant, 2nd respondent illegally terminated the agreement
to sell vide communication dated 30th January, 2013. The 1st appellant
had tried her level best to get the matter settled but, the modus operandi
of the 2nd respondent was to cheat from the very inception when the
agreement to sell was executed, nothing materialised.
                                                                              B
        6. In this regard, a private complaint was filed under Section 200
read with Section 190 CrPC on 23rd September, 2015 before the learned
Magistrate for taking cognizance of the offence committed by the 2nd
respondent before Saket Court, Delhi wherein it was directed to the
concerned Police Station to register the FIR under Section 156(3) CrPC
vide Order dated 15th November, 2016 that came to be challenged by            C
the 2nd respondent by filing of a criminal revision but that came to be
dismissed by the ASJ & Special Judge(NDPS), South East, Saket Courts,
New Delhi vide Order dated 26th April, 2017 and thereafter FIR under
Section 156(3) CrPC came to be registered against the 2nd respondent
and the broker Mr. Ashok Kumar under Sections 420, 406 and 34 IPC             D
on 28th April, 2017.
        7. The Investigation Officer conducted investigation and filed
charge-sheet dated 5th October, 2018 under Sections 420, 406 and 34
IPC. It reveals from the charge-sheet that the property in question, i.e.
1205.43 sq. yds was alleged to be sub-divided whereas the subject
                                                                              E
property, i.e. Plot No. 37 is admeasuring 3930 sq. yds. and sub-division
of the plot is not permitted to be sanctioned as per Clause 4.4.3(IV) of
the Master Plan Delhi, 2021. It also reveals from the charge-sheet that
prior to the present transaction which was executed pursuant to
agreement to sell dated 24th December, 2011, 2nd respondent under the
same modus operandi earlier in reference to self-same subject property        F
forfeited in the year 2007 a sum of Rs.18 crores from M/s. Shinestar
Buildcon Private Ltd. It further reveals that 2nd respondent never got
the site plan sanctioned for appellants nor the bifurcated & demarcated
area knowingly because of her malafide intentions. The role of husband
of 2nd respondent as a suspect is under pending investigation under Section
                                                                              G
173(8) CrPC and if adverse material comes on record, the supplementary
charge-sheet may be filed against S.C. Goyal(husband of 2nd respondent)
at a later stage.
        8. The 2nd respondent challenged the orders dated 15th November,
2016 and 26th April, 2017 passed in revision petition filed at her instance
before the High Court under Section 482 CrPC.                                 H
584            SUPREME COURT REPORTS                          [2021] 2 S.C.R.


A            9. It reveals from the record that after this fact was brought to
      the notice of the learned Judge of the High Court that the charge-sheet
      has been filed, the learned Judge directed the Public Prosecutor by Order
      dated 9th October, 2018 to place the charge-sheet on record. Even after
      the charge-sheet came to be filed by the Public Prosecutor in compliance
      of the Order of the Court, the learned Judge of the High Court while
B
      noticing the facts has only taken note of the agreement to sell dated 24th
      December, 2011, notice of termination dated 30th January, 2013 and
      without examining the bare facts on record, what being transpired in the
      complaint and so also during the investigation reflected from the charge-
      sheet filed before the trial Court and which was part of the record still
C     proceeded on the premise and observed that the case is of a simple
      breach of contract, which gives rise to purely civil dispute and cannot be
      converted into a criminal offence, more so, when the arbitral proceedings
      have been initiated, in the given circumstances, held that if such civil
      disputes as alleged are being permitted to be prosecuted in the criminal
      proceedings, this according to the learned Judge, would be a sheer abuse
D
      of the process of the Court. In consequence thereof, quashed all the
      criminal proceedings and the orders under challenge therein dated 15th
      November, 2016 and 24th April, 2017 and further observed that the
      observations made shall not be construed to be expression on merits, in
      the arbitration proceedings by impugned judgment dated 15th March, 2019.
E            10. We have heard Mr. Mukul Rohatgi, learned senior counsel for
      the appellants, Mr. P. Chidambaram, learned senior counsel for 2 nd
      respondent and Ms. Aishwarya Bhati, learned Additional Solicitor General
      for the State.
             11. Mr. Mukul Rohatgi, learned senior counsel for the appellants
F     submitted that the charge-sheet filed by the Investigating Officer on 5th
      October, 2018 discloses that the offence under Sections 406, 420 and 34
      IPC has been committed by the 2nd respondent and pursuant to the order
      of the learned Judge of the High Court dated 9th October, 2018, copy of
      the charge-sheet was placed on record still no reference of the charge-
G     sheet has been made by the learned Judge in the impugned judgment
      while quashing the criminal proceedings.
             12. Learned counsel further submits that the exercise of inherent
      power of the High Court under Section 482 CrPC is an exceptional one.
      Great care should be taken by the High Court before embarking to
H     scrutinise the complaint/FIR/charge-sheet in deciding whether the rarest
    PRITI SARAF & ANR. v. STATE OF NCT OF DELHI & ANR.                         585
                    [AJAY RASTOGI, J.]

of the rare case is made out to scuttle the prosecution in its inception. It   A
was expected from the High Court to prima facie consider the complaint,
charge-sheet and the statement of witness recorded in support thereof
which was recorded by the Investigating Officer in arriving at a conclusion
whether court could take cognizance of the offence, on that evidence
and proceed further with the trial. If it reaches a conclusion that no
                                                                               B
cognizable offence is made out, no further act could be done except to
quash the FIR/charge-sheet. But only in exceptional cases, i.e., in rarest
of rare cases of mala fide initiation of the proceedings to wreak private
vengeance process is availed of in laying a complaint or FIR itself does
not disclose any cognizable offence.
      13. Learned counsel submits that the High Court has committed a          C
manifest error in ignoring the material facts on record which make the
orders sensitively susceptible and further submits that the learned
Additional Sessions Judge had considered the entire gamut of facts and
appositely opined that the order taking cognizance could not be flawed
but the High Court has completely erred in its conclusion and has not          D
even looked into the bare facts available on record and has proceeded
on a premise that in case where there is an agreement to sell and its
subsequent termination for its alleged breach, such disputes are civil
disputes and more so where the arbitral proceedings are pending, criminal
proceedings will be an abuse of the process of the Court, in the given
circumstances, what has been made to be a basis by the learned Judge           E
is unsustainable in law and hence the order deserves to be set aside.
       14. In support of his submissions, learned counsel has placed
reliance on the judgments of this Court in R.P. Kapur Vs. State of
Punjab1; State of Haryana and Ors. Vs. Bhajan Lal and Others2;
Trisuns Chemical Industry Vs. Rajesh Agarwal and Ors. 3; M.                    F
Krishnan Vs. Vijay Singh & Anr.4; Joseph Salvaraj A. Vs. State of
Gujarat and Ors.5; Arun Bhandari Vs. State of Uttar Pradesh and
Ors.6; Anand Kumar Mohatta and Anr. Vs. State (NCT of Delhi),
Department of Home and Anr.7.
1
                                                                               G
  1960 (3) SCR 388
2
  1992 Suppl (1) SCC 335
3
  1999 (8) SCC 686
4
  2001 (8) SCC 645
5
  2011 (7) SCC 59
6
  2013 (2) SCC 801
7
  2019 (11) SCC 706                                                            H
586             SUPREME COURT REPORTS                            [2021] 2 S.C.R.


A             15. Per contra, Mr. P. Chidambaram, learned senior counsel for
      2nd respondent submits that agreement to sell dated 24th December,
      2011 discloses all the facts about the ownership of the property, property
      being mortgaged with the State Bank of Patiala and after the payment,
      property to be redeemed after obtaining the original papers and no
      objection certificate from the Bank, thereafter further procedure to be
B
      carried out by the parties as per the terms and conditions of the agreement
      to sell dated 24th December, 2011. When the appellant failed to carry out
      its obligation in compliance of the terms and conditions of the agreement
      to sell,the agreement to sell was terminated by letter dated 30th January,
      2013 and that empowers the 2nd respondent to forfeit the earnest money
C     which was deposited in terms of the agreement and it was purely a civil
      dispute and as their being a clause of arbitration, arbitral proceedings
      were initiated at the instance of the 1st appellant and although during
      pendency of the proceedings in the Court, learned Arbitrator has passed
      an award dated 8thMay, 2020 which has been challenged by the 2nd
      respondent under Section 34 of the Arbitration and Conciliation Act,
D
      1996 which is pending before the High Court of Delhi.
              16. Learned counsel further submits that parties have entered
      into an agreement to sell that does not amount to an offence under Section
      420 IPC. Neither the complaint which was initially instituted at the instance
      of the appellants nor the charge-sheet dated 5th October, 2018 which
E     was later filed although remain unnoticed by the High Court in the
      impugned judgment nowhere reveals even a prima facie case of a criminal
      offence being committed by the 2nd respondent under Sections 420, 406
      and 34 IPC and if the parties have entered into an agreement to sell
      which is purely a commercial transaction, and if there is a breach of the
F     terms of agreement to sell, the party to the agreement in consequence
      was justified to forfeit the earnest money, it is simply a civil dispute. As
      there was a demand to refund the forfeited amount failing which FIR
      was registered to set the criminal law into motion obviously to settle the
      scores giving the colour of criminal proceedings which is impermissible
      and this what has been observed by the High Court in the impugned
G     judgment supported by the factual matrix on record.
              17. Learned counsel further submits that the present case is of
      civil dispute as earnest money was forfeited by the 2nd respondent when
      the 1st appellant was not ready to fulfil and perform the terms and
      conditions of agreement to sell dated 24th December, 2011 and after the
H     arbitral proceedings were initiated, criminal proceedings were initiated
    PRITI SARAF & ANR. v. STATE OF NCT OF DELHI & ANR.                        587
                    [AJAY RASTOGI, J.]

just to harass the respondent with criminal charge under Sections 420,        A
406 and 34 IPC and further submits that no offence under Section 406 is
made out as the earnest money was paid in terms of the contract and
there was no restriction in the agreement as to how this money was to
be utilised therefore, there is no misappropriation.
        18. Learned counsel further submits that the appellant has not        B
come with clean hands and she has suppressed the fact that she did not
receive the letter dated 28th February, 2012 sent by 2nd respondent. To
the contrary, there is sufficient documentary evidence, as well as his/her
admission to this effect by the 1st appellant, which would show that she
had received the said letter. Since she did not respond to the letter dated
28th December, 2012, it was observed that she was not ready to perform        C
her obligations in terms of the contract and consequently, the 2 nd
respondent was well within her rights to terminate the contract by letter
dated 30th January, 2013.
        19. Learned counsel has further tried to justify that all the three
conditions of clause 3 of agreement hammered by the appellants were           D
fulfilled, and there is documentary evidence placed on record in support
thereof in the counter affidavit.
        20. Learned counsel for the 2nd respondent has also placed reliance
on various judgments of this Court which lays down the basic principles
under which inherent powers under Section 482 CrPC to be exercised            E
by the High Court and has set aside the criminal proceedings observing
that when there are civil disputes, the initiation of criminal proceedings
would be abuse of the process of the Court and placed reliance on the
judgments in Rajabhai Abdul Rehman Munshi Vs. Vasudev Dhanjibhai
Mody8; G. Narayanaswamy Reddy (Dead) by LRs. & Anr. Vs. Govt.
of Karnataka and Anr.9; G. Sagar Suri & Anr. Vs. State of U.P. and            F
Ors.10; Murari Lal Gupta Vs. Gopi Singh11; Indian Oil Corporation
Vs. NEPC India Ltd. and Ors.12; Harmanpreet Singh Ahluwalia
and Ors. Vs. State of Punjab and Ors.13; Joseph Salvaraj A. Vs.
State of Gujarat and Ors. 14; Chandran Ratnaswami Vs. K.C.

8
                                                                              G
  1964 (3) SCR 480
9
  1991 (3) SCC 261
10
   2000 (2) SCC 636
11
   2005 (13) SCC 699
12
   2006 (6) SCC 736
13
   2009 (7) SCC 712
14
   2011 (7) SCC 59                                                            H
588             SUPREME COURT REPORTS                            [2021] 2 S.C.R.


A     Palanisamy and Ors.15; VESA Holdings Private Limited and Anr.
      Vs. State of Kerala & Ors.16; K. Subba Rao and Ors. Vs. State of
      Telangana Rep. by its Secretary, Department of Home & Ors.17.
             21. Learned counsel has further submitted in his written submissions
      that the High Court indeed has not referred to the charge-sheet of which
B     a reference has been made, this Court if considers it appropriate, in the
      facts and circumstances, may remit the matter back to the High Court
      for fresh consideration. It would be unjust if the 2nd respondent was
      compelled to face criminal prosecution on the ground that the High Court
      had not looked into the material available on record.

C            22. After the conclusion of the submissions, an IA has been filed
      at the instance of the 2nd respondent for initiating proceedings under
      Section 340 read with Section 195 CrPC, in which it has been alleged
      that the appellants have not only concealed the documents but has made
      false statement and it has been prayed that proceedings under Section
      340 CrPC may be initiated against the appellants.
D
             23. It being a settled principle of law that to exercise powers
      under Section 482 CrPC, the complaint in its entirety shall have to be
      examined on the basis of the allegation made in the complaint/FIR/charge-
      sheet and the High Court at that stage was not under an obligation to go
      into the matter or examine its correctness. Whatever appears on the
E     face of the complaint/FIR/charge-sheet shall be taken into consideration
      without any critical examination of the same. The offence ought to appear
      ex facie on the complaint/FIR/charge-sheet and other documentary
      evidence, if any, on record.
             24. The question which is raised for consideration is that in what
F     circumstances and categories of cases, a criminal proceeding may be
      quashed either in exercise of the extraordinary powers of the High Court
      under Article 226 of the Constitution, or in the exercise of the inherent
      powers of the High Court under Section 482 CrPC. This has often been
      hotly debated before this Court and various High Courts. Though in a
      series of decisions, this question has been answered on several occasions
G
      by this Court, yet the same still comes up for consideration and is seriously
      debated.

      15
         2013 (6) SCC 740
      16
         2015 (8) SCC 293
      17
H        2018 (14) SCC 452
    PRITI SARAF & ANR. v. STATE OF NCT OF DELHI & ANR.                           589
                    [AJAY RASTOGI, J.]

       25. In this backdrop, the scope and ambit of the inherent jurisdiction    A
of the High Court under Section 482 CrPC has been examined in the
judgment of this Court in State of Haryana and Others Vs. Bhajan
Lal and Others(supra). The relevant para is mentioned hereunder:-
      “102. In the backdrop of the interpretation of the various relevant
      provisions of the Code under Chapter XIV and of the principles             B
      of law enunciated by this Court in a series of decisions relating to
      the exercise of the extraordinary power under Article 226 or the
      inherent powers under Section 482 of the Code which we have
      extracted and reproduced above, we give the following categories
      of cases by way of illustration wherein such power could be
      exercised either to prevent abuse of the process of any court or           C
      otherwise to secure the ends of justice, though it may not be possible
      to lay down any precise, clearly defined and sufficiently
      channelised and inflexible guidelines or rigid formulae and to give
      an exhaustive list of myriad kinds of cases wherein such power
      should be exercised.                                                       D
      (1)   Where the allegations made in the first information report or
            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 a case against the accused.
      (2)   Where the allegations in the first information report and other      E
            materials, if any, accompanying the FIR do not disclose a
            cognizable offence, justifying an investigation by police
            officers under Section 156(1) of the Code except under an
            order of a Magistrate within the purview of Section 155(2)
            of the Code.                                                         F
      (3)   Where the uncontroverted allegations made in the FIR or
            complaint and the evidence collected in support of the same
            do not disclose the commission of any offence and make out
            a case against the accused.
      (4)   Where, the allegations in the FIR do not constitute a                G
            cognizable offence but constitute only a non-cognizable
            offence, no investigation is permitted by a police officer without
            an order of a Magistrate as contemplated under Section
            155(2) of the Code.
                                                                                 H
590                  SUPREME COURT REPORTS                        [2021] 2 S.C.R.


A              (5)    Where the allegations made in the FIR or complaint are so
                      absurd and inherently improbable on the basis of which no
                      prudent person can ever reach a just conclusion that there is
                      sufficient ground for proceeding against the accused.
               (6)    Where there is an express legal bar engrafted in any of the
B                     provisions of the Code or the concerned Act (under which a
                      criminal proceeding is instituted) to the institution and
                      continuance of the proceedings and/or where there is a
                      specific provision in the Code or the concerned Act, providing
                      efficacious redress for the grievance of the aggrieved party.
C              (7)    Where a criminal proceeding is manifestly attended with mala
                      fide and/or where the proceeding is maliciously instituted
                      with an ulterior motive for wreaking vengeance on the
                      accused and with a view to spite him due to private and
                      personal grudge.”
D            26. This Court has clarified the broad contours and parameters in
      laying down the guidelines which have to be kept in mind by the High
      Courts while exercising inherent powers under Section 482 CrPC. The
      aforesaid principles laid down by this Court are illustrative and not
      exhaustive. Nevertheless, it throws light on the circumstances and the
      situation which is to be kept in mind when the High Court exercises its
E
      inherent powers under Section 482 CrPC.
             27. It has been further elucidated recently by this Court in Arnab
      Manoranjan Goswami Vs. State of Maharashtra and Others18 where
      jurisdiction of the High Court under Article 226 of the Constitution of
      India and Section 482 CrPC has been analysed at great length.
F
             28. It is thus settled that the exercise of inherent power of the
      High Court is an extraordinary power which has to be exercised with
      great care and circumspection before embarking to scrutinise the
      complaint/FIR/charge-sheet in deciding whether the case is the rarest
      of rare case, to scuttle the prosecution at its inception.
G
             29. In the matter under consideration, if we try to analyse the
      guidelines of which a reference has been made, can it be said that the
      allegations in the complaint/FIR/charge-sheet do not make out a case
      against the 2nd respondent or do they disclose the ingredients of an
H     18
           2020 SCC Online SC 964
       PRITI SARAF & ANR. v. STATE OF NCT OF DELHI & ANR.                       591
                       [AJAY RASTOGI, J.]

offence alleged against the 2nd respondent or the allegations are patently      A
absurd and inherently improbable so that no prudent person can ever
reach to such a conclusion that there is sufficient ground for proceeding
against the 2nd respondent.
       30. In the instant case, the complaint/FIR/charge-sheet as noticed
above, does, however, lend credence to the questions posed. It is settled       B
that one is not supposed to dilate on this score, or intend to present that
the allegations in the complaint will have to be accepted on the face of it
and the truth or falsity of which would not be gone into by the Court at
this stage, as noticed above, whether the allegations in the complaint
were true is to be decided on the basis of the evidence led at the stage of
                                                                                C
trial and the observations on this score in the case of Nagpur Steel &
Alloys Pvt. Ltd. Vs. P. Radhakrishna and Others19 ought to be noticed.
In para 3, this Court observed:-
          “3. We have perused the complaint carefully. In our opinion it
          cannot be said that the complaint did not disclose the commission
                                                                                D
          of an offence. Merely because the offence was committed during
          the course of a commercial transaction, would not be sufficient to
          hold that the complaint did not warrant a trial. Whether or not the
          allegations in the complaint were true was to be decided on the
          basis of evidence to be led at the trial in the complaint case. It
          certainly was not a case in which the criminal trial should have      E
          been cut short. The quashing of the complaint has resulted in
          grave miscarriage of justice. We, therefore, without expressing
          any opinion on the merits of the case, allow this appeal and set
          aside the impugned order of the High Court and restore the
          complaint. The learned trial Magistrate shall proceed with the
                                                                                F
          complaint and dispose of it in accordance with law expeditiously.”
       31. Be it noted that in the matter of exercise of inherent power by
the High Court, the only requirement is to see whether continuance of
the proceedings would be a total abuse of the process of the Court. The
Criminal Procedure Code contains a detailed procedure for investigation,
                                                                                G
framing of charge and trial, and in the event when the High Court is
desirous of putting a halt to the known procedure of law, it must use
proper circumspection with great care and caution to interfere in the
complaint/FIR/charge-sheet in exercise of its inherent jurisdiction.

19
     1997 SCC(Cri) 1073                                                         H
592             SUPREME COURT REPORTS                            [2021] 2 S.C.R.


A            32. In the instant case, on a careful reading of the complaint/FIR/
      charge-sheet, in our view, it cannot be said that the complaint does not
      disclose the commission of an offence. The ingredients of the offences
      under Sections 406 and 420 IPC cannot be said to be absent on the basis
      of the allegations in the complaint/FIR/charge-sheet. We would like to
      add that whether the allegations in the complaint are otherwise correct
B
      or not, has to be decided on the basis of the evidence to be led during the
      course of trial. Simply because there is a remedy provided for breach of
      contract or arbitral proceedings initiated at the instance of the appellants,
      that does not by itself clothe the court to come to a conclusion that civil
      remedy is the only remedy, and the initiation of criminal proceedings, in
C     any manner, will be an abuse of the process of the court for exercising
      inherent powers of the High Court under Section 482 CrPC for quashing
      such proceedings.
              33. We have perused the pleadings of the parties, the complaint/
      FIR/charge-sheet and orders of the Courts below and have taken into
D     consideration the material on record. After hearing learned counsel for
      the parties, we are satisfied that the issue involved in the matter under
      consideration is not a case in which the criminal trial should have been
      short-circuited. The High Court was not justified in quashing the criminal
      proceedings in exercise of its inherent jurisdiction. The High Court has
      primarily adverted on two circumstances, (i) that it was a case of
E     termination of agreement to sell on account of an alleged breach of the
      contract and (ii) the fact that the arbitral proceedings have been initiated
      at the instance of the appellants. Both the alleged circumstances noticed
      by the High Court, in our view, are unsustainable in law. The facts
      narrated in the present complaint/FIR/charge-sheet indeed reveal the
F     commercial transaction but that is hardly a reason for holding that the
      offence of cheating would elude from such transaction. In fact, many a
      times, offence of cheating is committed in the course of commercial
      transactions and the illustrations have been set out under Sections 415,
      418 and 420 IPC. Similar observations have been made by this Court in
      Trisuns Chemical Industry Vs. Rajesh Agarwal and Ors.(supra) :-
G
             “9. We are unable to appreciate the reasoning that the provision
             incorporated in the agreement for referring the disputes to
             arbitration is an effective substitute for a criminal prosecution when
             the disputed act is an offence. Arbitration is a remedy for affording
             reliefs to the party affected by breach of the agreement but the
H
    PRITI SARAF & ANR. v. STATE OF NCT OF DELHI & ANR.                         593
                    [AJAY RASTOGI, J.]

      arbitrator cannot conduct a trial of any act which amounted to an        A
      offence albeit the same act may be connected with the discharge
      of any function under the agreement. Hence, those are not good
      reasons for the High Court to axe down the complaint at the
      threshold itself. The investigating agency should have had the
      freedom to go into the whole gamut of the allegations and to reach
                                                                               B
      a conclusion of its own. Pre-emption of such investigation would
      be justified only in very extreme cases as indicated in State of
      Haryana v. Bhajan Lal [1992 Supp (1) SCC 335]”
       34. So far as initiation of arbitral proceedings is concerned, there
is no correlation with the criminal proceedings. That apart, the High
Court has not even looked into the charge-sheet filed against 2 nd             C
respondent which was on record to reach at the conclusion that any
criminal offence as stated is prima facie being made out and veracity of
it indeed be examined in the course of criminal trial.
       35. The submission made by Mr. P. Chidambaram, learned senior
counsel for 2nd respondent showing bonafides and taking us through the         D
documentary evidence annexed to the counter affidavit on record to
show that it was a simple case of termination because of breach of
terms of the contract giving rise to a purely civil dispute or initiation of
the arbitral proceedings would not attract the provisions under Sections
406, 420, 34 IPC may not hold good at this stage for the reason what is        E
being suggested by the learned counsel for the 2nd respondent can be his
defence during the course of trial but was not open to be examined by
the High Court to take a judicial notice and for quashing of the criminal
proceedings in exercise of its inherent powers under Section 482 CrPC.
        36. So far as the further submission made by learned counsel for       F
the 2nd respondent that if the High Court has failed to consider the charge-
sheet and other material available on record, the matter be remitted
back to the High Court for re-consideration afresh in accordance with
law. There may be some substance in what being urged by learned
counsel for the 2nd respondent but for the reason that matter has been
argued threadbare before us, and learned counsel for the parties have          G
taken us through the record of criminal proceedings. After going through
the record, we are satisfied that there was sufficient material available
as manifests from the record of criminal proceedings to connect the 2nd
respondent in the commission of crime. Consequently, we do not consider
                                                                               H
594             SUPREME COURT REPORTS                            [2021] 2 S.C.R.


A     it appropriate to remit the matter back at this stage, as it would be an
      exercise in futility; on the contrary, it will just delay the proceedings, and
      hold the criminal trial at bay, which deserves to be expedited.
             37. At the time of conclusion of the proceedings, IA has been
      filed at the instance of 2nd respondent initiating criminal proceedings
B     against the 1st appellant under Section 340 read with Section 195 CrPC.
      We find that such applications are being filed for ulterior reasons which
      we seriously deprecate. The said IA is accordingly dismissed.
             38. Consequently, the appeal succeeds and is accordingly allowed.
      The judgment of the High Court impugned dated 15th March, 2019 is
C     hereby set aside. We, however, make it clear that what has been observed
      by us is only for the purpose of disposal of the present appeal. The trial
      Court may proceed with the trial expeditiously without being influenced
      by the observations made in this judgment or taken as an expression of
      our opinion.

D            39. All pending IAs stand disposed of.


      Divya Pandey                                                    Appeal allowed.



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