Shri Jagdish Chand Surroach and Ors. v. The State of NCT of Delhi & Ors.

1. The present writ petition has been preferred by the petitioners Jagdish Chand Surroach and his two sons, Sandeep Surroach and Muneesh Surroach, for seeking quashing of FIR bearing NO. 0026/2024, registered on 11.01.2024 at Police Station Vikaspuri, District West, Delhi, for commission of offence under Section 420 of the Indian Penal Code, 1860 [hereafter „IPC‟].

2. Brief facts of the case are that the present FIR was registered on the complaint of Smt. Meena Goel (respondent no. 3), who alleged that she was induced into purchasing residential property bearing No. K-309, Ground Floor, Kangra Adarsh CGHS Ltd., Vikas Puri, New Delhi, by the accused persons, Sh. Jagdish Chand Surroach (Managing Director of Sannesh Enterprises Pvt. Ltd.), Sh. Sandeep Surroach and Sh. Muneesh Surroach (both Directors of the said company), on the representation that the property was free from all encumbrances and being sold urgently for business reasons. It is alleged that based on the assurances and after being shown original title documents, the complainant had paid a total sum of ₹50,00,000/through eleven cheques drawn on her and her husband‟s accounts dated 10.02.2021, along with TDS paid via Challan No. 280, and all the cheques had been duly encashed by the accused persons. Thereafter, a registered sale deed was executed in her favour on 10.02.2021 vide registration no. 3041, and notably, accused nos. 2 and 3 acted as attesting witnesses to the said sale deed. It is further alleged that despite full payment and execution of the sale deed, physical possession of the property was not handed over, and the complainant was informed that the accused persons would vacate the premises shortly, in the interim paying ₹25,000/- per month as rent. Subsequent requests for the original chain of title documents were allegedly met with evasive conduct. Upon further inquiry, the complainant discovered that the said property had been mortgaged to Indian Bank prior to the execution of the sale deed – a material fact that was knowingly suppressed by all the three accused persons, who being Directors of the borrower company, were fully aware of the existing encumbrance. It is thus alleged that the accused persons, in furtherance of a conspiracy, had dishonestly received the sale consideration, executed a fraudulent transfer/sale deed, and caused wrongful loss to the complainant by deceitfully concealing the mortgage status of the property, thereby committing several offences punishable under the IPC. On these allegations, the present FIR was registered.

3. The learned counsel appearing for the petitioners submits that petitioner no. 1 had already instituted proceedings under Section 200 of Cr.P.C. read with Section 156(3) of Cr.P.C. against respondent NO. 3 and her husband before the learned Judicial Magistrate, First Class, South-West District on 19.08.2023. It is submitted that respondent no. 3 and her husband had taken back the entire sale consideration amounting to ₹50,00,000/- from petitioner no. 1 when the cheque mentioned in the sale deed was presented for encashment in the bank account of respondent no. 3, which is maintained at the same branch where the respondent had also opened an account in the name of the petitioner. It is contended that since no actual sale consideration was received by the petitioner, the sale deed dated 10.02.2021 is without consideration and therefore void in the eyes of law. Consequently, the petitioner did not hand over physical possession of the subject property to the respondent no. 3. The learned counsel further submits that respondent no. 3 has also instituted proceedings under Section 138 of the Negotiable Instruments Act, 1881 against petitioner no. 1, which is nothing but a gross misuse of the process of law with the sole intention of harassing the petitioner.

4. It is further submitted that a Memorandum of Understanding was subsequently executed between the petitioners and respondent no. 3, whereby the parties settled all their disputes in respect of the said property. As per the said MoU, respondent no. 3 agreed to settle her claim for a sum of ₹28,00,000/-, out of which she has received ₹1,00,000/-. In view thereof, the continued prosecution of criminal proceedings by respondent no. 3 is wholly unwarranted. The learned counsel also argues that since the respondent no. 3 and her husband had already received the full sale consideration of ₹50,00,000/- and further entered into a settlement, she neither holds any valid ownership or possessory rights over the subject property, nor does she have any legal ground to initiate or continue criminal proceedings against the petitioners. It is thus prayed that the present petition be allowed and the FIR be quashed.

5. The learned counsel appearing for respondent no. 3/ complainant opposes the petition and submits that the FIR discloses a clear case of cheating and criminal misrepresentation by the petitioners, who had induced the complainant into purchasing the property by falsely representing that it was free from encumbrances. It is submitted that the complainant had paid the entire sale consideration of ₹50,00,000/- through eleven cheques, all of which were duly encashed, and a registered sale deed was executed on 10.02.2021. However, despite full payment, possession was not handed over, and it was later discovered that the property was already mortgaged to a bank, a fact deliberately concealed by the petitioners.

6. It is further submitted that the MoU relied upon by the petitioners has no legal sanctity, as the complainant never consented to it voluntarily. The said MoU was obtained under threat and coercion. Therefore, the said MoU cannot be used to defeat the lawful criminal proceedings initiated by the complainant.

7. This Court has heard arguments addressed by both the parties and has perused the material placed on record.

8. Having perused the material placed on record and considered the rival submissions, this Court finds that the FIR discloses specific allegations against the petitioners, which prima facie constitute the offence of cheating. The complaint alleges that she was induced into purchasing a residential flat after being shown the original title documents and being reassured that the property was free from all encumbrances. It is also clearly alleged that the complainant had paid a total sum of ₹50,00,000/- through eleven cheques, which were duly encashed by the petitioners. Despite receipt of full consideration and execution of a registered sale deed, the petitioners admittedly did not hand over physical possession of the property. On the contrary, the allegations in the FIR suggest that a fresh arrangement was made whereby the petitioners remained in possession of the property as tenants on a nominal rent of ₹25,000/- per month. Further, it later came to light that the property had already been mortgaged to Indian Bank – a fact that was allegedly never disclosed to the complainant at the time of execution of the sale deed. Such allegations, if proven, may constitute the offence of cheating under Section 420 of IPC.

9. The petitioners have now relied upon a Memorandum of Understanding, purportedly executed between the parties to settle the dispute. However, the complainant has categorically denied having entered into the said MoU voluntarily, asserting that the same was signed under coercion and pressure. Whether the MoU was executed voluntarily or under duress, and whether any amount has been paid under it, are disputed questions of fact which cannot be conclusively adjudicated at this stage.

10. The contention raised by the petitioners that the dispute is purely civil in nature is also misconceived. It is well settled that merely because a civil remedy may be available to a party, it does not bar the invocation of criminal law where the allegations disclose elements of criminality. The Hon‟ble Supreme Court has time and again held that where a prima facie case of deceit, cheating or fraudulent misrepresentation is made out, the pendency or availability of a civil remedy does not preclude criminal proceedings. In this regard, reference can be made to the following observations of the Hon‟ble Supreme Court in case of Amit Kapoor v. Ramesh Chander: (2012) 9 SCC 460: “27.11. Where allegations give rise to a civil claim and also amount to an offence, merely because a civil claim is maintainable, does not mean that a criminal complaint cannot be maintained.”

11. Thus, what clearly emerges from the record at this stage are three material aspects: first, that cheques amounting to ₹50,00,000/were issued by the complainant and duly encashed by the petitioners; second, that despite execution of the sale deed, the petitioners, admittedly, did not hand over physical possession of the property to the complainant; and third, that although the property was encumbered and mortgaged to a bank, the registered sale deed falsely declared that it was free from any encumbrance. Though the petitioners have attempted to offer explanations for each of these undisputed/conceded facts, such explanations do not inspire confidence of this Court, at this stage. These are matters which require thorough investigation. The deliberate inclusion of a false declaration in the registered sale deed cannot be merely considered a procedural lapse but it prima facie reflects a conscious act, possibly aimed at misleading the buyer or authorities. This assertion, when viewed in conjunction with other surrounding circumstances of the transaction, assumes greater significance. At this juncture, it is neither possible nor appropriate for this Court to draw final conclusions; however, the material on record discloses a prima-facie case warranting deeper scrutiny through investigation.

12. At this stage, it is apposite to note that the inherent powers of the High Court are to be exercised sparingly, with great caution, and only in rare and exceptional cases where the continuation of criminal proceedings would amount to an abuse of the process of law or where the allegations in the FIR, even if taken at face value, do not disclose the commission of any offence. It is not the function of this Court to embark upon a meticulous examination of the evidence or enter into disputed questions of fact at this stage, when the investigation is also not complete.

13. In Neeharika Infrastructure v. State of Maharashtra: 2021 SCC OnLine 315, the Hon‟ble Supreme Court analysed several judicial precedents and culled out the relevant principles that govern the law on quashing of FIR. The Court has held as under: