Jharkhand High Court Quashes Criminal Proceedings Against Filmmaker-Producer Prakash Jha In Land Allocation Dispute

Justice Sanjay Dwivedi observed, “Section 415 I.P.C. is definition of cheating. In the light of said definition to hold a person guilty of cheating it is necessary to show that he had fraudulent and dishonest intention at the time of making the promise. Consequence of not encashing of drafts in question suggests that intention from the very beginning was not there which is paramount consideration in a case arising out under section 415 I.P.C. and other sections with regard to the cheating.”

“It is well settled that a breach of contract does give rise to criminal prosecution for cheating unless the fraudulent and dishonest intention is there in the beginning of the transaction. Merely on the allegation of failure to keep premises will not be enough to initiate criminal proceeding,” Justice Dwivedi added.

Jha had sought quashing the entire criminal proceeding including order taking cognizance dated 10.01.2018 in connection with a Complaint Case, pending in the Court of the Chief Judicial Magistrate, Ranchi.

The complaint lodged asserted that the complainant was the duly authorized Agent of the Chairman-cum-Managing Director of M/s. Classic Multiplex Private Limited. According to the complaint, Jha and other accused, serving as Directors of Holy Cow Pictures Pvt. Ltd., were purportedly responsible for the day-to-day operations of the company.

It was alleged that Jha had intentions to establish a multiplex in Jamshedpur. To pursue this, he purportedly made a requisition to the State Government for the allocation of land spanning 3-4 acres. Subsequently, with the consent of the State Government and Tata Steel Ltd., 3.12 acres of land were allocated to him under plot nos. 13, 14, and 17 in khata no.2 within the notified area of Jamshedpur, Ward No.VI.

Further allegations were made that Jha approached the Chairman-cum-Managing Director of the complainant-Company, namely, Pawan Kumar Singh, and promised to provide him with 10,000 sq. ft. of super built-up area to be constructed in Jamshedpur.

A written agreement was entered into on 13.06.2006 at the Civil Court, Ranchi. The Chairman-cum-Managing Director of the complainant prepared three bank drafts of Rs.20 Lakh each in favor of Jha, which were handed over to him in the presence of the other accused parties. Jha accepted these bank drafts.

It was further alleged that on 28.05.2009, the Chairman-cum-Managing Director of M/s. Classic Multiplex Pvt. Ltd. visited the construction site to inspect the premises booked by him but was denied entry. Upon inquiry with the supervisor present at the site, it was revealed that there was no booking under his name.

Subsequently, on 23.06.2009, the Chairman-cum-Managing Director of the complainant confronted Jha, who confirmed that indeed, there was no booking under his name.

Senior counsel Umesh Prasad Singh, representing the petitioners, argued that the complaint case was initially forwarded by the court under section 156(3) of the Cr.P.C. for FIR registration and investigation. Subsequently, despite the police concluding the matter as civil in nature, the court, upon a protest petition, invoked section 418 of the IPC on January 10, 2018.

Singh highlighted the allegations, stating that M/s Classic Multiplex Private Limited purportedly issued three bank drafts worth Rs. 20 lakhs to Jha. He emphasized a supplementary affidavit filed by the petitioners, referencing a document from the State Bank of India, SME Branch, Ranchi. According to this document, the mentioned drafts were not issued or encashed yet.

Singh argued that even if there was an agreement, it would be void under Section 25 of the Indian Contract Act, 1872, as the promised payment hadn't materialized. He pointed out an admission in the complaint petition suggesting it was primarily about a breach of agreement.

Further, Singh noted that M/s Classic Multiplex Private Limited had already initiated a specific performance title suit pending in the court of Civil Judge (Senior Division)-IX, Jamshedpur. He contended that since the matter appeared to be civil in nature, the court's decision to proceed under section 418 of the IPC was incorrect.

Citing the case of Inder Mohan Goswami v. State of Uttaranchal (2007) 12 SCC 1, Singh argued that the essential element of intent to cheat was lacking in the present case. He also referred to Murari Lal Gupta v. Gopi Singh (2005) 13 SCC 699, asserting that the mere existence of an agreement shouldn't warrant criminal proceedings.

Based on these arguments, Singh urged the court to quash the entire criminal proceeding.

However, advocate Prabhu Dayal Agrawal, the senior counsel for the State, contended that although the police had submitted a final report stating that the case was civil in nature, the court decided to take cognizance of the protest petition.

The Court found merit in the argument presented by the senior counsel for the petitioners, highlighting that Section 25 of the Contract was applicable, indicating that without consideration, the contract is considered void. Consequently, the court agreed that the judgments cited by the petitioners' counsels in the cases of Inder Mohan Goswami and Murari Lal Gupta supported the petitioners' stance.

Additionally, the Court emphasized, “Further one fact is on the record which suggests that Title Suit No. 107 of 2009 was instituted by the O.P. No.2 which is still pending. Criminal Courts are not meant to use for settling the scores or pressurize the parties to settle the dispute. Whenever ingredients of criminal offences are made out criminal courts can take cognizance.”

“In the case in hand F.I.R. has already been registered and pursuant to direction of the learned court police investigated the matter and submitted final form saying the case civil in nature. In this background the Court finds that final form was rightly submitted saying the case civil in nature however, the learned court has taken cognizance on the basis of protest petition. Further the learned court in order taking cognizance has stated that the case is arising out of breach of agreement inspite of that he has taken cognizance,” the Court held.

Considering these factors, the Court concluded that allowing the criminal proceedings against the petitioners to continue would constitute an abuse of legal process. Therefore, it quashed all criminal proceedings, including the order of cognizance dated 10.01.2018, related to Complaint Case No. 1499 of 2011, pending before the Chief Judicial Magistrate, Ranchi.

Accordingly, the Court granted the petition.

Appearance:

For the Petitioners : Mr. Umesh Prasad Singh, Sr. Advocate (thorough Video Conferencing), Mr. Jitendra S. Singh, Advocate, Ms. Surbhi, Advocate

For the State :Mr. Prabhu Dayal Agrawal, Spl. P.P.

Case No.: Cr.M.P. No. 1647 of 2018

Case Title: Prakash Jha and ors vs The State of Jharkhand and anr

LL Citation: 2024 LiveLaw (Jha) 25

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