“An agreement was entered into with regard to development of property owned by the Appellants. This property is situated at 20, Feroz Shah Road, New Delhi which falls under Lutyens Zone. Respondent No. 2 paid a sum of Rs. 1,00,00,000 (Rupees One Crore). The agreement could not be fulfilled as the new building regulations prohibited the construction of high-rise buildings in the Lutyens Bungalow Zone. The Appellants did not return the amount advanced by the Respondent No. 2.
The FIR with which we are concerned was lodged against the Appellants for offence under Section 406, IPC. The Appellants approached the High Court under Section 482, CrPC seeking to quash the FIR. The High Court considered the Petition ‘pre-mature’. The Police have now submitted a Charge Sheet. Keeping in mind the position of this Court in Joseph Salvaraj, (2011) 7 SCC 59 we do not see any merit in this submission that once the Charge Sheet is filed, quashing of FIR is untenable. Indeed, it would be a travesty to hold that proceedings initiated against a person can be interfered with at the stage of FIR but not if it has advanced, and the allegations have materialized into a Charge Sheet. On the contrary it could be said that the abuse of process caused by FIR stands aggravated if the FIR has taken the form of a Charge Sheet after investigation.
In the present case, Rs. One Crore was paid by the Complainant-Respondent to the Appellants as an interest free deposit on the signing of the agreement. It was liable to be refunded to the Complainant simultaneously on handing over of possession of the area of the Owner’s share to the Owner.
It is not possible to hold that Rs. One Crore which was paid along with the development agreement as a deposit can be said to have been entrustment of property which has been dishonestly converted to his own use or disposed of in violation of any direction of law or contract by the Appellant. The Appellants have not used the amount nor misappropriated it contrary to any direction of law or contract which prescribes how the amount has to be dealt with. Going by the agreement, the amount has to be returned upon the handing over of the constructed area of the Owner which admittedly has not been done. Most significantly the Respondent No.2 has not demanded the return of the amount at any point of time. In fact, it is the specific contention of the Respondent No.2 that he has not demanded the amount because the agreement is still in subsistence. We find that the dispute has the contours of a dispute of Civil Nature and does not constitute a Criminal Offence.
The present case falls under the 1st, 3rd and 5th category set out in the Para 102 of Bhajan Lal, (1992) Supp (1) SCC 335. In such a situation, the High Court erred in dismissing the Petition of the Appellants filed under Section 482, CrPC. This was a fit case for the High Court to exercise its inherent power under Section 482 to quash the FIR. It is necessary here to remember the words of this Court in L. Muniswamy, (1977) 2 SCC 699. We find that the prosecution is mala fide, untenable and solely intended to harass the Appellants. We are forfeited in view of the Respondent not having made any attempt to recover the deposit of Rs. One Crore through a Civil Action. We have, therefore, no hesitation in quashing the FIR and the Charge Sheet.”
– Hon’ble Justice S.A. Bobde, Anand Kumar Mohtta v. State (Govt. of NCT of Delhi) Department of Home, [Criminal Appeal No. 1395 of 2018].