Wednesday, 30 March 2016

When landlord can be treated as owner for purpose of eviction of tenant from suit property?

 It entitles a landlord to seek a premises got evicted from defendant, if it is required by him for his own occupation provided he is owner. The definition of "landlord" was given in Section 2which has been quoted in para 6 of judgment stating, "any person who, for the time being, is entitled to receive or but for a special contract, would be entitled to receive the rent of any premises, whether or not on his own account ....." The Court held that definition shows if the rent is received by a person not on his own account but on account of any other person, such as his principal or his ward, he is for the purpose of the Act a landlord. Any such person is, therefore, entitled to institute a suit for eviction. The Court then noticed that Section 13(1)(ff) further provides that the landlord must be owner if he required the premises for his own occupation, or for the occupation of any person for whose benefit the premises are held. The contention was that term "owner" has to be interpreted strictly so as to exclude any person having less than full ownership rights, while appellant contended that it was the lease with heritable and transferable rights, and, therefore, for all purposes, he was owner of the property in dispute. It is in this contest, the Court considered as to what term "ownership" means and in para 8 said:
8. "Ownership denotes the relation between a person and an object forming the subject-matter of his ownership. It consists in a complex of rights, all of which are rights in rem, being good against all the world and not merely against specific persons." (Salmond on Jurisprudence, 12th ed., Ch. 8, p. 246 et. seq.). There are various rights or incidents of ownership all of which need not necessarily be present in every case. They may include a right to possess, use and enjoy the thing owned; and a right to consume, destroy or alienate it. Such a right may be indeterminate in duration and residuary in character. A person has a right to possess the thing which he owns, even when he is not in possession, but only retains a reversionary interest, i.e., a right to repossess the thing on the termination of a certain period or on the happening of a certain event."
65. The Court then said that what plaintiff needs to prove is that he has a better right than the defendant, he has no burden to show that he has the best of all possible titles. His ownership is good against all the world except true owner. The rights of an owner are seldom absolute, and often are in many respects controlled and regulated by statute. The question, however, is whether he has a superior right or interest vis-a-vis the person challenging it. Then the Court in para 10 said as under:
"10. The plaintiff is an allottee in terms of the West Bengal Co-operative Societies Act, 1983: (See Sections 87 and 89). He has a right to possess the premises for a period of 99 years as a heritable and transferable property. During that period he has a right to let out the premises and enjoy the rental income therefrom, subject to the statutory terms and conditions of allotment. The certificate of allotment is the conclusive evidence of his title or interest. It is true that he has to obtain the written consent of the Society before letting out the premises. But once let out in accord- ance with the terms of allotment specified in the statute, he is entitled to enjoy the income from the property. Al- though he is a lessee in relation to the Society, and his rights and interests are subject to the terms and conditions of allotment, he is the owner of the property having a superior right in relation to the defendant. As far as the defendant is concerned, the plaintiff is his landlord and the owner of the premises for all purposes dealt with under the provisions of the Act."
66. In view thereof, the plaintiff was held owner and the judgment of Trial Court was restored by setting aside judgments of Appellate Court.
Allahabad High Court
Sh. Suneel Galgotia And Another vs State Of U.P. Thru Secy. And 3 ... on 23 September, 2015
Bench: Sudhir Agarwal, Brijesh Kumar Srivastava-Ii
Citation; Citation: 2016 (92) ALLCC 40
1. All these four writ petitions involve common questions of facts and law and have arisen against the same first information report (in short "FIR") dated 09.09.2014 i.e. case crime no. 862 of 2014 under Sections 420467,468,471120B IPC, P.S. Hariparvat, Agra, hence have been argued collectively and are being decided by this composite judgment.
2. At the outset, it may be pointed out that in these matters interim orders were passed by this Court whereagainst respondent no.4 took the matter before Apex Court in appeal. The Court observing that since it was against an interim order, declined to interfere, vide order dated 10.04.2015 but directed this Court to dispose of all writ petitions on the next date of hearing, preferably within one month from that date.
3. All these matters were nominated on 22.7.2015 by Hon'ble the Chief Justice to the Bench presided over by one of us (Hon'ble Sudhir Agarwal, J.) pursuant whereto, these cases have come to us We have heard the parties finally and decide on merits hereunder.
4. Criminal Misc. Writ Petition No. 17169 of 2014 (hereinafter referred to as "first petition") has been filed by two petitioners, namely, Suneel Galgotia and Smt. Shakuntala Educational and Welfare Society (hereinafter referred to as the "Society"), having registered office at Delhi. Petitioner no. 1 Suneel Galgotia is President of the Managing Committee of the Society.
5. Criminal Misc. Writ Petition No. 19146 of 2014 (hereinafter referred to as "second petition") has come up at the instance of Smt. Jugnu Galgotia wife of Lt. P.D. Galgotia, one of Guarantors in respect of loan agreements and also Treasurer of Management Committee of the Society.
6. Criminal Misc. Writ Petition No. 19562 of 2014 (hereinafter referred to as "third petition") has been filed by Km. Aradhana Galgotia daughter of Suneel Galgotia (petitioner no. 1 in first petition).
7. Criminal Misc. Writ Petition No. 21078 of 2014 (hereinafter referred to as "fourth petition"), has been filed by Smt. Chandrika Mathur wife of Sri Ashok Mathur, and Sri Raghuvansh Mathur son of Lt. Dr. Shanti Swaroop Mathur, both being office bearers of the Society and thus accused in the impugned FIR.
8. In all the writ petitions prayer is common, i.e., for quashing of the FIR dated 09.09.2014 i.e. case crime no. 862 of 2014 under Sections 420467,468,471120B IPC, P.S. Hariparvat, District Agra.
9. Petitioner no. 1 in the first petition and other petitioners in three writ petitions alongwith some others promoted and constituted the Society for the purpose of establishing and promoting educational institutions. It was duly registered under the Societies Registration Act, 1860 (hereinafter referred to as the "Act, 1860"). The Society claimed itself to be a "charitable Society". It had established several institutions of higher education, namely, Galgotias College of Engineering and Technology, G.I.M.T. Institute of Management and Technology, Galgotias Business School etc. It sponsored Galgotias University at Gautambudh Nagar in State of U.P. and to give a statutory status, U.P. Legislature passed Galgotias University Uttar Pradesh Act, 2011 (hereinafter referred to as "UP Act 2011") which received assent of the Governor on 04.04.2011 and was published in U.P. Gazette (Extraordinary) on 07.04.2011. For the purpose of establishing University and creating its infrastructure, the Society obtained several loans from M/s S.E. Investment Ltd. (hereinafter referred to as the "Financier"), having its branch office at Sanjay Place, Agra. Some of the petitioners stood guarantors against aforesaid loan. Upto September, 2012, it is said, monthly installments were duly paid but thereafter some default occurred and post dated cheques received by respondent no. 4 returned dishonoured, as a result whereof, there arose a dispute between the parties.
10. The Society pleaded that Sri Giriraj Kishore Sharma, Assistant Manager, entered into an oral understanding that the Society would be given two years' moratorium, but, instead, proceeded to raise demand imposing penal interest on outstanding amount at a very high rate. A notice dated 07.10.2013 were sent by respondent no. 4 to Society stating that it has committed default in making payment and hence interest at penal rate of Rs. 3/- per thousand per day would be charged. Petitioner-Guarantors were also issued notices on 18.12.2013 which were duly replied. The Society then invoked arbitration clause vide letter dated 10.12.2014, requesting Financier to appoint Arbitrator. An FIR was also lodged by promoters of Society, i.e., Case Crime No. 141 of 2014, under Sections 406504506 IPC, Police Station Kasna, District Gautambudh Nagar against Directors of Financiers. In arbitration proceedings the matter was taken in Delhi High Court, where retired Justice R.C. Chopra was appointed as sole Arbitrator. An application was filed by Financier under Section 9 of Arbitration and Conciliation Act, 1996 (hereinafter referred to as the "Act, 1996") before Delhi High Court but no relief was granted except directing the Society to disclose on affidavit details of all assets movable and immovable and file balance sheet, bank accounts and securities etc. Respondent no.4 thereafter filed an application under Section 156(3)Cr.P.C. before Chief Judicial Magistrate, Agra on 25.04.2014 wherein the Additional Chief Judicial Magistrate VIII, Agra passed order directing Police to register FIR, pursuant whereto, impugned report has been lodged.
11. Respondent no. 4 has filed a counter affidavit in the first petition and parties have agreed to refer it in all other petitions also. It has been sworn by Mahendra Kumar Dixit, Legal Manager of Financier. It is said that petitioner has cheated Financier by claiming that Galgotias University is the asset of Society, though both are independent and different legal entities, incapable of being owned by either one. Balance-sheets filed by Society are false, and, fabricated to induce Financier to advance huge loan amount. If separate balance-sheets of two independent bodies would have been filed, Financier would not have advanced loan to the extent of such a huge amount. It is admitted that Society had been advanced loan from time to time by Financier in the last more than a decade vide 40 agreements which had been entered by Society with open eyes after understanding pros and cons of stipulations contained in the agreement. The amount claimed as a late fee by Financier is within the terms of the agreement and does not violate guidelines laid down by Reserve Bank of India (hereinafter referred to as "RBI") . The society is busy in making money under the cloak of charitable society. There are serious allegations of fraud, misappropriations, breach of trust and extortion of money from students. The society has succeeded in defrauding public at large, students, employees, contractors etc. including Financier. Initially, Society was running two educational institutions namely, GIMT (Galgotias Institute of Management and Technology) and Galgotias College of Engineering. Subsequently, another one, i.e., Galgotias' business school was also added. Though under Section 2(1) of U.P. Act 2011, it is provided that existing college means "institution which imparts professional education" and it is proposed to be merged down, run and maintained by the University but in the last three years, no merger has taken place. The society is mischievously and fraudulently claiming ownership of University in contravention of U.P. Act, 2011. Management of University is not responsible to sponsoring Society and it is only in case of dissolution of University that assets, properties and liabilities of Galgotias University shall go to the sponsoring society. During existence of University its assets and liabilities would stand excluded from that of society. When the agreements were executed, society and other petitioners never objected to the terms and conditions of agreement and now all kinds of allegations are being made which disclose real intention of petitioners, of misappropriation of amount taken from Financier. Assertion regarding oral agreement with respondent no.4 regarding moratorium etc. is denied. Allegation of counterblast or motive on the part of Financier has been denied. In order to cheat the Financier, petitioner Society gave cheques including cheque no. 354826 dated 27.03.2014, bearing amount of Rs. 6,50,00,000/- ostensibly, towards part payment of amount taken by society but it instructed its bank to stop payment which shows real intention of society and petitioners of cheating. In any case, real intention i.e. dishonest intention is an element which can be shown to exist by adducing evidence in trial and cannot be examined in writ jurisdiction. At this stage, suffice it to mention that allegations contained in charge-sheet do satisfy ingredients of various sections ofIPC mentioned therein and if those allegations taken to be true on the face of it, cognizable offence is made out. This Court would not exercise its extraordinary jurisdiction for quashing such an FIR. Claim of ownership of University by sponsoring body is nothing but a fraud on public at large. Against the provisions of U.P. Act 2011 declaration of assets and liabilities of University under the consolidated balance sheet is illegal. It also amounts to fraud and forgery by treating assets and liabilities of another legal independent body to that of society. The society has obtained loans on the basis of false and fabricated documents.
12. An affidavit has been filed by Investigating Officer annexing the progress in the investigation stating that pursuant to his investigation, he has obtained non-bailable warrants against Suneel Galgotia, Dhruv Galgotia, Smt. Jugnu Galgotia and Smt. Padmini Galgotia. We will discuss the record placed by Investigating Officer during our discussion, whenever it would be necessary.
13. Sri Gopal Swaroop Chaturvedi, learned senior counsel contended that here is a simple case of advancement of loan and alleged default in repayment, in respect of which, proceedings of arbitration are pending before sole Arbitrator. No element of criminality is involved. Hence, FIR lodged against petitioners, though has attempted to satisfy ingredients of various provisions mentioned therein, but in effect, it involves a pure and simple civil dispute, hence, no criminal case can be initiated in such matters and report is liable to be set aside. No offence under various provisions mentioned in the FIR has been committed. This Court while examining, whether allegations contained in FIR satisfy all ingredients of offence, showing that accused has/have committed such an offence, will consider not only the mere mention of words chosen by informant/complainant but will also look into substance to find out whether it is a case where there is any criminality or element of criminal intention, constituting offence under alleged provision. Literal reading of report would have to be avoided for the reason that these days FIRs are lodged with expert legal opinion and, therefore, one can understand that language of relevant provisions which are mentioned in the report must have been taken care of by the author to use and in such circumstances, care has to be taken to find out whether it is a case, substantially, involving element of criminality or not. The Court would peep into background facts to find out true controversy, intention and nature of dispute and would not be guided by bare simple reading of FIR.
14. Per contra, Sri Brijesh Sahai, learned counsel appearing for respondent no.4 vehemently contended that by producing and submitting accounts and balance sheets containing wrong and manipulated entries, dishonest intention on the part of Society is clear. The healthy state shown in balance sheets and accounts submitted by Society induced Financier to advance loan(s). Dishonest intention of Society stood proved also by their subsequent conduct in committing default in payment of regular EMIs. He submitted that civil and criminal liabilities can co-exist and both are not mutually exclusionary. Incidents or transactions while resulting in Civil dispute may also cause commission of offence(s) and both proceedings can co-exist. He submitted that ingredients of various provisions under which FIR was lodged against petitioners are well satisfied in substance and true spirit, hence no interference would be justified in equitable jurisdiction under Article 226 of Constitution of India.
15. Before proceeding further it would be appropriate first to notice the case set out by complainant/ informant in the impugned FIR. The FIR inter alia states that informant is Assistant Manager in S.E. Investments Ltd., having its Head Office at 54, Sanjay Place, Agra. The Society (Smt. Shakuntala Educational and Welfare Society) through its office bearers namely, Suneel Galgotia, President of Society and other petitioners had been obtaining several loans for the last 12 years from the aforesaid company, on the basis of balance sheets and other documents. In the mean time, in 2011 the Society secured right from State Government to sponsor Galgotias University and between 2011 and 2012 secured 10 loans by furnishing balance sheets, income and expenditure accounts etc. Now, the informant has come to know about forged balance sheets and income expenditure accounts were filed by Society under certain conspiracy for the purpose of securing loan. All loans were obtained from Surya Nagar Branch of Punjab National Bank, Agra. President of aforesaid Society Sri Suneel Galgotia and other office bearers while taking loan had represented that Galgotias University is under the ownership of Smt. Shankuntala Educational and Welfare Society and entire assets and liabilities of University are vested in Society. It was only on 25.07.2014, the informant came to know the truth that Galgotias University, Uttar Pradesh, is a separate corporate body, established under Galgotias University Act, 2011 and Smt. Shankuntala Educational and Welfare Society is a separate and independent entity, registered under the Societies Registration Act, 1860. The two are separate, distinct and independent legal corporate bodies and their assets, liabilities and expenses are separate. Thus fraud was played upon informant's company, by filing forged and fabricated documents under pre-planned conspiracy, in order to cause benefit to Society and harm the Financier company. Thus, petitioners have committed offence in obtaining loans. The office bearers of Society have issued false and incorrect balance sheets and audit report dated 09.07.2014, wherein University has been shown, being owned by Society and on that basis and thereby Society has secured unwanted huge loans as also enjoyed facility of over draft. The Society had been maintaining and submitting two balance sheets and income expenditure accounts, whereas for one institution/body only one balance sheet and income expenditure account is required. One balance sheet and income-expenditure account shows the name of Galgotias University and other one is relating to Shakuntala Educational and Welfare Society. In one balance sheet loss is shown whereas in the other balance sheet, profit is shown. It clearly indicates that it has been done under pre-planned conspiracy with mal-intention to defraud the Financier. The FIR further states that in order to defraud UGC only one balance sheet, showing profit has been filed and other balance sheet showing loss has not been placed before it, concealing the true facts for the reason that it (UGC) rejects the claim of an applicant/body, approaching with loss in balance sheet/account books. The act of accused comes within the purview of cheating and dishonestly inducing the Financier by committing forgery in preparing valuable security, thereby defrauding the informant's company.
16. From the record, some basic facts, which are discernible, may be penned down first.
17. The Society is registered with Registrar of Society, Government of NCT, New Delhi vide Registration Certificate dated 27.8.1998. It has shown its registered office as 4405/06, Prakash Apartments-II, 5, Ansari Road, Darya Ganj, New Delhi. The initial Governing Body had following names and designations:
(i) Suneel Galgotia, Gurgaon, Haryana - Pesident
(ii) Smt. Padmini Galgoia, Gurgaon, Haryana - Secretary
(iii) Sm. Jugnu Galgotia, Rajender Nagar, New Delhi - Treasurer
(iv) Dhruv Galgotia, Gurgaon, Haryana - Executive Member
(v) Srikanth Vasu Raj, Bangalore - Executive Member
(vi) Raghuvansh Mathur, Gurgaon, Haryana- Executive Member
(vii) Smt. Chandrika Mathur, Shah Nazaf Road, Lucknow - Executive Member
(viii) Rachiti Bahadur, Durg, Chattisgarh - Executive Member
(ix) Jagdish Chandra Prasad, Darbhanga, Bihar - Executive Member
(x) Kuldeep Chandra, Dehradun, Uttrakhan - Executive Member
(xi) Aswani Gupta, Jalandhar, Punjab - Executive Member
18. Its aims and objectives included the following:
(i) To arrange, establish and run primary, middle and/or higher secondary school and/or educational/vocational schools or institutions, colleges, study centers etc. and/or to provide the general education to the students of all sections and to bring the education of the best standard within the reach of poor backward children especially in the backward area or in the National Capital Region (NCR) or adjoining areas.
(ii) To establish, promote, run manage and organize university for carrying out research and imparting education in any field such as technology, art, science, commerce, management, medicine, finance, economics, music, dance, acting, sport, communication etc.
(iii) To provide libraries, publish books on educational social subjects organize discussions and seminars promote knowledge and understanding amongst the children and general public.
(iv) To uplift and help the poor, orphans and eligible student and to provide education standards amongst the children/students.
(v) To publish books, charts, illustrations, journals, magazines and periodicals and other publications in different languages for the propagations of above aims and objects.
(vi) To arrange and organise social, cultural and educational programmes from time to time.
(vii) To make correspondence in lawful manner to arrange meetings, conferences, seminars with the authorities concerned.
19. The Society in furtherance of its objectives, established educational institutions of higher education, namely, Galgotias College of Engineering and Technology, G.I.M.T. Institute of Management and Technology; and, Galgotias Business School. The State Government had encouraged establishment of Universities in private sector. In furtherance thereof, Society also proposed to sponsor an University in furtherance whereof U.P. Act, 2011 was passed by U.P. Legislature which came into force on 07.04.2011. The statement of objectives and reasons thereof clearly mention that Act is being enacted with a view to encourage private sector to participate in the field of higher education. It was decided to establish and incorporate a teaching University in the name of "Galgotias University, Uttar Pradesh" sponsored by Society.
20. The Society already had commercial transactions of advancement of loan from respondent no. 4 since 2000. It appears that between the Society and respondent no. 4 several loan agreements were executed between 6.4.2011 to 29.11.2012 (total ten agreements), details whereof are as under:
Sl.No.
Date of Agreement Financed Amount (in Rs.)
1. 06.04.2011 2,25,00,000
2. 28.12.2011 2,00,00,000
3. 30.12.2011 4,00,00,000
4. 21.01.2012 3,00,00,000
5. 21.01.2012 3,40,00,000
6. 21.01.2012 3,60,00,000
7. 21.01.2012 5,00,00,000
8. 02.03.2012 5,00,00,000
9. 20.03.2012 4,00,00,000
10. 29.11.2012 5,35,00,000
21. Copies of some of loan agreements have been filed along with investigation progress report filed by Investigating Officer, which also show that in all the agreements, Society has been shown as 'borrower'. There are five guarantors, namely, Suneel Galgotia, Smt. Padmini Galgotia, Dhruv Galgotia, M/s Galgotias Hotel and Resort Private Limited and M/s Galgotias Publication Private Limited. Sri Dhruv Galgotia is guarantor only in the loan agreement dated 29.11.2012 and in other agreements, rest four are guarantors.
22. Assets of Society have grown multifold inasmuch on 31.03.2000 the assets of Society were shown as Rs. 2.31 crores while on 31.03.2013, the same are shown as Rs. 360.13 crores. It appears that Society already established an institution to be established as University inasmuch in the returns of Assessment Year 2011-12 (Financial Year ending on 31.03.2011), it had shown an excess of income over expenditure transferred from Galgotias University, as Rs. 2258447.15. The Income and Expenditure Account of Galgotias University for Assessment Year 2011-12 (Financial Year ending on 31.03.2011) has been placed on record showing transfer of Rs. 2258447.15 to the balance-sheet which is actually income from interest. It was audited on 18.08.2011.
23. The fact remains that first such agreement was executed between the Society and respondent no. 4 on 06.04.2011 on which date, University was not a statutory University, having not come into existence with a statutory status whatsoever. All the agreements are in Financial Years 2011-12 and 2012-13. In fact nine agreements out of ten are between 01.04.2011 to 31.03.2012, i.e., in 2011-12 and the last tenth one is dated 29.11.2012 in the 2012-13. Only the return of Assessment Year 2011-12 (Financial Year ending on 31.03.2011) was available when nine loan agreements were executed. Further, U.P. Act 2011 was not even in existence at that time.
24. U.P. Act, 2011, as already said, came to be published on 07.04.2011. Some salient features of the Act are as under.
(i) The status of Society is that of a sponsoring body of the University. It is defined in Section 2(o).
(ii) Section 3 provides that Society shall establish at Greater Noida, Gautam Budh Nagar an University by the name of Galgotias University, Uttar Pradsh. It also provides that University shall be a body corporate.
(iii) Before establishing University, Society, i.e. Sponsoring Body has to fulfill conditions as provided in Section 4, which are:
(a) It must possess a minimum 50 acres contiguous land earmarked for University.
(b) It must construct on the aforesaid land building with at least 24,000 square meters carpet area, out of which 50 per cent shall be for academic and administrative purposes.
(c) It shall install equipments in offices, laboratories worth minimum Rs. Five crores in the building referred to in clause (b).
(d) It shall appoint teachers and establish infrastructure of the department/school for the purposes of teaching and/or research in at least seven subjects as per standards laid down by the University Grants Commission.
(iv) Section 5 provides the date on which University shall start and says that University shall start operation only after State Government issues to the Society a letter of authorization of commencement of functioning of University. It further provides that such letter of authorization shall be issued after the State Government receives an unambiguous affidavit along with documents from Society to the effect that all the conditions referred to in Section 4 have been fulfilled.
(v) Officers of University includes at the top 'Chancellor' and thereafter several authorities stated in Section 10.
(vi) Power of appointment of Chancellor and Pro-Chancellor has been conferred upon Society and rest of the Officers have to be appointed by Chancellor or other Officers.
(vii) Section 11(2) declares that Chancellor by virtue of his Office shall be the Head of University and shall constitute interim Executive Council.
(viii) Section 23 provides that Executive Council shall be the principal executive body of the University.
(ix) Various administrative, academic and other functions are given to various authorities of University. The management to the Society has been given over University only to the extent of appointing Chancellor and Pro-Chancellor but thereafter the entire management and function is in the hands of various authorities and officers of University, described in various provisions ofU.P. Act, 2011.
(x) There is a Planning Board to ensure infrastructure and academic support system, meeting the norms of University Grants Commission or the respective Councils.
(xi) There is a Finance Committee contemplated to take care of financial matters and there is an Academic Council contemplated to take care of academic functions of University.
(xii) Section 31 requires audit of annual accounts of University.
(xiii) With regard to the generation of funds, U.P. Act, 2011 has made several provisions. The initial contribution has to be made by the Society.
(xiv) Section 41 contemplates that Society shall establish a Permanent Endowment Fund of at least Rs. 10 Crore. The power to invest the amount in the aforesaid funds, thereafter, is vested in University vide Section 41(2).
(xv) The another kind of fund is General Fund, which is governed vide Section 42. It provides that University shall establish a general fund to which following amount shall be credited, namely,
(a) all fees, which may be charged by University;
(b) all sums received from any other source;
(c) all contributions made by Society; and,
(d) all contributions made in this behalf by any other person or body which are not prohibited by any law for the time being in force.
(xvi) Section 42(2) provides that the money credited to general funds shall be applied to meet all the recurring expenditures of University.
(xvii) A third kind of fund is provided vide Section 43, i.e., Development Fund. University is obliged to establish a Development Fund and the following money shall be credited therein:
(a) development fees, which may be charged from students;
(b) all sums received from other sources for the purpose of the development of the University;
(c) all contributions made by the Society;
(d) all contributions made in this behalf by any other person or body which are not prohibited by any law for the time being in force; and
(e) all incomes received from the permanent endowment fund.
(xviii) Section 43(2) provides that money credited to Development Fund from time to time shall be utilized for development of University.
(xix) Section 44 authorizes the Court, a body constituted vide Section 22, to supervise, control, regulate and maintain the three funds established under Section 4142 and 43 in such manner as may be prescribed.
(xx) Section 52 contemplates the situation in case where University is dissolved and provides that all assets and property including permanent endowment fund, general fund or any other fund and also the liabilities of University will belong to the Society. This provision, therefore, will come into picture only when University is dissolved as provided in Section 48.
25. It has not come on record as to when certificate for start of University was/has been issued by State Government as contemplated in Section 5 of U.P. Act, 2011. The Act itself has come into existence on 07.04.2011. The requirement of conditions and compliance under Section 4 is bound to take some time. The Certificate under Section 5 could have been issued by State Government after 07.04.2011, but that date or that certificate has not come on record. Even respondent no. 4 has not said anything in this regard. So long as Certificate under Section 5 is not issued, it cannot be said in law that University has started under U.P. Act, 2011.
26. In the income tax returns for the Assessment Year 2012-13 (Financial Year ending on 31.03.2011), the excess of income over expenditure in respect to Galgotias University has been shown as Rs. 42892188 in income and expenditure accounts. On page 238, balance-sheet of Galgotias University as on 31.03.2012, is on record in first petition showing Permanent Endowment Fund of Rs. ten crores and development fund of Rs. 10388759/-. We are informed that Suneel Galgotia has been appointed as Chancellor of University and Smt. Padmini Galgotia has been appointed as Pro-chancellor. In the subsequent balance-sheets also, Society has disclosed income, expenditure and balance-sheet of University as a part of its own statement of accounts and balance-sheet besides other educational institutions with which we are not concerned.
27. In absence of any information, material or certificate under Section 5 on record, it is difficult to hold that University is a separate legal entity even as on date. The income and expenditure of University even in Financial Year 2011-12 (Assessment Year 2012-13) has also not been explained as to whether there was University already functioning or not and on this aspect, we do not find any material available on record. The petitioners, however, did not dispute that University is functioning and working under the management of Society and consolidated balance-sheet is being prepared for Society which includes individual balance-sheet of educational institutions being managed by Society including the University.
28. Now before examining other aspects, we first propose to examine the provisions under which FIR has been lodged, to find out what are the ingredients which we have to analyze in the FIR in question, whether they are satisfied or not. The FIR has been lodged under Sections 420467,468471 read with Section 120B I.P.C.
29. Section 420 is "cheating" which is defined in Section 415. Therefore, let us examine both these provisions which read as under:
"415. Cheating.- Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any proper­ty to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to "cheat".
Explanation.--A dishonest concealment of facts is a deception within the meaning of this section."
"420. Cheating and dishonestly inducing delivery of property.- Whoever cheats and thereby dishonestly induces the person de­ceived to deliver any property to any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and which is capable of being converted into a valuable security, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine."
30. In order to attract allegations of "cheating", following things must exist:
(i)deception of a person;
(ii)(A) fraudulent or dishonest inducement of that person,
(a)to deliver any property to any person; or,
(b)to consent that any person shall retain any property, (B) intentional inducing that person to do or omit to do any thing,
(a) which he would not do or omit if he was not so deceived, and,
(b) such act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property.
31. Then in order to attract Section 420 I.P.C., essential ingredients are:
(i)cheating;
(ii)dishonest inducement to deliver property or to make or destroy any valuable security or any thing which is sealed or signed or is capable of being converted into a valuable security; and,
(iii)mens rea of accused at the time of making inducement and which act of omission.
32. In Mahadeo Prasad Vs. State of West Bengal, AIR 1954 SC 724 it was observed that to constitute offence of cheating, intention to deceive should be in existence at the time when inducement was offered.
33. In Jaswantrai Manilal Akhaney Vs. State of Bombay, AIR 1956 SC 575 the Court said that a guilty intention is an essential ingredient of the offence of cheating. For the offence of cheating, "mens rea" on the part of that person, must be established.
34. In G.V. Rao Vs. L.H.V. Prasad and others, 2000(3) SCC 693, the Court said that Section 415has two parts. While in the first part, the person must "dishonestly" or "fraudulently" induce the complainant to deliver any property and in the second part the person should intentionally induce the complainant to do or omit to do a thing. In other words in the first part, inducement must be dishonest or fraudulent while in the second part, inducement should be intentional.
35. In Hridaya Ranjan Prasad Verma and others Vs. State of Bihar and another, 2000(4) SCC 168 these two provisions came up for consideration. There were three brothers, Hridaya Ranjan Prasad Verma, Manoranjan Prasad Verma and Rajiv Ranjan Prasad Verma sons of late Sri Kashi Nath Prasad Verma. They had three more brothers but they were not involved in the proceedings, therefore, the judgment has excluded them. Father of these three brothers was owner of Khasra No. 213, Plot No. 1172, Village Srinagar, P.S. Siwan (Bihar). On his death his six sons including aforesaid three brothers succeeded to the property. Sri Hridaya Ranjan Prasad Verma was a Neurosurgeon at Patna. Sri Manoranjan Prasad Verma was Manager of Pathar Jhora Tea Gardens in Jalpaiguri (West Bengal). Sri Rajiv Ranjan Prasad Verma was a retired Marketing Manager of Jay Shree Tea and Industries Ltd., Delhi. There was a housing society, namely, Kanishka Sahkari Grih Nirman Samiti Limited, Sewan, a Cooperative Society engaged in purchasing land from different persons and after developing and dividing it into small pieces, selling the plots to customers. Sri Manish Prasad Singh, an Advocate was Secretary of the said Society. The three brothers, named above, agreed to sell the aforementioned land in Village Shrinagar to aforesaid Society for consideration of Rs. 16 lacs. A sum of Rs. 11 lacs were paid to vendors by way of draft. The vendors executed registered sale deed in respect of land in favour of said Society. The two other brothers of aforesaid three brothers signed the sale deed as witnesses. Besides, aforesaid three brothers executed a separate indemnity deed undertaking to indemnify any loss caused to Society on account of any objection which may be raised by any co-sharer against transfer of land in future. The possession of land was also transferred to said Society on the same day. One more brother, Sri Priya Ranjan Prasad Verma also executed a sale deed in favour of Society alienating his part of land. At the time of registration of sale deed, the Secretary of Society, Sri Manish Prasad Singh, gave three cheques to the vendors for the sum of Rs. 5,50,000/-. The cheques when presented to Bank, were dishonoured on account of insufficiency of funds in the account of drawer. The Secretary of Society had issued a separate cheque in favour of Sri Priya Ranjan Prasad Verma, fourth brother, which was also dishonoured for the same reason. Further before execution of sale deed, Sri Akhil Ranajan Prasad Verma, another brother of aforementioned vendors, filed title Suit No. 118 of 1990 for partition stating that though there was a partition amongst brothers in 1971 but not by metes and bounds. On 05.12.1992 an application was filed under Order 39, whereupon the subordinate Judge, Siwan passed an interim order restraining the above named three brothers from disturbing the status quo or transferring land of Schedule 1 to the plaint but no injunction was passed in respect of land described in Schedule 4 of the plaint, in which the property in dispute was included. The aforesaid vendors stated that plaintiff did not press his prayer for injunction in respect of Schedule 4 property. Between 09.12.1992 to 18.12.1992 the Secretary of Society sold a portion of disputed land to several other persons. When cheques were bounced, the vendors requested Secretary of Society for payment of amount but except of promise to do so, he did not pay. On 21.10.1995 the aforesaid vendors through their Advocates sent notice to Society reminding it that cheques issued by it had bounced due to insufficiency of funds. Thereafter FIR was lodged underSection 406420120B IPC at Police Station Siwan on 22.11.1995. In the said FIR the Secretary of Society as well as one Avdesh Narayan Rai, Vice-President, were named as accused. Police after investigation filed charge-sheet against both of them. Besides, the vendors also filed three suits for realization of amount due to them. On 14.12.1995 the Secretary of Society filed Complaint No. 1282 of 1995 before Chief Judicial Magistrate, Siwan against vendors alleging commission of offences under Section 418420423469504 and 120B IPC. The vendors moved the Court for quashing of aforesaid complaint but failed, hence came to Apex Court. It is in this background the Court considered, whether in the complaint lodged at the instance of Secretary of Society, ingredients of Section 415 or 420 IPC are satisfied or not.
36. The Court in Hridaya Ranjan Prasad Verma (supra) said that in the definition of 'cheating' there are set forth two separate classes of acts which the person deceived may be induced to do. In the first place he may be induced fraudulently or dishonestly to deliver any property to any person. The second class of acts set forth in the section is the doing or omitting to do anything which the person deceived would not do or omit to do if he were not so deceived. In the first class of cases, inducing must be fraudulent or dishonest. In the second class of acts, the inducing must be intentional but not fraudulent or dishonest. It was pointed out that there is a fine distinction between mere breach of contract and the offence of cheating. It depends upon the intention of accused at the time to inducement which may be judged by his subsequent conduct but for this subsequent conduct is not the sole test. Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction, that is the time when the offence is said to have been committed. Therefore it is the intention which is the gist of the offence. In order to hold a person guilty of cheating it would be obligatory to show that he had fraudulent or dishonest intention at the time of making the promise. Mere failure to keep up promise subsequently such a culpable intention right at the beginning, i.e, when he made the promise cannot be presumed.
37. In S.W. Palanitkar and others Vs. State of Bihar and another, 2002(1) SCC 241, while examining the ingredients of Section 415 IPC, the aforesaid authorities were followed.
38. In Hira Lal Hari lal Bhagwati Vs. CBI, New Delhi, 2003(5) SCC 257 the Court said that to hold a person guilty of cheating under Section 415 IPC it is necessary to show that he has fraudulent or dishonest intention at the time of making promise with an intention to retain property. The Court further said:
"Section 415 of the Indian Penal Code which defines cheating, requires deception of any person (a) inducing that person to: (i) to deliver any property to any person, or (ii) to consent that any person shall retain any property OR (b) intentionally inducing that person to do or omit to do anything which he would not do or omit if he were not so deceived and which act or omission causes or is likely to cause damage or harm to that person, anybody's mind, reputation or property. In view of the aforesaid provisions, the appellants state that person may be induced fraudulently or dishonestly to deliver any property to any person. The second class of acts set forth in the Section is the doing or omitting to do anything which the person deceived would not do or omit to do if he were not so deceived. In the first class of cases, the inducing must be fraudulent or dishonest. In the second class of acts, the inducing must be intentional but not fraudulent or dishonest."
39. In Devender Kumar Singla Vs. Baldev Krishan Singh 2004 (2) JT 539 (SC), it was held that making of a false representation is one of the ingredients of offence of cheating.
40. In Indian Oil Corporation Vs. NEPC India Ltd., 2006(6) SCC 736 in similar circumstances of advancement of loan against hypothecation, the complainant relied on Illustrations (f) and (g) toSection 415, which read as under:
"(f) A intentionally deceives Z into a belief that A means to repay any money that Z may lend to him and thereby dishonestly induces Z to lend him money, A not intending to repay it. A cheats."
"(g). A intentionally deceives Z into a belief that A means to deliver to Z a certain quantity of indigo plant which he does not intend to deliver, and thereby dishonestly induces Z to advance money upon the faith of such delivery. A cheats; but if A, at the time of obtaining the money, intends to deliver the indigo plant, and afterwards breaks his contact and does not deliver it, he does not cheat, but is liable only to a civil action for breach of contract."
41. The Court said that crux of the postulate is intention of the person who induces victim of his representation and not the nature of the transaction which would become decisive in discerning whether there was commission of offence or not. The Court also referred to its earlier decisions in Rajesh Bajaj Vs. State NCT of Delhi, 1999(3) SCC 259 and held that it is not necessary that a complainant should verbatim reproduce in the body of his complaint all the ingredients of the offence he is alleging. Nor is it necessary that the complainant should state in so many words that the intention of the accused was dishonest or fraudulent.
42. In Vir Prakash Sharma Vs. Anil Kumar Agarwal and another, 2007(7) SCC 373 it was held that if no act of inducement on the part of accused is alleged and no allegation is made in the complaint that there was any intention to cheat from the very inception, the requirement ofSection 415 read with Section 420 IPC would not be satisfied. The Court relied on the earlier decisions in Hridaya Ranjan Prasad Verma (supra) and Indian Oil Corporation Vs. NEPC India Ltd.(supra).
43. In support of the contention that no offence under Section 420 I.P.C. is made out, Sri Chaturvedi placed reliance on decisions of Apex Court in Mohammad Ibrahim and others Vs. State of Bihar and another (2009) 8 SCC 751 and Parminder Kaur Vs. State of Uttar Pradesh and another (2010) 1 SCC 322. He contended that Society being owner of University has rightly included assets, funds and liabilities of University in its own consolidated accounts and balance-sheet. There is no cheating or fraud or forgery.
44. In Mohammad Ibrahim (supra), the accused-petitioners were prosecuted by Magistrate underSection 323342420461471 and 504 I.P.C. The prosecution commenced after a complaint against Mohammad Ibrahim and two others was filed by second respondent before Chief Judicial Magistrate under section 156(3) Cr.P.C., who took cognizance and referred the complaint for investigation, pursuant whereto, Police registered F.I.R. dated 10.10.2003 and after investigation submitted a charge-sheet under the aforesaid Sections. The admitted facts before the Court were that first accused and the complainant were cousins. Badri Mian (paternal grandfather of complainant) and Mithu Mian (maternal grandfather of first accused) were brothers and owners of plot number 1973 and 1971. The plots were inherited by son of Badri Mian, father of complainant and children of Mithu Mian one of whom was Girja, mother of Mohammad Ibrahim-first accused. As per a family arrangement, a portion of the said plots came to the share of Girja, mother of first accused and that portion was in possession of her husband, who got it mutated in his name, paid land revenue; and after his death, the said land came into possession of her son, i.e., first accused. His name was entered in place of his father. He was paying land revenue and bona fide believing himself to be owner of property in dispute, sold a portion of land measuring 8 Kathas and 13 Dhurs to the second accused. The complainant said that sale-deed was forged and the land belong to complainant. The first accused said that sale-deeds were valid and complainant filed a false complaint only to harass him. The first accused also contended that allegations by complainant even if accepted to be true, would only give rise to a civil dispute and did not constitute any offence punishable under the Code or any other law. The Court considered the question whether material on record, prima facie constitute any offence, against the accused. In the context of above, the Court also took judicial cognizance of the fact that there has been a growing tendency of complainants attempting to give the cloak of a criminal offence to matters which are essentially and purely civil in nature, either to apply pressure on the accused, or out of enmity towards the accused, or to subject the accused to harassment. Criminal courts should ensure that proceedings before it are not used for settling scores or to pressurise parties to settle civil disputes. Simultaneously, it should be cautioned that several disputes of a civil nature may also contain ingredients of criminal offences and if so, will have to be tried as criminal offences, even if they also amount to civil disputes. It placed reliance in making this caution on its earlier decision in G. Sagar Suri Vs. State of U.P. 2000 (2) SCC 636 and Indian Oil Corporation Vs. NEPC India Ltd. (supra).
45. The Court then considered Sections 467471464 and held that sale-deed executed by first accused did not fall in the category of false document. The Court held that there is a fundamental difference between a person executing a sale deed claiming that property conveyed is his property, and a person executing a sale deed by impersonating the owner or falsely claiming to be authorised or empowered by the owner to execute the deed on owner's behalf. When a person executes a document, conveying a property describing it as his, there are two possibilities. The first is that he bonafide believes that the property actually belongs to him. The second is that he may be dishonestly or fraudulently claiming it to be his, even though he knows that it is not his property. It was also held that to fall under first category of `false documents', it is not sufficient that a document has been made or executed dishonestly or fraudulently. There is a further requirement that it should have been made with the intention of causing it to be believed that such document was made or executed by, or by the authority of a person, by whom or by whose authority he knows that it was not made or executed. When a document is executed by a person claiming a property which is not his, he is not claiming that he is someone else nor is he claiming that he is authorised by someone else.
46. Then the Court further considered Section 420 and observed that in order to attract Section 420, there should not only be cheating, but as a consequence of such cheating, the accused should have dishonestly induced the person deceived either to deliver any property or to consent to the retention thereof or to make, alter or destroy wholly or in part a valuable security. The Court said that in a given case, when a ownership is wrongly claimed, it may be a case where a purchaser may raise a complaint of fraud, but such a complain cannot be made by third party, who is not purchaser. In the facts of the case, the Court found that no offence under Sections 417418419 or 420 I.P.C. was made out. Having said so, the Court has also given a clarification as under:
"... We should not be understood as holding that such an act can never be a criminal offence. If a person sells a property knowing that it does not belong to him, and thereby defrauds the person who purchased the property, the person defrauded, that is the purchaser, may complain that the vendor committed the fraudulent act of cheating. But a third party who is not the purchaser under the deed may not be able to make such complaint."
47. In Parminder Kaur Vs. State of Uttar Pradesh (supra) the facts of the case were very different. The appellant before Supreme Court was an old lady of about 74 years. There was an allegation that in a certified copy of revenue record there was an alteration in the date changing it from 6.5.2002 to 16.5.2002 and 7.5.2002 to 17.5.2002 and 27.5.2002. A first information report was lodged by Parminder Kaur wherein the Police after investigation submitted charge-sheet. She filed application under Section 482 Cr.P.C. before this Court for quashing of proceedings initiated under Sections 420467468471 I.P.C., but the application was rejected by this Court relying on Apex Court's decision in K. Rama Krishna and others Vs. State of Bihar and another (2000) 8 SCC 547. Hence, the matter was taken before Apex Court. The allegation of forgery was only that the date 6.5.2002 was altered as 16.5.2002 and 7.5.2002 was altered as 17.5.2002 and 27.5.2002. The Court first examined that even if it was accepted that such alteration was made, it did not give any advantage to Parminder Kaur in any manner and this position could not be disputed by counsel for other side. This is evident from what has been noticed in para 27 of the judgment. The Court further held that even if somebody has added the figure one, it cannot be said that it would render the document to be a forged document. It is in this context, the Court examined Section 463 and held that this alteration of one in the document does not satisfy the ingredients of forgery under Section 463 I.P.C. inasmuch even if this alteration is brought in, it could not be shown as to how it would cause damage or injury to public or anybody or how it could have supported the claim of title or how it could cause any person to part with property or for that matter how there could be any intention to commit fraud. It then noticed Sections 467,468 I.P.C. and found these also not attracted in that case. Then it examined Section 464 which speaks of making a false document and noticed that first and third clauses were admittedly not attracted. Then in order to attract second clause of Section 464, there has to be alteration of document dishonestly and fraudulently. In order to attract second clause, if the document is to be altered it has to be for some gain or with such object on the part of accused. Merely, changing a document does not make it a false document. As no gain was shown, the Court held that even second clause was not attracted. The Court held the entire proceedings of prosecution mala fide, malicious and vengeanceful looking into the conduct of complainant, as noticed in para 36 which reads as under:
"We are surprised at the attitude of the State when it is apparent on the record that the whole prosecution is mala fide, malicious and vengeanceful only to settle the scores of respondent no.2 against ....."
48. The basic ingredient of the relevant provisions cannot be disputed but their application in each case will have to be examined on the basis of the facts of that case and, therefore, the mere fact that Apex Court in the above two decisions found no offence having been committed under Section 420 I.P.C. etc. ipso facto, it cannot be said that in the present case also, no offence has been committed by petitioners since there is only a civil dispute.
49. In Rashmi Jain vs. State of U.P. and Anr., 2014(1) SCALE 415 the Court said that mere failure of a person to keep up promise subsequently, a culpable intention right at the beginning, i.e., when he made the promises cannot be presumed. A distinction has to be kept in mind between mere breach of contract and the offence of cheating. It depends upon the intention of the accused at the time of inducement. The subsequent conduct is not the sole test. Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent, dishonest intention is shown at the beginning of the transaction.
50. In Vesa Holdings P. Ltd. and Ors. vs. State of Kerala and Ors., 2015 Cr.L.J. 2455 (SC) the Court held that every breach of contract would not give rise to an offence of cheating and only in those cases breach of contract would amount to cheat where there was any deception played at the very inception. If the intention to cheat has developed later on, the same cannot amount to cheating. In other words, for the purpose of constituting an offence of cheating, the complainant is required to show that the accused had fraudulent or dishonest intention at the time of making promise. Even in a case where allegations are made in regard to failure on the part of accused to keep his promise, in the absence of a culpable intention at the time of making initial promise being absent, no offence under Section 420 IPC can be said to have been made out.
51. Now before examining whether requirements of Section 415 and 420 IPC are satisfied in FIR, we may crystallize some of the allegations contained in FIR since there is apparent repetitions. The allegations are:
(i) Between 2011 to 2012 the Society secured ten loans by furnishing balance-sheets, income and expenditure account.
(ii) The informant came to know that forged balance-sheet, income and expenditure accounts were filed by Society under conspiracy for the purpose of securing loan.
(iii) The President and office bearers of Society while taking loans represented that Galgotia University is under the ownership of Society and entire assets and liabilities of University are vested in Society.
(iv) On 25.07.2014 the informant came to know that Galgotia University is a separate corporate body under U.P. Act, 2011.
(v) The Society is a separate and independent body registered under Act, 1860.
(vi) The two are separate, distinct and independent legal corporate bodies and their assets, liabilities and expenses are separate.
(vii) Fraud was played upon informant's Company by filing forged and fabricated documents, as a pre-planned conspiracy to cause benefit to the Society and harm the complainant.
(viii) The office bearers of Society have issued false and incorrect balance-sheets and audit reports dated 09.07.2014 wherein University has been shown as owned by Society.
(ix) The Society has secured unwanted huge loans as also enjoyed facility of over draft by showing itself owner of University.
(x) The Society had been maintaining and submitting two balance-sheets, income and expenditure accounts while only one balance-sheet and income-expenditure account is required for one institute. One balance-sheet and income-expenditure account in the name of University while another is in the name of Society.
(xi) In one balance-sheet loss is shown whereas in another profit is shown.
(xii) It has been done under pre-planned conspiracy with mal-intention to defraud the financier.
(xiii) In order to defraud UGC one balance-sheet showing profit has been filed and other balance-sheet showing loss has not been placed before it concealing true facts for the reason that UGC rejects balance-sheet/accounts book showing loss.
52. The allegations in FIR are very vague. Admittedly, ten loans were obtained by Society in the year 2011 and 2012 i.e. Financial Year 2011-12 and 2012-13. In fact, nine loan agreements are in 2011-12, i.e., between 01.04.2011 to 31.03.2012. The tenth is dated 29.11.2011. It is admitted that during this period of nine agreements the only balance-sheet and account completed and prepared by Society is of the Financial Year 2010-11 ending on 31.03.2011. For the Financial Year 2011-12, accounts and balance-sheet could have been prepared after 31.03.2012. Despite repeated query, learned counsel appearing for respondent no. 4-complainant, could not show that there was anything wrong in the accounts and balance-sheets submitted upto 31.03.2011, which was the basis for furnishing loans vide agreements executed between 01.04.2011 to 31.03.2012. It takes care of nine loan agreements. It is not stated in the entire FIR that the accounts and balance-sheets ending on 31.03.2011, in any manner, were forged or fictitious. It is not the case even before us. With respect to balance-sheet of Financial Year 2011-12, which is the basis for one loan agreement dated 29.11.2012, again it is not disputed that there is no allegation that even that balance-sheet and accounts were forged and fictitious.
53. The U.P. Act, 2011 came into force on 07.04.2011, i.e., when Financial Year 2011-12 has already commenced. So long as certificate under Section 5 of said Act is not issued, separate legal entity of University would not come into function. Neither in the FIR not before us, complainant-respondent no. 4 has stated that balance-sheet and accounts of Financial Year 2011-12 were not genuine. Initially, an attempt was made that two distinct accounts with distinct entries of Society were prepared and one was submitted to Financier while another to Income Tax Department but when we specifically made enquiry in this regard, petitioners filed a supplementary affidavit, stating that no such two sets of accounts were prepared. These averments have not been denied. Learned counsel for respondent no. 4, on the contrary, when specifically enquired, admitted that there was only one set of balance-sheet and accounts prepared by Society which was submitted to Financier as well as Income Tax Department. Thus, on the dates when loan agreements were executed, account statements of Society were genuine and there is no complaint or allegation about their inaccuracy. Pursuant to aforesaid agreements, relying on account statements as available till that date, loans were advanced to Society. It is also not in dispute that in respect of earlier nine loans, payments were actually made upto September, 2012 and thereafter EMI cheques submitted were dishonoured. With regard to dispute that arose between the parties in breach of repayment schedule, the matter was taken to Delhi High Court by the Society by filing an arbitration application dated 28.03.2014 which was registered as Arbitration Petition No. 164 of 2014. With the consent of parties, Hon'ble R.C. Chopra, a Retired Judge of Delhi High Court was nominated as Arbitrator and nomination petition stood disposed of accordingly vide order dated 01.05.2014. Thereafter vide application dated 16.07.2014 Financier filed a petition under Section 9 of Act, 1996 wherein it prayed for appointment of a Receiver and for taking custody and possession of all finances and receipts of University and other educational institutions of Society. The matter, it appears, is still pending. These facts show that on account of non-payment of loan amount, there occurred a dispute between parties and it is subject matter of arbitration. FIR is the subsequent event and appears to be an afterthought. An attempt has been made to level allegations therein so as to bring the offences referred therein against petitioners but on a closer scrutiny we find that complainant-respondent no. 4 has not been able to succeed in its attempt.
54. The time of inducement is an integral part to attract Section 420 I.P.C. In the FIR there is not even a whisper that there was a cheating and dishonest inducement at the time of entering into loan agreements which are dated 06.04.2011 to 29.11.2012. The FIR is completely silent vis-à-vis the time of execution of loan agreements and payment of loan amount pursuant thereto. It talks of a balance-sheet filed on 09.07.2014 but it is not stated anywhere as to pursuant thereto any property was delivered by respondent no. 4 to the Society and accused persons or not. In fact balance-sheet of 2014 has nothing to do with the loan agreements and the amount of loan advanced to Society.
55. What we actually find from record is that whatever was the status disclosed earlier in the Financial Year 2011-12 and 2012-13, remained the same for the Financial Year 2013-14 and 2014-15, except difference in figures and amount. Nothing new has been done in the balance-sheet and audit report dated 09.07.2014. The agreements were executed long back and loan amount was also advanced long back. In fact, from September' 2012 and onwards the Society had commenced committing default in repayment of loan amount, resulting in civil dispute between the parties.
56. Thus, the intention to deceive or deception, fraudulent or dishonest, at the time of inception, i.e., when loan agreements were executed is conspicuously missing. It is said that on 26.07.2015 the informant came to know that University is a separate body. How and in what manner and on what basis it has come to know, about this fact nothing is stated in the FIR. We are also not shown that if there are two legal entities, one is sponsored by another, then the sponsoring body is barred from getting prepared consolidated balance-sheet and accounts showing funds, assets and liabilities of sponsored body also.
57. It is true that under U.P. Act, 2011 the University is a corporate body having its own identity but there is nothing in U.P. Act, 2011 which provides that Society cannot or shall stand deprived of maintaining a consolidated account or would not show the assets, liabilities etc. of University in its own accounts as a consolidated account. The University would maintain its own separate accounts and balance-sheets being a separate legal entity, may be one thing, but the Society being sponsoring body cannot maintain consolidated accounts, is neither provided in any statute nor shown to be barred under any provision or statute nor is shown to us. We are also not shown any recognized accounting system whereunder a sponsored body is barred from maintaining a consolidated account, showing assets, funds, liabilities etc. of sponsored body in its own account. The entire assumption on the part of informant is of his own. It was not shown that at the time of inception of delivery of funds there was any dishonest intention or mens-rea on the part of Society.
58. During course of argument Sri Brijesh Sahai, learned counsel appearing for respondent no. 4, though sought to argue that all the ingredients of Section 415 read with Section 420 IPC are satisfied but except repeating the allegations contained in FIR he could not explain as to what was the inaccuracy in accounts, how consolidated accounts of Society was impermissible in law and where is deception.
59. At this stage, it was sought to argue that University, a statutory independent body can not be owned by Society. On this aspect, Sri G.S. Chaturvedi, learned Senior Advocate for petitioners, contended that the Society has an element of ownership over the University and, therefore, in the consolidated balance-sheet it has rightly shown assets etc. of University alongwith the assets etc. of Society.
60. Sri Chaturvedi sought to argue that Society being a sponsored body is de-facto owner of University, even if the University under U.P. Act, 2011 got status of a legal independent entity. In order to elaborate the concept of ownership, we drew support from decisions of Apex Court in Swadesh Ranjan Sinha Vs. Haradeb Banerjee (1991) 4 SCC 572, and B. Gangadhar Vs. B.G. Rajalingam 1995 (5) SCC 238.
61. Swadesh Ranjan Sinha (supra) is a matter which has arisen from a landlord tenant dispute under the provisions of West Bengal Premises Tenancy Act, 1956 (hereinafter referred to as "Act, 1956"). Plaintiff's suit for ejectment of tenant on the ground specified under Section 13 of Act, 1956 was decreed by Trial Court but the judgment was reversed by Appellate Court holding that plaintiff was not owner of premises, hence, not entitled to seek eviction and this was upheld by Calcutta High Court by dismissing appeal preferred by plaintiff-appellant. Before the Apex Court, plaintiff was the appellant and the question considered was whether plaintiff is owner of suit premises for the purpose of instituting a suit for eviction in terms of Act, 1956.
62. Brief facts as discussed in the judgment of Apex Court are that a flat was allotted to the plaintiff by the Kadamtola Housing Co-operative Society, Calcutta. The said Society was granted lease of 16 flats by Calcutta Metropolitan Development Authority for a term of 99 years under a registered document. The Society in turn allotted these flats to its members, and plaintiff-appellant was one of such member, who was given a sub-lease by Society of a term of 99 years. The sub-lease was with heritable and transferable title. The plaintiff-appellant then inducted the respondent-tenant on a rent of Rs. 110 per month. Plaintiff terminated tenancy and called upon respondent-tenant to vacate premises which it did not, hence, the suit was filed which was decreed by Trial Court, but judgment was reversed by first Appellate Court which was maintained by second Appellate Court. The Appellate Court held that since plaintiff was only a lessee under a 99 years lease granted by Society, he was not owner within the meaning of Section 13(1)(ff) of Act, 1956, hence not entitled for eviction.
63. Section 13(1)(ff) of Act, 1956 as quoted in para 5 of judgment, reads as under:
"S.(13).(1) Notwithstanding anything to the contrary in any other law, no order or decree for the recovery of possession of any premises shall be made by any Court in favour of the landlord against a tenant except on one or more of the following grounds, namely:-
......................
(ff) Subject to the provisions of sub-section (3-A), where the premises are reasonably required by the landlord for his own occupation if he is the owner or for the occupation of any person for whose benefit the premises are held and the landlord or such person is not in possession of any reasonably suitable accommodation."
64. It entitles a landlord to seek a premises got evicted from defendant, if it is required by him for his own occupation provided he is owner. The definition of "landlord" was given in Section 2which has been quoted in para 6 of judgment stating, "any person who, for the time being, is entitled to receive or but for a special contract, would be entitled to receive the rent of any premises, whether or not on his own account ....." The Court held that definition shows if the rent is received by a person not on his own account but on account of any other person, such as his principal or his ward, he is for the purpose of the Act a landlord. Any such person is, therefore, entitled to institute a suit for eviction. The Court then noticed that Section 13(1)(ff) further provides that the landlord must be owner if he required the premises for his own occupation, or for the occupation of any person for whose benefit the premises are held. The contention was that term "owner" has to be interpreted strictly so as to exclude any person having less than full ownership rights, while appellant contended that it was the lease with heritable and transferable rights, and, therefore, for all purposes, he was owner of the property in dispute. It is in this contest, the Court considered as to what term "ownership" means and in para 8 said:
8. "Ownership denotes the relation between a person and an object forming the subject-matter of his ownership. It consists in a complex of rights, all of which are rights in rem, being good against all the world and not merely against specific persons." (Salmond on Jurisprudence, 12th ed., Ch. 8, p. 246 et. seq.). There are various rights or incidents of ownership all of which need not necessarily be present in every case. They may include a right to possess, use and enjoy the thing owned; and a right to consume, destroy or alienate it. Such a right may be indeterminate in duration and residuary in character. A person has a right to possess the thing which he owns, even when he is not in possession, but only retains a reversionary interest, i.e., a right to repossess the thing on the termination of a certain period or on the happening of a certain event."
65. The Court then said that what plaintiff needs to prove is that he has a better right than the defendant, he has no burden to show that he has the best of all possible titles. His ownership is good against all the world except true owner. The rights of an owner are seldom absolute, and often are in many respects controlled and regulated by statute. The question, however, is whether he has a superior right or interest vis-a-vis the person challenging it. Then the Court in para 10 said as under:
"10. The plaintiff is an allottee in terms of the West Bengal Co-operative Societies Act, 1983: (See Sections 87 and 89). He has a right to possess the premises for a period of 99 years as a heritable and transferable property. During that period he has a right to let out the premises and enjoy the rental income therefrom, subject to the statutory terms and conditions of allotment. The certificate of allotment is the conclusive evidence of his title or interest. It is true that he has to obtain the written consent of the Society before letting out the premises. But once let out in accord- ance with the terms of allotment specified in the statute, he is entitled to enjoy the income from the property. Al- though he is a lessee in relation to the Society, and his rights and interests are subject to the terms and conditions of allotment, he is the owner of the property having a superior right in relation to the defendant. As far as the defendant is concerned, the plaintiff is his landlord and the owner of the premises for all purposes dealt with under the provisions of the Act."
66. In view thereof, the plaintiff was held owner and the judgment of Trial Court was restored by setting aside judgments of Appellate Court.
67. The Apex Court while explaining ownership said that it denotes a relation between a person and object forming subject matter of ownership. The ownership is a complex of rights of all which are rights in rem and good against all the world. In the present case, the University owes its existence to the Society and on dissolution, the assets etc. are bound to again vest in Society. Even for the management purposes, top officers are to be appointed by the Society. Therefore, it cannot be said that element of ownership of Society vis-a-vis University is not in existence.
68. B.Gangadhar Vs. B.G. Rajalingam (supra) was a decision which has come in appeal from Andhra Pradesh High Court. Petitioner before Supreme Court was the judgment-debtor. A suit was filed for declaration of title too and for possession of the property situate at Chelapura, Hyderabad. Trial Court decreed the suit holding plaintiff-respondent as absolute owner of suit property. Decree became final. When warrant was issued in execution for delivery of possession, bailiff returned it on the ground that judgment-debtor had constructed shops and inducted tenants into possession and, therefore, warrant cannot be executed. The decree-holder filed an application under Order 21, Rule 98 read with Section 151 C.P.C. to issue warrant to bailiff to demolish the shops constructed by judgment-debtor and deliver vacant possession of the suit property. The executing court, after enquiry, by its order dated 30.09.1993 directed bailiff by warrant to demolish the shops and to deliver vacant possession to respondent. The judgment-debtor brought the matter before High Court but failed, hence came to Supreme Court. His contention was that in absence of mandatory injunction granted in decree, executing court is devoid of power and jurisdiction to direct demolition of the shops constructed by judgment-debtor. The second contention was that tenants in possession being not eo-nominee parties to the decree, were not bound by the decree and, therefore, direction to dispossess them was illegal. The Apex Court negatived both the arguments and upheld the judgment of Court below. Order 21 Rule 101 which was relied read as under:
"101. Question to be determined.- All questions (including questions relating to right, title or interest in the property) arising between the parties to a proceeding on an application under rule 97 or rule 99 or their representatives, and relevant to the adjudication of the application, shall be determined by the court dealing with the application, and not by a separate suit and for this purpose, the court shall, notwithstanding anything to the contrary contained in any other law for the time being in force, be deemed to have jurisdiction to decide such questions."
69. The executing court is mandated to decide all questions relating to right, title or interest in the property in the execution proceedings. Looking to the nature of tenants inducted by judgment-debtor, the Court looked into the meaning of word "possession" and referred to Halsbury's Laws of England and said:
" ... Halsbury's Laws of England, IVth Ed., Vol.35 in paragraph 1214 at page 735, the word `possession' is used in various contexts and phrases, for example, in the phrase "actual possession" or "to take possession" or "interest in possession" or "estate in possession" or "entitled in possession". In paragraph 1211 at page 732, legal possession has been stated that possession may mean that possession which is recognised and protected as such by law. Legal possession is ordinarily associated with de facto possession; but legal possession may exist without de facto possession, and de facto possession is not always regarded as possession in law. A person who, although having no de facto possession, is deemed to have possession in law is sometimes said to have constructive possession. In paragraph 1216 at p.736 it is stated that the right to have legal and de facto possession is a normal but not necessary incident of ownership. Such a right may exist with, or apart from, de facto or legal possession, and different persons at the same time in virtue of different proprietary rights."
70. Thus, in the context of Order 21 Rule101, the question of ownership and legal possession was considered by Court and its meaning was explained.
71. It is true that the Society cannot be said to possess the University de-facto. It has its own entity, statutory method of functioning under U.P. Act, 2011 and would be governed thereby. However, the Society being a sponsoring body having pervasive control over the University and its funds and assets, it cannot be doubted that the Society can be said to have legal possession over University.
72. The status of sponsor has not been explained. However, it is not disputed that for establishment of University, entire funds are made available by Society. The ultimate management of University is also in the hands of Society, inasmuch as the top officers of University, i.e., Chancellor and Pro-Chancellor are to be appointed by Society. If University wants to dispose of any property the approval of Society is necessary. At the end, i.e., when University is dissolved, entire assets, funds and liabilities of University would stand vested in the Society. These facts show that Society atleast has some element of ownership rights over University, legal possession, and simultaneously maintain interest in the assets and funds of University. If Society maintains assets and liabilities of University by preparing consolidated accounts and balance-sheet of its own, in absence of any statutory bar, we find no apparent fault on the part of Society in doing so. It cannot be said that mere preparation of a consolidated account and balance-sheet by Society showing funds, assets etc. of University in its own accounts is an act of fraud on the part of the Society. If the Society has an element of ownership over University, nothing bars it from showing funds, assets, liabilities etc. of University in its own consolidated accounts and balance-sheets, particularly when there is no such bar and none has been shown to us.
73. Now reverting back to the applicability of Section 415 and 420 IPC, we find that basic ingredient that the deception was at the time of inception, is absent.
74. Now we come to examine whether Sections 467468 and 471 IPC are attracted in this case. All the three provisions are part of same genus of offences dealt with under the head of "Forgery".
75. The term "forgery" has been defined in Section 463 IPC, which says that if any one makes any false documents etc. to cause damage or injury or to support any claim or title or to cause any person to part with property or to enter into any express or implied contract etc., he would be said to have committed forgery. Section 463 reads as under:
"463. Forgery.-- Whoever makes any false documents or false electronic record or part of a document or electronic record, with intent to cause damage or injury, to the public or to any person, or to support any claim or title, or to cause any person to part with property, or to enter into any express or implied contract, or with intent to commit fraud or that fraud may be committed, commits forgery."
76. The term "forgery' thus brings us to the term "false document" and Section 464 IPC provides as to when it can be said that one has made false document. It reads as under:
"464 Making a false document. --A person is said to make a false document or false electronic record--
First --Who dishonestly or fraudulently--
(a) makes, signs, seals or executes a document or part of a document;
(b) makes or transmits any electronic record or part of any electronic record;
(c) affixes any electronic signature on any electronic record;
(d) makes any mark denoting the execution of a document or the authenticity of the electronic signature, with the intention of causing it to be believed that such document or part of document, electronic record or electronic signature was made, signed, sealed, executed, transmitted or affixed by or by the authority of a person by whom or by whose authority he knows that it was not made, signed, sealed, executed or affixed; or Secondly --Who, without lawful authority, dishonestly or fraudu­lently, by cancellation or otherwise, alters a document or an electronic record in any material part thereof, after it has been made, executed or affixed with electronic signature either by himself or by any other person, whether such person be living or dead at the time of such alteration; or Thirdly --Who dishonestly or fraudulently causes any person to sign, seal, execute or alter a document or an electronic record or to affix his electronic signature on any electronic record knowing that such person by reason of unsoundness of mind or intoxication cannot, or that by reason of deception practiced upon him, he does not know the contents of the document or electronic record or the nature of the alteration."
77. Sections 467468 and 471 IPC contemplate certain stages of forgery and read under:
"467. Forgery of valuable security, will, etc.--Whoever forges a document which purports to be a valuable security or a will, or an authority to adopt a son, or which purports to give authority to any person to make or transfer any valuable security, or to receive the principal, interest or dividends thereon, or to receive or deliver any money, movable property, or valuable security, or any document purporting to be an acquittance or receipt acknowledging the payment of money, or an acquittance or receipt for the delivery of any movable property or valuable security, shall be punished with imprisonment for life, or with imprisonment of either description for a term which may extend to ten years, and shall also be liable to fine.
468. Forgery for purpose of cheating.--Whoever commits forgery, intending that the document or electronic record forged shall be used for the purpose of cheating, shall be punished with imprisonment of either de­scription for a term which may extend to seven years, and shall also be liable to fine.
471. Using as genuine a forged document or electronic record.--Whoever fraudulently or dishonestly uses as genuine any document or electronic record which he knows or has reason to believe to be a forged document or electronic record, shall be punished in the same manner as if he had forged such document or electronic record."
78. One of the conditions to attract Section 463 is existence of false document. When a false document is said to have been made, we go to Section 464. It is admitted that conditions no. 1 and 3 are not applicable in the case in hand. We go, therefore, to second condition which provides that if a person without lawful authority, dishonestly or fraudulently by cancellation or otherwise alters a document in any material part thereof, after it has been executed or affixed either by himself or by any person, whether such person is living or dead at the time of said alteration, would be said to have made a false document. Having carefully gone through the aforesaid clause, we find that it is also not attracted in the case in hand at all. Once the alleged making of false document is not attracted, there cannot be any forgery and that being so,Sections 467468 and 471 IPC would not be attracted.
79. To attract Section 467 IPC, the essential ingredients are that the accused has forged a document and the document must be one of classes specified in Section, namely, valuable security or Will etc. Section 468 would be attracted when there is a forgery of a document with an intention to use the same for the purpose of cheating. Section 471 would be attracted when someone fraudulently or dishonestly uses a document as genuine document, which he knows or has reason to believe that the same is forged document.
80. In the case in hand, we tried to understand as to how the accounts and balance-sheets of Society can be said to be forged when entries contained therein are not claimed to be false or incorrect but what is charged is that the Society has prepared consolidated balance-sheets by including the assets, income, expenditure and liabilities of University also, therefore, the account books, assets and balance-sheets are forged. It is not disputed that entries contained in accounts and balance-sheets are true. The only fact is that it is a consolidated accounts and balance-sheet by including the assets, funds, liabilities etc. of the University. In absence of any bar, we do not find that any of the ingredients of Sections 467468471 read with Sections 463464 IPC are attracted.
81. Learned counsel appearing for complainant-respondent no. 4, contended that while exercising jurisdiction in writ petition under Article 226 of the Constitution of India for quashing of FIR this Court should examine only the allegations contained in FIR and thereafter find out whether offences mentioned in FIR are satisfied are not.
82. Explaining as to when the Court would be justified in interfering with criminal proceedings in R. Kalyani Vs. Janak C. Mehta and others, 2009(1) SCC 516, the Court said:
"Propositions of law which emerge from the said decisions are:
(1) The High Court ordinarily would not exercise its inherent jurisdiction to quash a criminal proceeding and, in particular, a First Information Report unless the allegations contained therein, even if given face value and taken to be correct in their entirety, disclosed no cognizable offence.
(2) For the said purpose, the Court, save and except in very exceptional circumstances, would not look to any document relied upon by the defence.
(3) Such a power should be exercised very sparingly. If the allegations made in the FIR disclose commission of an offence, the court shall not go beyond the same and pass an order in favour of the accused to hold absence of any mens rea or actus reus.
(4) If the allegation discloses a civil dispute, the same by itself may not be a ground to hold that the criminal proceedings should not be allowed to continue."
83. This decision has been followed in Kamlesh Kumari and Ors. vs. State of U.P. and Ors., 2015(6) SCALE 77.
84. We have examined only the allegations contained in FIR but to understand the same the documents referred therein have been perused. We have not gone into any defence of petitioners and having gone through allegations contained in FIR, we are clearly of the opinion that no offences under various sections mentioned therein have been made out.
85. With regard to exercise of jurisdiction under Article 226 of the Constitution of India, exposition of law is well settled. At this stage, the Court would not go to examine evidence which may be placed by accused in defence but if we find that from the allegations contained in FIR, offences stated therein are not made out or that FIR is otherwise with mala fide intention or to cloak a civil dispute into criminal one, this Court would not hesitate in exercising its jurisdiction under Article 226 of the Constitution by quashing such FIR.
86. Sri G.S. Chaturvedi, learned Senior Advocate, at one stage also argued that since arbitration proceedings are already pending, therefore, the criminal proceedings could not have been initiated by respondent no. 4.
87. However, we have no doubt in our mind that mere fact that a civil dispute it has arisen between parties, would not mean that simultaneously it cannot give rise to a criminal liability. Both can exist together. Even if there is civil dispute, still, if from the allegations contained in complaint or FIR, an offence can be made out, criminal proceedings can go on.
88. In Vesa Holdings P. Ltd. and Ors. vs. State of Kerala (supra) the Court said that a given set of facts may make out a civil wrong as also a criminal offence. Only because a civil remedy may be available to the complainant that itself cannot be a ground to quash criminal proceeding. The real test is whether allegations in the complaint disclose criminal offence of cheating or not. If such offence is not disclosed still the proceedings are allowed to continue, it would amount to abuse of the process of the Court.
89. In Trisuns Chemical Industry vs. Rajesh Agarwal and others, 1999(8) SCC 686, there was an arbitration clause in the agreement between parties. The Court dealt with the effect of such clause on criminal prosecution and held that merely because an act has a civil profile is not enough to stop action on criminal side. It was further held that a provision made in the agreement for referring the disputes to arbitration is not an effective substitute for a criminal prosecution when the disputed act constitute a criminal offence also. This decision has been followed in S.W. Palanitkar and others Vs. State of Bihar (supra). The submission of Sri Chaturvedi, thus, has no merit on this aspect.
90. Be that as it may, since in our view the allegations contained in the impugned FIR, taken on its face value, do not satisfy offences under Sections 420467468471120B IPC, continuance of proceedings in furtherance thereof is an apparent misuse of the process of Court and the same cannot be allowed.
91. The writ petitions are allowed. The impugned FIR dated 09.09.2014 being Case Crime No. 862 of 2014, under Sections 420467468471120B IPC, Police Station Hariparvat, Agra and all subsequent proceedings pursuant thereto, are hereby quashed.
92. There shall be no order as to costs.
Order Date :- 23.09.2015 Akn/PS/AK    
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