Observing that delay in delivery of flats may amount to a breach of agreement but will not amount to a criminal breach of trust or cheating under the Indian Penal Code (IPC) when such circumstances are addressed in the terms and conditions of the agreements, the High Court of Karnataka has quashed criminal case registered against Sushil P. Mantri of Mantri Developers Pvt. Ltd. and his family members.
“Criminal law cannot be set into motion on the said delay in delivery of flats, as those facts arise out of agreements entered into between the parties, at best, it can be breach of agreement,” the court said.
Justice M. Nagaprasanna passed the order while allowing the petitions filed by Mr. Sushil Mantri, his wife Snehal S. Mantri, their son Pratik S. Matri, and their companies.
The petitioners had questioned the legality of the registration of the first information report (FIR) by Subramanyapura police based on a complaint lodged by Dhananjaya P., who had booked a flat in the company’s ‘Mantri Serenity’ project on Kanakapura Road in Bengaluru.
Quoting the apex court’s judgments on breach of contracts/agreements, Justice Nagaprasanna said that every breach of contract, unless it is shrouded with dishonest intention at the outset, cannot become an offence of cheating and criminal breach of trust under the IPC.
The court noted that ‘Mantri Serenity’ project was delayed for certain reasons and at that stage the complainant had lodged complaints before various fora alleging that funds of the projects were illegally diverted by the company and its directors.
Sale deeds registered
Also, the court noted that the company had subsequently received an occupancy certificate and had already registered sale deeds in favour of around 1,800 purchasers of flats in ‘Mantri Serenity’ project but the complainant had declined registration of the sale deed by citing certain reasons.
“If the execution of the sale deed is not accepted by the complainant, it cannot mean that it would become a criminal breach of trust or cheating, as the case would be, as there is no dishonest intention right from the inception of the transaction by the petitioners,” the court observed.
Other fora
While giving liberty to the complainant to move any fora, specifically created for that purpose, on the grievance that he is seeking to vent out in terms of the agreement, the court said that observations made in this order would not influence or bind proceedings before other fora.
Meanwhile, the court also quashed a separate proceeding initiated by the Enforcement Directorate against the petitioners based on the criminal case registered with the Subramanyapura police by the complainant.
