Supreme Court Quashes Criminal Complaint in Family Share Dispute: Suresh Kumar Goyal vs. State of UP (2019)

Date of the Judgment: 11 January 2019

Citation: Criminal Appeal No. 56 of 2019

Judges: Uday Umesh Lalit, J. and Dr. Dhananjaya Y. Chandrachud, J.

Can a criminal complaint be quashed if it appears to be a counterblast to a family dispute, especially when the core issue involves share ownership? The Supreme Court of India addressed this question in a case where a son accused his father, brother, and brother-in-law of cheating and forgery related to shares. The court’s decision highlights the importance of substantive evidence in criminal proceedings, especially when the dispute has roots in a family conflict. The bench comprised of Justice Uday Umesh Lalit and Justice Dr. Dhananjaya Y. Chandrachud, with Justice Lalit authoring the judgment.

Case Background

The case originated from a complaint filed by Respondent No. 2 against his father (Appellant No. 1), brother (Appellant No. 2), and brother-in-law (Appellant No. 3) on 02 December 2009, in the Court of 3rd Additional Chief Judicial Magistrate, Ghaziabad. The complaint alleged that the appellants had cheated him by illegally procuring bonus shares and refusing to return his original shares. The complainant claimed that he had purchased shares of Reliance Industries and Amrit Banaspati Co. Ltd., which were in the custody of the accused. He further alleged that in 1998, he was thrown out of the house by the accused.

The appellants, however, contended that the shares were acquired using funds from Appellant No. 1 in 1992-1993, when Respondent No. 2 was about 24 years old. They stated that the shares were initially debentures of Reliance Polythene Limited, which were later converted into shares and further subdivided due to company policies. The appellants also argued that the shares were always in their custody and that they had offered to divide the proceeds from the shares with the complainant.

The complainant alleged offences punishable under Sections 406, 420, 467, 471, 323, 504, 506, 447 and 448 of the Indian Penal Code (IPC). The appellants applied for discharge under Section 245(2) of the Code of Criminal Procedure (CrPC), which was rejected by the Additional Chief Judicial Magistrate. The appellants then approached the High Court under Section 482 CrPC.

Timeline

Course of Proceedings

The 3rd Additional Chief Judicial Magistrate, Ghaziabad, initially dismissed the complaint on 18 June 2010, under Section 203 of the Code of Criminal Procedure (CrPC), finding it devoid of merit. However, the Additional Sessions Judge, Ghaziabad, set aside this order on 11 November 2010, in Criminal Revision No. 179 of 2010, and remanded the matter back to the Magistrate with a direction to pass fresh orders after granting an opportunity of hearing to Respondent No. 2.

The appellants then approached the High Court under Section 482 CrPC, which was disposed of on 23 March 2011, with a direction to the appellants to move an application under Section 245(2) CrPC for discharge. The application for discharge was rejected by the Additional Chief Judicial Magistrate on 14 June 2011, who found sufficient grounds to frame charges under Sections 420, 323, and 504 of the Indian Penal Code (IPC). This order was challenged by the appellants in the High Court under Section 482 CrPC, which was dismissed on 29 May 2018.

Legal Framework

The complaint filed by Respondent No. 2 alleged offences under the following sections of the Indian Penal Code (IPC):

• Section 406 IPC: Criminal breach of trust.
• Section 420 IPC: Cheating and dishonestly inducing delivery of property.
• Section 467 IPC: Forgery of valuable security, will, etc.
• Section 471 IPC: Using as genuine a forged document or electronic record.
• Section 323 IPC: Punishment for voluntarily causing hurt.
• Section 504 IPC: Intentional insult with intent to provoke breach of the peace.
• Section 506 IPC: Punishment for criminal intimidation.
• Section 447 IPC: Punishment for criminal trespass.
• Section 448 IPC: Punishment for house-trespass.

The appellants sought discharge under Section 245(2) of the Code of Criminal Procedure (CrPC), which states:

“Nothing in this section shall be deemed to prevent a Magistrate from discharging the accused at any previous stage of the case if, for reasons to be recorded by such Magistrate, he considers the charge to be groundless.”

The High Court’s jurisdiction was invoked under Section 482 of the Code of Criminal Procedure (CrPC), which states:

“Saving of inherent power of High Court. Nothing in this Code shall be deemed to limit or affect the inherent powers of the High Court to make such orders as may be necessary to give effect to any order under this Code, or to prevent abuse of the process of any Court or otherwise to secure the ends of justice.”

Arguments

Appellants’ Submissions:

• The appellants argued that the complaint was a counterblast to the actions taken by Appellant No. 1, who had disowned Respondent No. 2, filed a civil suit against him, and initiated a criminal complaint against him.
• They contended that the entire funding for the acquisition of the shares came from Appellant No. 1 in 1992-1993, when Respondent No. 2 was a young adult.
• The appellants submitted that the shares were initially debentures of Reliance Polythene Limited, which were later converted into shares and further subdivided due to company policies, and that these shares were always in the custody of Appellant No. 1.
• They presented photocopies of bank accounts to support their claim that the acquisition was from the funds of Appellant No. 1.
• The appellants argued that they had offered to divide the proceeds from the sale of the shares with Respondent No. 2.
• The appellants argued that no forgery was committed and the preparation of any act cannot be termed as forgery.

Respondent’s Submissions:

• Respondent No. 2 argued that the issue of ownership was a question of fact to be decided in the pending complaint.
• He claimed that the shares were acquired from his own funds and presented a typewritten extract showing debit entries from his account.
• He maintained that the appellants had cheated him by illegally procuring bonus shares and refusing to return his original shares.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a separate section. However, the core issue before the court was:

1. Whether the High Court was justified in dismissing the application under Section 482 of the Code of Criminal Procedure (CrPC) and whether the criminal proceedings should be quashed.

The sub-issue that the court dealt with was: Whether the material produced by the accused was sufficient to rule out the allegations made in the complaint.

Treatment of the Issue by the Court

Authorities

The Supreme Court relied on the following authority:

• Rajiv Thapar and Others v. Madan Lal Kapoor [(2013) 3 SCC 330], Supreme Court of India: This case was cited for the principles governing the exercise of jurisdiction under Section 482 CrPC to quash criminal proceedings.

The Court also considered the following legal provisions:

• Section 245(2) of the Code of Criminal Procedure (CrPC): Regarding the discharge of the accused at any stage if the charge is groundless.
• Section 482 of the Code of Criminal Procedure (CrPC): Regarding the inherent powers of the High Court to prevent abuse of the process of law.

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• The Supreme Court followed the principles laid down in Rajiv Thapar v. Madan Lal Kapoor [(2013) 3 SCC 330]* regarding the exercise of jurisdiction under Section 482 CrPC, emphasizing that the High Court should quash proceedings when the material produced by the accused is of sterling quality and not refuted by the prosecution.

What weighed in the mind of the Court?

The Supreme Court was primarily influenced by the following factors:

• The lack of evidence from the complainant to support his claim that the shares were acquired from his funds.
• The clear evidence that the shares were acquired from the funds of Appellant No. 1.
• The fact that the shares were always in the custody of Appellant No. 1.
• The timing of the complaint, which appeared to be a counterblast to actions taken by Appellant No. 1.
• The offer made by the appellants to divide the proceeds from the sale of the shares.

The Court reasoned that the material on record clearly indicated that the shares were acquired from the funds of Appellant No. 1. The Court also noted that the complainant had failed to provide any evidence to support his claim that the shares were acquired from his funds. The Court further observed that the complaint appeared to be a counterblast to the actions taken by Appellant No. 1, who had disowned Respondent No. 2 and had filed civil proceedings against him.

The Court emphasized that the power under Section 482 of the Code of Criminal Procedure (CrPC) should be exercised to prevent abuse of the process of the court and to secure the ends of justice. The Court stated that the material on record was of sterling quality and that it had not been refuted by the complainant. The Court, therefore, concluded that the criminal proceedings should be quashed.

The court quoted from Rajiv Thapar v. Madan Lal Kapoor [(2013) 3 SCC 330], stating, “To invoke its inherent jurisdiction under Section 482 CrPC the High Court has to be fully satisfied that the material produced by the accused is such that would lead to the conclusion that his/their defence is based on sound, reasonable, and indubitable facts; the material produced is such as would rule out and displace the assertions contained in the charges levelled against the accused; and the material produced is such as would clearly reject and overrule the veracity of the allegations contained in the accusations levelled by the prosecution/ complainant.”

The Court further quoted, “It should be sufficient to rule out, reject and discard the accusations levelled by the prosecution/complainant, without the necessity of recording any evidence. For this the material relied upon by the defence should not have been refuted, or alternatively, cannot be justifiably refuted, being material of sterling and impeccable quality.”

The Court also stated, “Based on the factors canvassed in the foregoing paragraphs, we would delineate the following steps to determine the veracity of a prayer for quashment raised by an accused by invoking the power vested in the High Court under Section 482 CrPC”, and then laid down the steps.

Key Takeaways

• Criminal complaints that appear to be a counterblast to family disputes may be quashed if there is clear evidence that the allegations are unfounded.
• The burden of proof lies on the complainant to provide substantive evidence to support their claims.
• Courts should exercise caution when dealing with criminal complaints arising from family disputes, especially when there is a lack of evidence.
• The power under Section 482 CrPC can be used to prevent abuse of the process of the court and to secure the ends of justice.
• In cases involving share ownership disputes, the court will look for evidence of the source of funds and the custody of the shares.

Directions

The Supreme Court directed Respondent No. 2 to pay a sum of Rs. 25,000/- to each of the appellants within two months as costs for initiating frivolous litigation.

Specific Amendments Analysis

There is no discussion on specific amendments in the judgment.

Development of Law

The ratio decidendi of this case is that in cases where a criminal complaint appears to be a counterblast to a family dispute, and the material produced by the accused is of sterling quality and not refuted by the prosecution, the court can exercise its power under Section 482 of the Code of Criminal Procedure (CrPC) to quash the proceedings. This judgment reinforces the principles laid down in Rajiv Thapar v. Madan Lal Kapoor [(2013) 3 SCC 330]*.

Conclusion

The Supreme Court allowed the appeal filed by Sri Suresh Kumar Goyal and others, setting aside the orders of the lower courts and quashing the criminal complaint filed by Respondent No. 2. The Court found that the complaint was not a bona fide exercise and that the shares in question were acquired from the funds of Appellant No. 1. The Court also directed Respondent No. 2 to pay costs to the appellants for initiating frivolous litigation. This judgment underscores the importance of substantive evidence in criminal proceedings and the need to prevent abuse of the process of the court, especially in family disputes.