Oral observations in court are in the course of judicial discourse. Text of a written order is binding and enforceable: Supreme Court.

Justice DY Chandrachud and Justice MR Shah were unimpressed with the way the High Court of Gujarat handled the present case relating to non-bailable offence. It is reported, according to the face of the judgement of Supreme Court, that the High Court has followed irregular procedure while dealing with Section 482, Code of Criminal Procedure, 1973 for the offences of serious nature.

                In the present case, while hearing from Appellant’s Counsel, came to know that the text of the order of the High Court did not contain any direction restraining the arrest of the respondent/accused. But it appeared from the subsequent order after the submission was adverted by the respondent counsel that direction was previously issued orally  by the the High Court, not to arrest the accused/respondent, which was not disputed by the appellant.

The High Court in a petition for stay of arrest, by the respondent/accused observed the following:

“At this juncture when the proceedings are clearly pending between the parties and both of them have set the criminal machinery in action, to  strike a balance between both the parties the investigation is required to be proceeded, however the present applicant be not arrested till next date”

This order gave rise to the present appeal before the Apex Court.

The main allegations of appellant were overlooked by the High Court, and ought not to have stayed the arrest regarding the seriousness of the offence.

1.            The present case involves the serious allegations made by the Complainant/Appellant against the Respondents. The allegations are

a.            Interpolation  of the deed of relinquishment executed by the appellant with the consequence that whereas the interest in only one property at Akota was relinquished, several additional properties have been included and the nature of the interpolation would be obvious on a bare perusal of the documents have been annexed; and

b.            The deed of dissolution of partnership is purported to have been executed on a day when the appellant was not present in India but was travelling to Dubai

2.            The FIR was been registered on the basis of the above allegations implicating the commission of offences punishable under Sections 405, 420, 465, 467, 468 and 471 of the Penal Code

3.            Pursuant to the Memorandum of Understandings between the Appellant and Accused/Respondent the cheques which were issued by the respondent was dishonoured and the title to the lands which were purported to be transferred to the appellant is under cloud and is not marketable.

It was urged by the counsel that the high court was not justified in issuing a direction restaining the arrest without any reasons.

 

The Apex Court held the offences which are alleged to be involved are of serious nature, so, an order granting stay of arrest in a proceedings must be after judicious application of mind which must emerge from the reasons recorded in writing. The formulation of reasons in a judicial order provides the backbone of public confidence in the sanctity of the judicial process.

The Court was also of the view that the High Court was undoubtedly not expected to deliver a detailed judgment (which gave rise to this present appeal) elaborating upon reasons why a stay of arrest has been granted. But the reasons recorded by the Court must reflect an application of mind to relevant facts and circumstances including the nature and gravity of the allegations, the seriousness of the alleged offences etc. moreover the High Court has not alluded to the allegations made in the FIR. This constitute a serious deficiency.

The Court also held, while determining ad-interim relief like stay of arrest, the High Court must bear in mind the parameters for the exercise of jurisdiction for quashing.

The Court took note of the recent judgement as was held in Neeharika Infrastructure Pvt.  Ltd. vs. State of Maharashtra (2021) which formulated the principles which have to be borne in mind by the High Court when its intervention is sought  for quashing an FIR.

In the case, Justice MR Shah observed:

“Before passing an interim order of staying further investigation pending the quashing petition under Section 482 Cr.P.C. and/or Article 226 of the Constitution of India, the High Court has to apply the very parameters which are required to be considered while quashing the proceedings in exercise of powers under Section 482 Cr.P.C. in exercise of its inherent jurisdiction, referred to hereinabove.”

The Court also observed in the above mentioned case that “while there may be some cases where the initiation of the criminal proceedings may be an abuse of law, it is in cases of an exceptional nature, where it is found that absence of interference would result in a miscarriage of justice, that the Court may exercise its jurisdiction under Section 482 of the CrPC and Article 226 of the Constitution. This Court has disapproved of interim orders of High Courts which grant stay of arrest or which direct that no coercive steps must be taken against the accused, without assigning reasons. The impugned order of the High Court cannot be sustained on the touchstone of the principles which have been consistently laid down by this Court and reiterated in the above decision”.

The Court also relied on the Parbatbhai Aahir's  case wherein the principles governing exercise of Section 482 Cr.PC were  laid down.

FACT OF THE CASE

The appellant and the respondent/accused were partners under a firm by the name Calla Associates.  The share of the appellant and respondent/accused were 45% and 55% respectively.

 An agreement with a document by name “sammati-lekh was allegedly entered into by the appellant consenting to the execution of a sale deed in favour of a third party where he agreed not to make any claim in the amount of Rs 3.89 crores from his capital investment.

Thereafter an addendum to the “sammati-lekh” is alleged to have been executed in terms of which certain amounts were to be adjusted and an amount of Rs 5.03 crores was to be paid by the first respondent to the appellant. It has been alleged that under the terms of the addendum, a sale deed of certain land situated at Mouje Samiyala was to be executed in favour of the appellant.

 It is alleged that, a document was prepared and notarised, pertaining to record the relinquishment of rights by the appellant from a parcel of land belonging to the firm. The allegation of the appellant is that under the terms of the original document, the appellant agreed to relinquish rights only in certain land situated at Akota, Vadodara. However, it is alleged that the first respondent forged the internal pages of the document and added additional survey numbers of land, over and above what was agreed to be relinquished.

 A notice was issued by the appellant to the first respondent which was followed by a public notice alleging misappropriation of the amount invested by the appellant. In a reply, the respondent suggested that partnership had been mutually dissolved and documents had been executed to that effect.

 

 Again a legal notice was issued by the appellant complaining of the dishonour of a cheque of Rs 1.47 crores and of another cheque in the amount of Rs 81.31 lacs.

When the appellant addressed a communication to the bankers to cease all transactions in the account of partnership firm due to disputes, he came to know through one of the banker, that the bank had received a document allegedly executed which the appellant had relinquished all his rights in the firm in favour of the respondent/accused.

The appellant alleged that it was then that he came to know that the first respondent has fabricated the deed of dissolution of partnership dated. This forged deed allegedly contained a reference to another forged document, as alleged.

According to the appellant, his signature on the deed of dissolution of partnership was forged and another copy of the document without his signature was notarised.

 The investigating officer at Police Station conducted a preliminary enquiry into a complaint lodged by the appellant, which is stated to have been disposed of on the ground that the first respondent was ready to settle the accounts in the presence of a mediator and that the allegations were of a civil nature.

As alleged, a settlement was arrived at between the appellant and the first respondent in terms of which it was agreed that the partnership be dissolved and a sum of Rs 26.03 crores be paid to the appellant. Post-dated cheques were issued to the appellant. One of Rs 50 lacs was honoured while the remaining cheques were dishonoured, leading to the initiation of proceedings under the Negotiable Instruments Act 1881.

The appellant instituted a complaint before Police Station against the respondent making allegations of forgery and cheating.

Then, a fresh MoU was entered between the appellant and the respondent which acknowledged that an amount of Rs 50 lacs was paid, while a balance of Rs 25.52 crores remained due. The terms of the MoU envisaged that certain lands would be transferred to the appellant in lieu of the outstanding amount.

The appellant has alleged that fresh cheques issued to him also returned unpaid and the sale deeds which were executed by the respondent were in respect of lands whose title was not marketable.

The complaint filed by the appellant was disposed of by I.O in view of the settlement on the ground that despite repeated requests, the appellant had not come forth to record his statement and it appeared that the matter involved monetary transactions for which the appellant would have to seek redressal before the appropriate court. The respondent got an FIR registered before the Vadodara City Police Station alleging an act of forgery on the part of the appellant. The  investigating officer filed a ‘B’ summary report recording that the alleged document shown by the respondent, had not been forged by the appellant but by himself. The FIR which forms the basis of the present proceedings was registered, alleging the commission of offences punishable under Sections 405, 420, 465, 467, 468 and 471 of the Penal Code.

 

 After  hearing both the parties, the Apex Court allowed the Appeal and set aside the impugned order of the High Court that granted stay from arrest to the Respondent/accused, and directed the High Court to proceed with the petition under Section 482, the consideration which should outweigh, applying the mind whether or not to exercise the jurisdiction to quash must be present  while determining whether an interim order should be made.

Case:

 Salimbhai Hamidbhai Menon Versus Niteshkumar Maganbhai Patel & Anr.

Date of Judgement: 31.08.2021