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Judgment
M. Jeyapaul, J.—The petition is filed seeking quashment of the criminal proceedings in C.C.No. 1259 of 2002 pending on the file of the
learned XIV Metropolitan Magistrate, Egmore, Chennai.
The petitioners are the accused in a case under Sections 198, 403, 406, 409, 417, 418, 420, 447 and 448 r/w Section 34 of the Indian Penal
Code.
The respondent has filed a private complaint alleging as follows:-
The complainant was the sole and absolute owner of the land bearing Door No. 3, Lady Madhavan Road, Mahalingapuram, Chennai-34. She
entered into an agreement dated 29.5.2000 with the accused who are the builders. The complainant also executed power of attorney on 1.6.2000
in favour of the accused authorising them to promote the land of the complainant. The accused did not put up the elevation as desired by the
complainant in the land. Only after persistent demands made by the complainant, the accused modified the elevation. She cancelled the power of
attorney granted in favour of the accused on 7.8.2001. Only inferior materials were used in the complainant''s share of flats, whereas superior
materials were used in the share of flats of the accused. The accused also executed a memorandum of understanding agreeing to continue the work
in accordance with the clauses therein. But the accused failed and neglected to act in accordance with the terms of agreement and the
memorandum of understanding.
The complainant came to know that the accused had put up the construction deviating from the plan approved by the CMDA. The complainant
demanded the accused that 50% of the area constructed over and above the approved plan should be given to the complainant. The accused had
applied to CMDA for regularisation of the deviations and violations in the construction after the complainant cancelled the power of attorney
executed in favour of the accused. The best parking slots were also taken by the accused. Apart from the above misdeeds, the accused are still
possessing the flats belonging to the complainant and are demanding exorbitant amounts from the complainant for completing the remaining works.
A legal notice was issued by the complainant calling upon the accused to hand over the possession of flats after deducting Rs. 6 lakhs from the
amount payable to the accused. Thus, the accused have committed offences punishable under Sections 198, 403, 406, 409, 417, 418, 420, 447
and 448 r/w Section 34 of the Indian Penal Code.
The accused have contended in the petition seeking quashment as follows:-
The complainant agreed to refund the sum of Rs. 20 lakhs deposited with her on completion of the project without any interest, retaining a sum of
Rs. 4 lakhs as non-refundable deposit. She had also agreed that in case she failed to complete with the aforesaid conditions, the accused are
entitled to retain such portion of the super built up area to the value of Rs. 20 lakhs. As per the joint venture agreement dated 29.5.2000, the
complainant accepted to retain 48.3% undivided share in the land together with the proportionate constructed area. The complainant started
complaining about the various aspects of the construction in order to give trouble to the accused. After several meetings with the complainant in the
presence of her advocate, a memorandum of understanding was entered into between the parties on 24.4.2000 wherein she agreed to refund the
sum of Rs. 14,13,700/- after adjusting the various amount payable to her by the accused. After executing the work, the accused called upon the
complainant to pay the said amount to enable the accused to hand over the residential flats. But unfortunately she started issuing notices as though
the accused have committed various offences. The power of attorney was executed in favour of the accused only to co-ordinate with the various
public authorities and enter into agreements for sale with the clients who preferred to purchase the flats. There may be certain minor permissible
deviations. Further the development authorities brought in several rules and regulations curing the deviations on payment of regularisation fee. The
deviations are only curable with payment of regularisation fee. Only to cure the deviation that too, for the benefit of the principal, the accused have
applied for regularisation of the deviations. The entire transaction between the accused and the complainant is purely civil in nature and the
complaint preferred is an abuse of process of law and it is intended to harass the accused and to bring down their reputation.
The Court heard the submissions made on either side.
Learned counsel for the accused would submit that the commercial transaction has been painted with criminal colour in the complaint in order to
tarnish the image of a reputed builder. Even on the face of allegations found in the complaint, the Court cannot come to a conclusion that there is
some prima facie case made out as against the accused.
Learned counsel for the complainant would submit that when the power of attorney executed in favour of the accused was cancelled, the
accused have chosen to apply for regularisation of the deviations as though the power of attorney was in vogue. The area built up in the land of the
complainant is more than the area contemplated to be built as per the terms and conditions of the agreement between the parties. By constructing
additional portions in the land of the complainant, the accused have dishonestly misappropriated huge income. They have also cheated the
complainant by providing substandard materials in the flats earmarked for the complainant, it is argued.
The complainant and the accused have entered into a joint venture agreement dated 29.5.2000. Clause 4 (d) of the said agreement
contemplates refund of the sum of Rs. 20 lakhs by the complainant to the accused. It further reads that in case the complainant fails to refund the
advance of Rs. 20 lakhs made by the builder, the accused herein, the builder, is entitled to retain such portion of the super built up area covering
the amount of Rs. 20 lakhs at the rate of Rs. 1200 per sq.ft.
The complainant had executed a power of attorney on 1.6.2000 empowering the accused to perform all the acts on behalf of the principal to
put up construction on her land and also to enter into agreement with the prospective purchasers of flats. Of course, the said power of attorney
was cancelled on 7.8.2001 and the same was also intimated by a notice issued by the complainant on 27.8.2001.
It appears that the memorandum of understanding was thereafter entered into between the parties on 24.4.2002. The entire dispute between
the complainant and the accused have been thrashed out by entering into memorandum of understanding on 24.4.2002. The accused have been
directed to cause certain improvements in the constructed areas allotted to the owner of the premises. In Clause 3 (i) of the memorandum of
understanding, the builder agreed that the owner can retain a sum of Rs. 2 lakhs which would be deposited with the association for payment of
regularisation of the deviation in the construction of the flats to CMDA. Under Clause 3 (j), it has been agreed by the builder to pay 50% of the
additional space constructed over and above 20,640 sq.ft. at the rate of Rs. 1800 per sq.ft. Clause 5 of the said memorandum of understanding
contemplates that the owner shall refund the balance of Rs. 14,13,700/- to the builder after taking possession of the properties earmarked for the
owner. The last portion of the said memorandum of understanding would read that both the owner and the builder agreed that there was no dispute
whatsoever among themselves.
Though the original joint venture agreement dated 29.5.2000 contemplates refund of Rs. 20 lakhs by the owner to the builder, the
memorandum of understanding after chalking out all the pending issues and contentions adumbrates a clause that the owner shall refund the balance
of Rs. 14,13,700/- on taking possession of the property earmarked for the owner.
The complainant had issued notice on 18.6.2002 and the same was responded by the accused by their reply dated 26.6.2002. It is the
admitted case of the accused that there had been some deviations in the construction made by the accused. Of course, the accused have chosen to
apply for regularisation of the deviation by paying necessary fees to the CMDA after the power of attorney was cancelled. The accused had
applied for regularisation of the deviation only for the benefit of the principal. Certain deviations are visited with some regularisation fees imposed
by the CMDA. It is not as if the accused had alienated the property of the complainant on the strength of the power of attorney which was
cancelled by the complainant. The accused had just applied for regularisation of the deviation which is not only for the benefit of the accused but
also for the complainant. Civil action may be taken as against the agent for having acted without valid power of attorney, but that will not definitely
give rise to criminal action against the agency.
Further, it is found that the action of the accused applying for regularisation of the deviation even after the power of attorney executed by the
complainant in favour of the accused was cancelled had almost been ratified in the memorandum of understanding.
The whole grievance of the complainant is that poor quality materials have been used in the flats earmarked for the complainant, and
constructions have been made additionally over and above 20,640 sq.ft. contemplated in the agreement. All these grievances have been addressed
and thrashed out in the memorandum of understanding entered into between the parties on 24.4.2002. Now the accused is ready to hand over the
flats earmarked for the complainant on receipt of the refund of the sum of Rs. 14,13,700/- as per the memorandum of understanding. But the
complainant complains of irregularities in the execution of the construction work by the accused.
The whole transaction is found to be a commercial one. There might have been some breach of contract or non-compliance of certain
specifications or poor quality materials would have been used, but that will not amount to fraudulent or dishonest action on the part of the accused.
When the whole issues have been thrashed out by entering into a memorandum of understanding, the question of harbouring an intention to cheat
from the very beginning does not arise in this case.
The complainant has just come forward with the complaint simply abusing the process of law. The accused cannot be directed to face the
ordeal of trial based on such a complaint.
In the result, the criminal proceedings in C.C.No. 1259 of 2002 pending on the file of the learned XIV Metropolitan Magistrate, Egmore,
Chennai stands quashed and the criminal original petition stands allowed. Consequently, connected criminal miscellaneous petitions stand closed.