M/S Jhajjz PVT LTD And Others vs. State Of Nct Of Delhi And Others

Held

The Court held that the FIR was liable to be quashed. Regarding jurisdiction, while the initial complaint was made to Delhi Police, the Court noted that the alleged transactions and defaults primarily occurred in Mohali. However, the primary ground for quashing was that the allegations in the FIR did not disclose the commission of any criminal offence, specifically criminal breach of trust under Section 406 IPC. The Court reasoned that the arrangement described was a business dealing where petitioners were entrusted with cars for earning profits, with obligations to pay EMIs and commissions. The failure to pay EMIs, leading to loans becoming NPAs, and alleged non-payment of commission, constituted a civil dispute over balance payments, not a dishonest misappropriation or conversion of property. The Court also noted that the complainant had received substantial payments, indicating a dispute over the balance. Furthermore, the Court found the filing of the FIR in Delhi to be mala fide, especially after a preliminary inquiry in Mohali had indicated a civil dispute. The Court concluded that the case fell under categories (1) and (3) of the principles laid down in State of Haryana v. Bhajan Lal, concerning allegations that do not disclose a cognizable offence or make out a case against the accused, and possibly category (7) regarding mala fide institution. Consequently, the FIR and all subsequent proceedings were quashed.

Facts

M/s. Jhajjz Pvt. Ltd. and others (petitioners) filed a writ petition seeking to quash FIR No. 196/2021 registered at the Economic Offences Wing (EOW) under Sections 406/120B of the Indian Penal Code, 1860. The FIR was based on a complaint by respondent No. 4, Siddharth Nautiyal, alleging that petitioners engaged in a business arrangement involving assured returns on investments, with cars purchased in the complainant's name using loans. Petitioners were to handle down payments, EMIs, insurance, road tax, TDS, and GST. The complainant alleged defaults in payments starting from late 2018, with outstanding amounts escalating. Despite multiple assurances and part payments, the petitioners allegedly failed to clear dues after March 2021, leading the complainant to suspect forged documents and file a complaint, claiming misappropriation of over Rs. 3.9 crores and 26 cars worth approximately Rs. 7.1 crores. The complainant also mentioned a prior complaint filed in Mohali, Punjab.

Key Issues

1. Whether the FIR registered by the Delhi Police is liable to be quashed on the grounds of lack of territorial jurisdiction, as the alleged offence was committed in Mohali and no part of it occurred in Delhi? 2. Whether the dispute is essentially civil in nature, arising from contractual obligations, and thus does not disclose any criminal offence, particularly criminal breach of trust under Section 406 IPC? 3. Whether the FIR is liable to be quashed on grounds of mala fide, malicious institution with an ulterior motive, or being manifestly attended with mala fide, as alleged by the petitioners? Petitioner's Arguments: The petitioners argued that the FIR should be quashed because the Delhi Police lacked jurisdiction as the alleged offence occurred in Mohali. They contended that the dispute was purely civil, based on contractual terms, and did not meet the ingredients of criminal breach of trust. They also submitted that the complainant had previously filed a similar complaint in Mohali, which was not registered, and the subsequent filing in Delhi was mala fide, especially after a preliminary inquiry in Mohali suggested a civil dispute. They relied on the indemnity bonds executed between the parties, which they claimed showed a business arrangement where they were responsible for loan repayment and business operations. Revenue/State's Arguments: The judgment does not explicitly record arguments made by the State or respondent No. 4/3-5 regarding the jurisdiction, the civil nature of the dispute, or allegations of mala fide. The court's analysis focuses on the allegations in the FIR and the petitioners' submissions.