1. The petitioner has filed the present petition for quashing of FIR No. 1 of 2022, dated 11.1.2022, registered at Police Station State Vigilance and Anti-Corruption Bureau (SV&ACB), Dharamshala for the commission of offences punishable under Sections 420 and 120-B of IPC and Section 13(2) of Prevention of Corruption Act.

2. Briefly stated, the facts giving rise to the present petition are that the Councilor of Municipal Corporation, Dharamshala made a complaint against the present petitioner, Devender Singh Jaggi, asserting that the petitioner had taken a building belonging to MC Dharamshala on rent for an amount of ₹20,111/-, whereas he was receiving the rent basis in lakhs by effecting illegal changes in the original structure and plan of the building. On inquiry, it was found that the building adjacent to the office of MC Dharamshala was initially constructed as a rest house for MC employees. This under-construction building was leased to Devender Singh Jaggi in the year 2005 without mentioning the security amount and rent in the tender notice. Resolution No.911 dated 29.8.2005 was passed by the House for renting the building. It was decided that the amount of the security would be ₹30.00 lacs and the monthly rent would be ₹30,000/- with the lease period of the building to be 25 years. The auction of the building was approved vide Resolution No. 39, dated 15.5.2006 without mentioning the security amount, which implied that conditions approved by the House earlier, vide Resolution No. 911 dated 29.8.2005 were to be adopted for auction; however, the Executive Officer in violation of the Leasing out of the stalls/shops constructed by the municipalities in Himachal Pradesh Rules, dated 21.12.2001 framed new terms and conditions for the auction of the building to benefit Devender Singh Jaggi. The tender was earlier called but was withdrawn as the amount of security and rent was not mentioned in the advertisement. The Executive Officer at his level decided that the rent of the building would be fixed based on the highest bidding for the tender. The petitioner got the tender without mentioning the security and rent amount and without getting approval of the House. The building was handed over to the petitioner without obtaining the approval of the House. The Executive Officer had also authorized the petitioner to mortgage the building with the bank and issued a No Objection Certificate that the building could be given on rent basis to any Bank/Insurance Company or financial institution. The petitioner leased out the first floor of the building to ICICI Bank and the other storey to Bajaj Alliance Insurance Company. The petitioner collected ₹1,21,46,649/- from ICICI Bank and ₹39,47,971/- from Bajaj Alliance Insurance Company. In thismanner he collected ₹1,60,94,620/-, whereas he paid ₹18,38,869/-to MC Dharamshala towards the rent of the building, which caused huge loss to the State exchequer. The police registered the FIR and conducted the investigation.

3. Being aggrieved from the registration of the FIR, the petitioner has approached this Court asserting that the HP Municipal Act, 1994 provides for the functions of the municipalities and constitution of various committees. The Finance Committee approved the proposal and finalized the terms and conditions of the bid and the lease agreement. The allegations made in the FIR, even if accepted to be correct, do not constitute the commission of any offence. The building was leased by the Municipal Corporation for raising construction. The petitioner had taken the lease to earn his livelihood and profits. He invested lakhs of rupees in the improvement. The making of profit is not sufficient to constitute an offence. The complaint does not disclose that the building was constructed by the petitioner by spending about ₹80.00 lakhs. The petitioner was not in active politics at the time of taking the lease. He was elected as a councillor for the first time in the year 2010. He was elected as a Mayor in the year 2015. The FIR was lodged to harass him due to political rivalry. Therefore, it was prayed that the present petition be allowed and the FIR be ordered to be quashed.

4. The petition was opposed by filing a reply reproducing the contents of the petition. It was asserted that Mahesh Dutt, Executive Officer, completed the process of tendering the building within eight days instead of the prescribed period of three weeks. The tender notice was issued on 18.5.2006. It was published on 20.5.2006 and the building was allotted to the petitioner on 27.5.2006. The Rules were violated to help the petitioner. Rule 10 of the leasing out of stall, shops constructed by the Municipalities in Himachal Pradesh Rule, 2001 prohibits the subletting or transfer. The petitioner had leased a part of the building for commercial purposes without the approval of the House. He deviated from the site plan and got reduced the security amount and the rent. He got reduced the security amount from ₹30 lakhs to ₹20,10,111/- and monthly rent from ₹30,000/- to ₹20,111/-. He caused wrongful loss to the Municipal Committee and wrongful gain to himself. MC Dharamshala had passed a resolution for giving an under- construction building on lease for 25 years on a competitive bid. The auction was scheduled to be held on 29.8.2005. Three persons submitted the bids in a sealed cover. The auction was cancelled as the security amount and monthly rent were not mentioned in the tender document. A resolution was passed that the Government had asked to fix the security amount as ₹30.00 lacs and monthly rent as ₹30,000/-. The tenders were again issued but no person participated. Tenders were again floated on 18.5.2006 without mentioning the terms and conditions of the lease. The petitioner applied for the copies of tender document on 26.5.2006 by filing four applications. Four tender documents were issued to him. The petitioner obtained possession of the building based on the highest competitive bid. He prepared the Lease Deed with MC Dharamshala. The monthly rent was settled as ₹20,111/- instead of ₹30,000/- fixed by the House and the security amount was reduced to ₹20,10,111/- from ₹30.00 lacs approved by the House. The petitioner had entered into a conspiracy with his co-accused Mahesh Dutt and caused wrongful loss to the State of H.P. He paid ₹34,88,918/- but he received ₹1,96,40,798/- from two floors only. The investigations are continuing. One of the councillors submitted a complaint levelling the allegations against the Executive Officer. Learned Additional District Magistrate, Kangra submitted a report to District Magistrate, Kangra regarding subletting of the building. The petitioner filed a civil suit against the MC. Deviations made by the petitioner were compounded by the Town and Country Planning on 1.2.2014. A false petition was filed, therefore, it was prayed that the present petition be dismissed.

5. I have heard Mr Sanjeev Bhushan, learned Senior Counsel assisted by Mr Arun Kaushal, learned counsel for the petitioner and Mr Prashant Sen, learned Deputy Advocate General for the respondent/State.

6. Mr Sanjeev Bhushan, learned Senior Counsel for the petitioner submitted that the allegations contained in the FIR even if accepted as correct, do not constitute any cognizable offence. The allegation against the petitioner is that he had taken much more rent than he had paid to the Municipal Corporation and thereby he cheated MC, Dharamshala. No representation was made by the petitioner to attract the provision of Section 420 of IPC. He participated in the auction conducted by the MC Dharmashala. He offered the highest amount towards the security and monthly rent and obtained the possession. The building was under construction at the time of the auction and the petitioner spent a huge amount on the completion of the construction. This amount was not considered by the complainant. Various documents annexed to the petition show that MC Dharamshala had accepted the terms and conditions of the auction after the earlier auction was unsuccessful. It had decided to offer the building to the highest tenderer. The petitioner was the highest tenderer and there is no illegality on the part of the participation in participating in the bid and taking the building on lease. The complaints were also made against the Executive Officer but no action was taken on the administrative side. The incident pertains to 2005 and FIR was lodged in the year 2022. No charge sheet has been filed till today, therefore, he prayed that the FIR be quashed. He relied upon the judgment of this Court in Rabinder Nath Sharma vs. State of H.P., Cr.MMO No. 167 of 2022, decided on 10.5.2023 in support of his submission.

7. Mr. Prashant Sen, learned Deputy Advocate General for the respondent/State submitted that the investigation is continuing and the petition is premature. The investigation may result in a cancellation report. The allegations in the FIR clearly show that the petitioner had made a huge profit on the building in connivance with the Executive Officer. There is a distinction between administrative law and criminal law and the fact that the Government had not taken any action against the Executive Officer on the administrative side will not show that no criminal act was done by the petitioner in connivance with the Executive Officer. Therefore, he prayed that the present petition be dismissed.

8. I have given considerable thought to the submissions at the bar and have gone through the records carefully.

9. The parameters for exercising jurisdiction under Section 482 of Cr.P.C. were laid down by the Hon’ble Supreme Court in A.M. Mohan v. State, 2024 SCC OnLine SC 339, wherein it was observed: -

9. The law with regard to the exercise of jurisdiction under Section 482 of Cr. P.C. to quash complaints and criminal proceedings has been succinctly summarized by this Court in the case of Indian Oil Corporation v. NEPC India Limited (2006) 6 SCC 736: 2006 INSC 452 after considering the earlier precedents. It will be apposite to refer to the following observations of this Court in the said case, which read thus:

“12. The principles relating to the exercise of jurisdiction under Section 482 of the Code of Criminal Procedure to quash complaints and criminal proceedings have been stated and reiterated by this Court in several decisions. To mention a few— Madhavrao Jiwajirao Scindia v. Sambhajirao Chandrojirao Angre [(1988) 1 SCC 692: 1988 SCC (Cri) 234], State of Haryana v. Bhajan Lal [1992 Supp (1) SCC 335: 1992 SCC (Cri) 426], Rupan Deol Bajaj v. Kanwar Pal Singh Gill [(1995) 6 SCC 194: 1995 SCC (Cri)

1059], Central Bureau of Investigation v. Duncans Agro Industries Ltd. [(1996) 5 SCC 591: 1996 SCC (Cri)

1045], State of Bihar v. Rajendra Agrawalla [(1996) 8 SCC 164: 1996 SCC (Cri) 628], Rajesh Bajaj v. State NCT of Delhi [(1999) 3 SCC 259: 1999 SCC (Cri) 401], Medchl Chemicals & Pharma (P) Ltd. v. Biological E. Ltd. [(2000) 3 SCC 269: 2000 SCC (Cri) 615], Hridaya Ranjan Prasad Verma v. State of Bihar [(2000) 4 SCC 168: 2000 SCC (Cri) 786], M. Krishnan v. Vijay Singh [(2001) 8 SCC 645: 2002 SCC (Cri) 19] and Zandu Pharmaceutical Works Ltd. v. Mohd. Sharaful Haque [(2005) 1 SCC 122: 2005 SCC (Cri) 283]. The principles, relevant to our purpose are:

(i) A complaint can be quashed where the allegations made in the complaint, even if they are taken at their face value and accepted in their entirety, do not prima facie constitute any offence or make out the case alleged against the accused.

For this purpose, the complaint has to be examined as a whole, but without examining the merits of the allegations. Neither a detailed inquiry nor a meticulous analysis of the material nor an assessment of the reliability or genuineness of the allegations in the complaint is warranted while examining prayer for quashing a complaint.

(ii) A complaint may also be quashed where it is a clear abuse of the process of the court, as when the criminal proceeding is found to have been initiated with mala fides/malice for wreaking vengeance or to cause harm, or where the allegations are absurd and inherently improbable.

(iii) The power to quash shall not, however, be used to stifle or scuttle a legitimate prosecution. The power should be used sparingly and with abundant caution.

(iv) The complaint is not required to verbatim reproduce the legal ingredients of the offence alleged. If the necessary factual foundation is laid in the complaint, merely on the ground that a few ingredients have not been stated in detail, the proceedings should not be quashed. Quashing of the complaint is warranted only where the complaint is so bereft of even the basic facts which are necessary for making out the offence.

(v.) A given set of facts may make out: (a) purely a civil wrong; (b) purely a criminal offence; or (c) a civil wrong as also a criminal offence. A commercial transaction or a contractual dispute, apart from furnishing a cause of action for seeking remedy in civil law, may also involve a criminal offence. As the nature and scope of a civil proceeding are different from a criminal proceeding, the mere fact that the complaint relates to a commercial transaction or breach of contract, for which a civil remedy is available or has been availed, is not by itself a ground to quash the criminal proceedings. The test is whether the allegations in the complaint disclose a criminal offence or not."

10. Similar is the judgment in Maneesha Yadav v. State of U.P., 2024 SCC OnLine SC 643, wherein it was held: -

"12. We may gainfully refer to the following observations of this Court in the case of State of Haryana v. Bhajan Lal1992 Supp (1) SCC 335: 1990 INSC 363:

“102. In the backdrop of the interpretation of the various relevant provisions of the Code under Chapter XIV and of the principles of law enunciated by this Court in a series of decisions relating to the exercise of the extraordinary power under Article 226 or the inherent powers under Section 482 of the Code which we have extracted and reproduced above, we give the following categories of cases by way of illustration wherein such power could be exercised either to prevent abuse of the process of any court or otherwise to secure the ends of justice, though it may not be possible to lay down any precise, clearly defined and sufficiently channelised and inflexible guidelines or rigid formulae and to give an exhaustive list of myriad kinds of cases wherein such power should be exercised.

(1) Where the allegations made in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused.

(2) Where the allegations in the first information report and other materials, if any, accompanying the FIR do not disclose a cognizable offence, justifying an investigation by police officers under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section 155(2) of the Code.

(3) Where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused.

(4) Where the allegations in the FIR do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code.

(5) Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused.

(6) Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party.

(7) Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge.

103. We also give a note of caution to the effect that the power of quashing a criminal proceeding should be exercised very sparingly and with circumspection and that too in the rarest of rare cases; that the court will not be justified in embarking upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the FIR or the complaint and that the extraordinary or inherent powers do not confer an arbitrary jurisdiction on the court to act according to its whim or caprice.”

11. The allegations against the present petitioner are that he had taken an under-construction building on lease on a monthly rent of ₹20,111/- and security amount of ₹20,10,111/- as against the monthly rent of ₹30,000/- and security of ₹30.00 lacs fixed by the Municipal Council. He paid ₹34,88,918/- and earned ₹1,96,40,798/- by leasing three rented floors. In this manner, he committed the offence punishable under Sections 420 and 120-B of IPC.

12. The ingredients of cheating were explained by the Hon’ble Supreme Court in S.W. Palanitkar v. State of Bihar, (2002) 1 SCC 241 as under:

“10. The ingredients of an offence of cheating are: (i) there should be fraudulent or dishonest inducement of a person by deceiving him, (ii)(a) the person so deceived should be induced to deliver any property to any person or to consent that any person shall retain any property; or

(b) the person so deceived should be intentionally induced to do or omit to do anything which he would not do or omit if he were not so deceived; and (iii) in cases covered by (ii)(b), the act of omission should be one which causes or is likely to cause damage or harm to the person induced in body, mind, reputation or property.

11. One of us (D.P. Mohapatra, J.), speaking for the Bench, in Hridaya Ranjan Prasad Verma v. State of Bihar [(2000) 4 SCC 168: 2000 SCC (Cri) 786] on facts of that case, has expressed thus: (SCC p. 177, para 15)

“15. In determining the question it has to be kept in mind that the distinction between mere breach of contract and the offence of cheating is a fine one. It depends upon the intention of the accused at the time of inducement which may be judged by his subsequent conduct but for this subsequent conduct is not the sole test. Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction, that is the time when the offence is said to have been committed. Therefore it is the intention which is the gist of the offence. To hold a person guilty of cheating it is necessary to show that he had fraudulent or dishonest intention at the time of making the promise. From his mere failure to keep up promise subsequently such a culpable intention right at the beginning, that is, when he made the promise cannot be presumed.”

(emphasis supplied)

12. Finding that the ingredients of the offence of cheating and its allied offences had not been made out, this Court interfered with the order of the High Court and quashed the criminal proceedings.

13. In G.V. Rao v. L.H.V. Prasad [(2000) 3 SCC 693: 2000 SCC (Cri) 733] this Court in para 7 has stated thus: (SCC pp. 696-97)

“7. As mentioned above, Section 415 has two parts. While in the first part, the person must ‘dishonestly’ or ‘fraudulently’ induce the complainant to deliver any property; in the second part, the person should intentionally induce the complainant to do or omit to do a thing. That is to say, in the first part, inducement must be dishonest or fraudulent. In the second part, the inducement should be intentional. As observed by this Court in JaswantraiManilalAkhaney v. State of Bombay [AIR 1956 SC 575: 1956 Cri LJ 1116] a guilty intention is an essential ingredient of the offence of cheating. In order, therefore, to secure the conviction of a person for the offence of cheating, ‘mens rea’ on the part of that person, must be established. It was also observed in Mahadeo Prasad v. State of W.B. [AIR 1954 SC 724: 1954 Cri LJ 1806] that in order to constitute the oflence of cheating, the intention to deceive should be in existence at the time when the inducement was oflered.”(emphasis supplied)

14. In Trisuns Chemical Industry v. Rajesh Agarwal [(1999) 8 SCC 686: 2000 SCC (Cri) 47] dealing with the effect of existence of arbitration clause in the agreement on criminal prosecution on the ground that civil proceedings are also maintainable, this Court has held that quashing of FIR or a complaint exercising power under Section 482 CrPC should be limited to a very extreme exception; merely because an act has a civil profile is not enough to stop action on the criminal side. It is further held that a provision made in the agreement for referring the disputes to arbitration is not an effective substitute for a criminal prosecution when the disputed act constitutes a criminal offence.

13. A similar view was taken in G.V. Rao v. L.H.V. Prasad, (2000) 3 SCC 693 wherein it was observed as under:

“7. As mentioned above, Section 415 has two parts. While in the first part, the person must “dishonestly” or “fraudulently” induce the complainant to deliver any property; in the second part, the person should intentionally induce the complainant to do or omit to do a thing. That is to say, in the first part, inducement must be dishonest or fraudulent. In the second part, the inducement should be intentional. As observed by this Court in JaswantraiManilalAkhaney v. State of Bombay [AIR 1956 SC 575: 1956 Cri LJ 1116: 1956 SCR 483] a guilty intention is an essential ingredient of the offence of cheating. In order, therefore, to secure the conviction of a person for the offence of cheating, “mens rea” on the part of that person, must be established. It was also observed in Mahadeo Prasad v. State of W.B. [AIR 1954 SC 724: 1954 Cri LJ 1806] that in order to constitute the offence of cheating, the intention to deceive should be in existence at the time when the inducement was offered.

8. Thus, so far as the second part of Section 415 is concerned, “property”, at no stage, is involved. Here it is the doing of an act or omission to do an act by the complainant, as a result of intentional inducement by the accused, which is material. Such inducement should result in the doing of an act or omission to do an act as a result of which the person concerned should have suffered or was likely to suffer damage or harm in body, mind, reputation or property. In an old decision of the Allahabad High Court in Empress v. Sheoram [(1882) 2 AWN 237], it was held by Mahmood, J.:

“That to palm off a young woman as belonging to a caste different to the one to which she really belongs, with the object of obtaining money, amounts to the offence of cheating by personation as defined in Section 416 of the Penal Code, 1860, which must be read in the light of the preceding Section 415.”

14. It was laid down by the Hon’ble Supreme Court in Ram Jas v. State of U.P., (1970) 2 SCC 740 that there should be a fraudulent or dishonest inducement before a person can be held guilty of cheating. It was observed:

“3. In recording this finding and conviction, the High Court lost sight of the fact that no such charge was framed against the appellant in the trial court. As we have indicated above, the persons, who were cheated or attempted to be cheated, referred to in the charges framed against the appellant, were Madan Lal, Chunni Lal, or the office of the Relief and Rehabilitation-cum- Settlement Officer, Saharanpur. There was no charge at all relating to any cheating or attempting to cheat the Oath Commissioner. In fact, the case was never brought to Court with the intention of obtaining conviction of the appellant for any offence of cheating in respect of the Oath Commissioner. Not only was there no charge in this respect, but, in addition, the appellant, when questioned under Section 342 of the Code of Criminal Procedure after the prosecution evidence had been recorded, was not asked to explain evidence relating to such a charge of cheating the Oath Commissioner. No doubt, there was mention of the commission of forgery of affidavits; but the mention of the commission of that offence could not possibly lead the appellant to infer that he was liable to be convicted for abetting the offence of cheating the Oath Commissioner. Further, in recording this conviction, the High Court did not even case to examine in detail whether all the ingredients of the offence had been established by the prosecution evidence. The only finding of fact was that the appellant, who was known to the Oath Commissioner, wrongly identified some other person as Govind Ram and got the affidavit attested by the Oath Commissioner as if it was being sworn by Govind Ram. This act of wrong identification committed by the appellant cannot amount to the offence of cheating by personation. Cheating is defined in Section 415 IPC, which is as follows:

“Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to ‘cheat’.”

The ingredients required to constitute the offence of cheating are—

(i) there should be fraudulent or dishonest inducement of a person by deceiving him;

(ii)(a) the person so deceived should be induced to deliver any property to any person, or to consent that any person shall retain any property; or

(b) the person so deceived should be intentionally induced to do or omit to do anything which he would not do or omit if he were not so deceived; and

(iii) in cases covered by (ii)(b), the act or omission should be one which causes or is likely to cause damage or harm to the person induced in body, mind, reputation or property.

4. In the present case, the finding of fact recorded only shows that the Oath Commissioner was induced to attest the affidavit by the deception practised by the appellant in wrongly identifying a person as Govind Ram when he was in fact not Govind Ram. That act done by the Oath Commissioner of attesting the affidavit could not, however, possibly cause any damage or harm to the Oath Commissioner in body, mind, reputation or property. The Oath Commissioner was obviously not induced to deliver any property to anybody by this wrong identification, nor was he induced to consent that any person should retain any property. Thus, the facts found did not constitute the offence of cheating at all. The conviction for an offence under Section 419, substantively or with the aid of Section 109 IPC, could only have been justified if the facts proved constituted all the ingredients of the offence of cheating. In recording the conviction, the High Court neglected to see whether all those ingredients were proved. On the face of it, though the Oath Commissioner was induced to attest the affidavit by wrong identification made by the appellant, there was no likelihood of any damage or harm to him in body, mind, reputation or property, so that the Oath Commissioner was never cheated. Clearly, therefore, the High Court fell into an error in recording the conviction of the appellant for the offence under Section 419, read with Section 109 IPC and substituting that conviction in place of the conviction for offences for which he had been punished by the trial court.

15. Similar is the judgment in V.Y. Jose v. State of Gujarat, (2009) 3 SCC 78 wherein it was observed:-

“14. An offence of cheating cannot be said to have been made out unless the following ingredients are satisfied:

(i) deception of a person either by making a false or misleading representation or by other action or omission;

(ii) fraudulently or dishonestly inducing any person to deliver any property, or to consent that any person shall retain any property and finally intentionally inducing that person to do or omit to do anything which he would not do or omit.

For the purpose of constituting an offence of cheating, the complainant is required to show that the accused had fraudulent or dishonest intentions at the time of making a promise or representation. Even in a case where allegations are made in regard to failure on the part of the accused to keep his promise, in the absence of a culpable intention at the time of making the initial promise being absent, no offence under Section 420 of the Penal Code can be said to have been made out.”

16. This position was reiterated in Raju Krishna Shedbalkar v. State of Karnataka, 2024 SCC OnLine SC 200 wherein it was observed:

“7. A perusal of the aforesaid provision shows that the offence of cheating is in two parts. The first is where a person fraudulently or dishonestly deceives another in inducing that person to deliver any property to any person etc. The second part of the offence would be made out if somebody is deceived to do an act which causes damage or harm to that person “in body, mind, or reputation or property is said to have cheated”. Time and again, this Court has reiterated that in order to make out an offence under cheating the intention to cheat or deceive should be right from the beginning. By no stretch of the imagination, this is even reflected from the complaint made by the informant.

8. In the case of Hridaya Ranjan Prasad Verma v. State of Bihar (2000) 4 SCC 168, this Court held as under:

“15. In determining the question it has to be kept in mind that the distinction between mere breach of contract and the offence of cheating is a fine one. It depends upon the intention of the accused at the time of inducement which may be judged by his subsequent conduct but for this subsequent conduct is not the sole test. Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction, that is the time when the offence is said to have been committed. Therefore it is the intention which is the gist of the offence. To hold a person guilty of cheating it is necessary to show that he had fraudulent or dishonest intention at the time of making the promise. From his mere failure to keep up promise subsequently such a culpable intention right at the beginning, that is, when he made the promise cannot be presumed.”

(Emphasis supplied)

9. Further, in the case of Indian Oil Corporation v. NEPC India Ltd. (2006) 6 SCC 736 this position was reiterated in the following manner:

33. The High Court has held that a mere breach of contractual terms would not amount to cheating unless the fraudulent or dishonest intention is shown right at the beginning of the transaction and in the absence of an allegation that the accused had a fraudulent or dishonest intention while making a promise, there is no “cheating”. The High Court has relied on several decisions of this Court wherein this Court has held that dishonest intent at the time of making the promise/inducement is necessary, in addition to the subsequent failure to fulfil the promise. Illustrations (f) and (g) to Section 415 make this position clear:

“(f) A intentionally deceives Z into a belief that A means to repay any money that Z may lend to him and thereby dishonestly induces Z to lend him money, A not intending to repay it. A cheats.

(g) A intentionally deceives Z into a belief that A means to deliver to Z a certain quantity of indigo plant which he does not intend to deliver, and thereby dishonestly induces Z to advance money upon the faith of such delivery, A cheats; but if A, at the time of obtaining the money, intends to deliver the indigo plant, and afterwards breaks his contract and does not deliver it, he does not cheat, but is liable only to a civil action for breach of contract.”

(emphasis supplied)

17. In the present case, the reply states that the petitioner in pursuance of conspiracy with co-accused Mahesh Dutt fraudulently and dishonestly induced MC Dharamshala to deliver the possession of under construction building to him and prepared two lease deeds on different dates and caused wrongful loss to the Government of H.P. However, the rest of the reply and the allegations in the FIR do not support this assertion.

18. It is undisputed that the tenders were floated on behalf of MC Dharamshala. Initially, no one submitted any bids.

The tenders were again floated and the petitioner was the highest bidder. His tender was accepted and the building was leased to him. Therefore, no representation was made by the petitioner. The petitioner only responded to the tender by submitting his bid. It is nobody’s case that the petitioner has failed to honour the terms of the bid submitted by him. He offered to pay ₹20,111/- as monthly rent and security of ₹20,10,111/- which was accepted on behalf of MC Dharamshala. Hence, there was no misrepresentation or dishonest inducement to deliver any property.

19. It was submitted that there is a violation of the leasing out of the stall/shops constructed by the Municipalities in Himachal Pradesh Rules, 2001. This is not correct. Rule 10 provides that the lessee shall not assign, sub-let or transfer by lease or otherwise part with the stall/shop or any part thereof without the prior permission in writing of the concerned Municipality. Therefore, there is no absolute prohibition on the sub-letting of the premises. The sub-letting is permissible with the permission of the Municipality. Para 10(C) of the reply reads that EO, MC Dharamshala vide letter dated 24.6.2006 authorized Devender Singh to further mortgage the part of the building for loan purposes after the lease period and issued a No Objection Certificate. He also issued a No Objection Certificate for renting out the building in question to any Bank/Insurance Company without the prior approval of the Municipality. It means that the Executive Officer had granted a No Objection Certificate to the petitioner for sub-letting the premises.

20. Not only this, a copy of the Lease Deed (Annexure P- 2) (the authenticity of which is not disputed) provides that the licensee can sublet the building/storey to any of the parties with the prior intimation to the licensor. No objection Certificate issued by the Executive Officer reads that the office had no objection if the petitioner rented the building to any bank/Insurance Company or any other financial institution. Therefore, the plea that the petitioner had sublet the building contrary to the leasing rules is not correct.

21. Sub Divisional Officer (C) conducted the investigation and submitted an inquiry report stating that efforts were made to auction the building but no suitable bidder came forward. The building was put to auction and leased to the highest bidder on certain terms and conditions. The building was passed as a guest house but the revised building plan was submitted. Hence, the SDM concluded that there was no breach.

22. Even the Additional District Magistrate submitted a report to Deputy Commissioner, Kangra on 17.1.2009 that the MC had granted a No Objection Certificate to the licensee to sublet the premises in favour of the bank. Hence, the plea taken by the respondent that the building was sublet without any permission is not correct.

23. Therefore, even if the allegations in the FIR are accepted as correct, they do not satisfy the requirement of Section 420 of IPC.

24. The incident took place in the year 2005. The FIR was registered in the year 2022 and we are in the year 2024. The investigation has not been completed. It was held by this Court in Ravinder Nath (supra) that the accused has a right to a speedy trial. When the report under Section 173 of Cr.P.C. was not submitted even after the lapse of eleven years, this right was violated and FIR is to be quashed as a violation of the right of speedy trial. It was observed:-

“14. It also is a cause of concern that even after a lapse of 11 years of registration of FIR, a report under Section 173 of the Cr.P.C. has not been submitted. There is no explanation from respondents/State for such a huge and inordinate delay. The right to speedy trial includes the right to speedy investigation also as denial of one will automatically deny the other.

15. In Raghubir Singh and others vs. State of Bihar, (1986)4 SCC 481, the Supreme Court has observed as under:-

“9. The constitutional position is now well-settled that the right to a speedy trial is one of the dimensions of the fundamental right to life and liberty guaranteed by Art. 21 of the Constitution: Vide Hussainara Khatton

(I) v. State of Bihar, [1979] 5 SCR 169 (per Bhagwati and Koshal, JJ), Kadra Pehdiya (I) v. State of Bihar, AIR 1981 SC 939 (per Bhagwati and Sen, JJ.), Kadra Pehdiya (II) v. State of Bihar, AIR 1982 SC 1167 (per Bhagwati and Eradi, JJ) and State of Maharashtra v. Champa Lal Punjaji Shah, [1981] 3 SCR 610 (per Chinnappa Reddy, Sen and Baharul Islam, JJ). In foreign jurisdictions also, where the right to a fair trial within a reasonable time is a constitutionally protected right, the infringement of that right has been held in appropriate cases sufficient to quash a conviction or to stop further proceedings: Strunk v. United States, 37 Law Ed. 2d 56 and Barker v. Wingo, 407 US 514 two cases decided by the United States Supreme Court and Bell v. Director of Public Prosecutions. Jamaica, [1985]

(II) All ER 585 a case from Jamaica decided by the Privy Council. Several questions arise for consideration. Was there a delay How long was the delay Was the delay inevitable having regard to the nature of the case, the sparse availability of legal services and other relevant circumstances Was the delay unreasonable Was any part of the delay caused by the wilfulness or the negligence of the prosecuting agency Was any part of the delay caused by the tactics of the defence Was the delay due to causes beyond the control of the prosecuting and defending agencies Did the accused have the ability and the opportunity to assert his right to a speedy trial Was there a likelihood of the accused being prejudiced in his defence Irrespective of any likelihood of prejudice in the conduct of his defence, was the very length of the delay sufficiently prejudicial to the accused Some of these factors have been identified in Barker v. Wingo (supra). A host of other questions may arise which we may not be able to readily visualise just now. The question whether the right to a speedy trial which forms part of the fundamental right to life and liberty guaranteed by Art.

21 has been infringed is ultimately a question of fairness in the administration of criminal justice even as 'acting fairly' is of the essence of the principles of natural justice (In re K. (H) an infant 1967(1) All ER 226) and a 'fair and reasonable procedure' is what is contemplated by the expression 'procedure established by law' in Art. 21(Maneka Gandhi vs. Union of India, (1978)1 SCC 248).”

16. In Abdul Rehman Antulay and others vs. R.S. Nayak (1992) 1 SCC 225, the Supreme Court has highlighted the imminence of speedy trial as under:-

“86. In view of the above discussion, the following propositions emerge, meant to serve as guidelines. We must forewarn that these propositions are not exhaustive. It is difficult to foresee all situations. Nor is it possible to lay down any hard and fast rules. These propositions are :

1. Fair, just and reasonable procedure implicit in Article 21 of the Constitution creates a right in the accused to be tried speedily. The right to a speedy trial is the right of the accused. The fact that a speedy trial is also in the public interest or that it serves the societal interest also does not make it any- the-less the right of the accused. It is in the interest of all concerned that the guilt or innocence of the accused is determined as quickly as possible in the circumstances.

2. Right to Speedy Trial flowing from Article

21 encompasses all the stages, namely the stages of investigation, inquiry, trial, appeal, revision and retrial. That is how this Court has understood this right and there is no reason to take a restricted view.

3. The concerns underlying the Right to speedy trial from the point of view of the accused are :

(a) the period of remand and pre- conviction detention should be as short as possible. In other words, the accused should not be subjected to unnecessary or unduly long incarceration prior to his conviction;

(b) the worry, anxiety, expense and disturbance to his vocation and peace, resulting from an unduly prolonged investigation, inquiry or trial should be minimal; and

(c) undue delay may well result in impairment of the ability of the accused to defend himself, whether on account of death, disappearance or non-availability of witnesses or otherwise.

4. At the same time, one cannot ignore the fact that it is usually the accused who is interested in delaying the proceedings. As is often pointed out, "delay is a known defence tactic". Since the burden of proving the guilt of the accused lies upon the prosecution, delay ordinarily prejudices the prosecution. Non-availability of witnesses and disappearance of evidence by lapse of time really work against the interest of the prosecution. Of course, there may be cases where the prosecution, for whatever reason, also delays the proceedings. Therefore, in every case, where the Right to a speedy trial is alleged to have been infringed, the first question to be put and answered is-who is responsible for the delay Proceedings taken by either party in good faith, to vindicate their rights and interests, as perceived by them, cannot be treated as delaying tactics nor can the time taken in pursuing such proceedings be counted towards delay. It goes without saying that frivolous proceedings or proceedings taken merely to delay the day of reckoning cannot be treated as proceedings taken in good faith. The mere fact that an application/petition is admitted and an order of stay granted by a superior court is by itself no proof that the proceeding is not frivolous. Very often these stays are obtained on ex- parte representation.

5. While determining whether the undue delay has occurred (resulting in violation of the Right to Speedy Trial) one must have regard to all the attendant circumstances, including the nature of the offence, the number of accused and witnesses, the work- load of the court concerned, prevailing local conditions and so on-what is called, the systemic delays. It is true that it is the obligation of the State to ensure a speedy trial and State includes the judiciary as well, but a realistic and practical approach should be adopted in such matters instead of a pedantic one.

6. Each and every delay does not necessarily prejudice the accused. Some delays may indeed work to his advantage. As has been observed by Powell, J. in Barker "it cannot be said how long a delay is too long in a system where justice is supposed to be swift but deliberate". The same idea has been stated by White, J. in U.S. v. Ewell, 15 Law Edn. 2nd 627, in the following words :

'…..the sixth amendment right to a speedy trial is necessarily relative, is consistent with delays, and has orderly expedition, rather than more speed, as its essential ingredients; and whether the delay in completing a prosecution amounts to an unconstitutional deprivation of rights depends upon all the circumstances.'

However, an inordinately long delay may be taken as presumptive proof of prejudice. In this context, the fact of incarceration of the accused will also be a relevant fact. The prosecution should not be allowed to become a persecution. But when does the prosecution become prosecution, again depends upon the facts of a given case.

7. We cannot recognize or give effect to, what is called the 'demand' rule. An accused cannot try himself; he is tried by the court at the behest of the prosecution. Hence, an accussed's plea of denial of speedy trial cannot be defeated by saying that the accused did at no time demand a speedy trial. If in a given case, he did make such a demand and yet he was not tried speedily, it would be a plus point in his favour, but the mere non- asking for a speedy trial cannot be put against the accused. Even in the U.S.A., the relevance of the demand rule has been substantially watered down in Barker and other succeeding cases.

8. Ultimately, the court has to balance and weigh the several relevant factors-'balancing test' or 'balancing process'-and determine in each case whether the right to speedy trial has been denied in a given case.

9. Ordinarily speaking, where the court comes to the conclusion that the Right to speedy trial of an accused has been infringed the charges or the conviction, as the case may be, shall be quashed. But this is not the only course open. The nature of the offence and other circumstances in a given case may be such that quashing of proceedings may not be in the interest of justice. In such a case, it is open to the court to make such other appropriate order-including an order to conclude the trial within a fixed time where the trial is not concluded or reducing the sentence where the trial has concluded-as may be deemed just and equitable in the circumstances of the case.

10. It is neither advisable nor practicable to fix any time limit for trial of offences. Any such rule is bound to be a qualified one. Such a rule cannot also be evolved merely to shift the burden of proving justification onto the shoulders of the prosecution. In every case of complaint of denial of the Right to speedy trial, it is primarily for the prosecution to justify and explain the delay. At the same time, it is the duty of the court to weigh all the circumstances of a given case before pronouncing upon the complaint. The Supreme Court of the U.S.A. too has repeatedly refused to fix any such outer time limit in spite of the Sixth Amendment. Nor do we think that not fixing any such outer limit in effectuates the guarantee of the Right to speedy trial.

11. An objection based on denial of Right to speedy trial and for relief on that account, should first be addressed to the High Court. Even if the High Court entertains such a plea, ordinarily it should not stay the proceedings, except in a case of a grave and exceptional nature. Such proceedings in High Court must, however, be disposed of on a priority basis.”

17. Similarly in Kartar Singh vs. State of Punjab, (1994)3 SCC 569, a similar reiteration has been made in the following terms:-

“86. The concept of speedy trial is read into Article 21 as an essential part of the fundamental right to life and liberty guaranteed and preserved under our Constitution. The right to speedy trial begins with the actual restraint imposed by arrest and consequent incarceration and continues at all stages, namely, the stage of an investigation, inquiry, trial, appeal and revision so that any possible prejudice that may result from the impermissible and avoidable delay from the time of the commission of the oflence till it consummates into a finality, can be averted. In this context, it may be noted that the constitutional guarantee of speedy trial is properly reflected in Section 309 of the Code of Criminal Procedure.”

18. In State of Andhra Pradesh vs. P. V. Pavithran (1990)2 SCC 340 it has been observed as under:-

“7. There is no denying the fact that a lethargic and lackadaisical manner of investigation over a prolonged period makes an accused in a criminal proceeding to live every moment under extreme emotional and mental stress and strain and to remain always under a fear psychosis. Therefore, it is imperative that if the investigation of a criminal proceeding staggers on with a tardy pace due to the indolence or inefficiency of the investigating agency causing unreasonable and substantial delay resulting in grave prejudice or disadvantage to the accused, the Court as the protector of the right and personal liberty of the citizen will step in and resort to the drastic remedy of quashing further proceedings in such investigation.

8. While so, there are oflences of grave magnitude such as diabolical crimes of conspiracy or clandestine crimes committed by members of the underworld with their tentacles spread over various parts of the country or even abroad. The very nature of such oflences would necessarily involve considerable time for unearthing the crimes and bringing the culprits to book. Therefore, it is not possible to formulate inflexible guidelines or rigid principles of uniform application for speedy investigation or to stipulate any arbitrary period of limitation within which investigation in a criminal case should be completed.

9. The determination of the question whether the accused has been deprived of a fair trial on account of delayed or protracted investigation would also, therefore, depend on various factors including whether such delay was unreasonably long or caused deliberately or intentionally to hamper the defence of the accused or whether such delay was inevitable in the nature of things or-whether it was due to the dilatory tactics adopted by the accused. The Court, in addition, has to consider whether such delay on the part of the investigating agency has caused grave prejudice or disadvantage to the accused.”

19. Recently in Hasmukhlal D. Vora and Another vs. State of Tamil Nadu, 2022 SCC OnLine SC 1732, the Hon'ble Supreme Court has held as under:-

“25. In the present case, the Respondent has provided no explanation for the extraordinary delay of more than four years between the initial site inspection, the show cause notice, and the complaint. In fact, the absence of such an explanation only prompts the Court to infer some sinister motive behind initiating the criminal proceedings.

26. While inordinate delay in itself may not be ground for quashing of a criminal complaint, in such cases, unexplained inordinate delay of such length must be taken into consideration as a very crucial factor as grounds for quashing a criminal complaint.

27. While this court does not expect a full-blown investigation at the stage of a criminal complaint, however, in such cases where the accused has been subjected to the anxiety of a potential initiation of criminal proceedings for such a length of time, it is only reasonable for the court to expect bare-minimum evidence from the Investigating Authorities.

28. At the cost of repetition, we again state that the purpose of filing a complaint and initiating criminal proceedings must exist solely to meet the ends of justice, and the law must not be used as a tool to harass the accused. The law is meant to exist as a shield to protect the innocent, rather than it being used as a sword to threaten them.”

20. Reverting to the facts of the case, there is no hesitation to hold that there is absolutely no explanation for such an inordinate delay in the submission of the report under Section 173 of the Cr.P.C. Not even a single circumstance has been highlighted which may blame the petitioners for causing a delay in the investigation. Petitioners have already suffered mental torture, and trauma besides having been physically and financially exhausted for such a long period. Petitioner No.1 has even retired during the intervening period. The delay caused in the investigation in all probabilities is likely to prejudice the defence of petitioners as the material defence evidence may not be available to them."

25. In the present case, multiple inquiries have been conducted by various authorities, which found no illegality. Ultimately, the FIR was registered in the year 2022 after the lapse of nearly 16 years of the incident. The charge sheet has not been filed. Permitting the continuation of the proceedings after such inordinate delay will result in the harassment of the petitioner, especially since the Government has not taken any action against the Executive Officer on the administrative side.

26. Therefore, the present petition is allowed and the FIR No. 1 of 2022, dated 11.1.2022, registered at Police Station State Vigilance and Anti-Corruption Bureau (SV&ACB), Dharamshala for the commission of offences punishable under Sections 420 and 120-B of IPC and Section 13(2) of Prevention of Corruption Act are ordered to be quashed.