1

AFR
Reservedon10.09.2015
Deliveredon23.09.2015
CourtNo.34
1.CRIMINALMISC.WRITPETITIONNo.17169of2014
Petitioner:Sh.SuneelGalgotiaAndAnother
Respondent:StateOfU.P.ThruSecy.And3Others
CounselforPetitioner:SwetashwaAgarwal,Anil
Tiwari,S.K.Dubey,SamitGopal
CounselforRespondent:Govt.Advocate,D.Kumar
Mishra,ManishTiwary,TarunAgrawal,YogeshAgrawal
2.CRIMINALMISC.WRITPETITIONNo.19146of2014
Petitioner:Smt.JugnuGalgotia
Respondent:StateOfU.P.ThruSecy.And3Others
CounselforPetitioner:SamitGopal
CounselforRespondent:Govt.Advocate,YogeshAgarwal
3.CRIMINALMISC.WRITPETITIONNo.19562of2014
Petitioner:Km.AradhanaGalgotia
Respondent:StateOfU.P.ThruSecy.And3Others
CounselforPetitioner:SamitGopal
CounselforRespondent:Govt.Advocate,YogeshAgarwal
4.CRIMINALMISC.WRITPETITIONNo.21078of2014
Petitioner:Smt.ChandrikaMathurAndAnother
Respondent:StateOfU.P.ThruSecy.And3Others
CounselforPetitioner:SamitGopal
CounselforRespondent:Govt.Advocate,D.K.Mishra
Hon'bleSudhirAgarwal,J.
Hon'bleBrijeshKumarSrivastavaII,J.
(DeliveredbyHon'bleSudhirAgarwal,J.)
1.

All these four writ petitions involve common questions of

factsandlawandhavearisenagainstthesamefirstinformation
report(inshortFIR)dated09.09.2014i.e.casecrimeno.862of

2014underSections420,467,468,471,120BIPC,P.S.Hariparvat,
Agra,hencehavebeenarguedcollectivelyandarebeingdecided
bythiscompositejudgment.
2.

Attheoutset,itmaybe pointedoutthatinthesematters

interimorderswerepassedbythisCourtwhereagainstrespondent
no.4 took the matter before Apex Court in appeal. The Court
observingthatsinceitwasagainstaninterimorder,declinedto
interfere,videorderdated10.04.2015butdirectedthisCourtto
disposeofallwritpetitionsonthenextdateofhearing,preferably
withinonemonthfromthatdate.
3.

Allthesematterswerenominatedon22.7.2015byHon'ble

theChiefJusticetotheBenchpresidedoverbyoneofus(Hon'ble
SudhirAgarwal,J.)pursuantwhereto,thesecaseshavecometous
Wehaveheardthepartiesfinallyanddecideonmeritshereunder.
4.

CriminalMisc.WritPetitionNo.17169of2014(hereinafter

referredto asfirstpetition)has been filedby twopetitioners,

namely, Suneel Galgotia and Smt. Shakuntala Educational and
WelfareSociety(hereinafterreferredtoastheSociety),having
registered office at Delhi. Petitioner no. 1 Suneel Galgotia is
PresidentoftheManagingCommitteeoftheSociety.
5.

CriminalMisc.WritPetitionNo.19146of2014(hereinafter

referredtoassecondpetition)hascomeupattheinstanceof
Smt.JugnuGalgotiawifeofLt.P.D.Galgotia,oneofGuarantorsin
respect of loan agreements and also Treasurer of Management
CommitteeoftheSociety.
6.

CriminalMisc.WritPetitionNo.19562of2014(hereinafter

referred to as third petition) has been filed by Km. Aradhana

Galgotia daughter of Suneel Galgotia (petitioner no. 1 in first
petition).

7.

CriminalMisc.WritPetitionNo.21078of2014(hereinafter

referredtoasfourthpetition),hasbeenfiledbySmt.Chandrika
MathurwifeofSriAshokMathur,andSriRaghuvanshMathurson
ofLt.Dr.ShantiSwaroopMathur,bothbeingofficebearersofthe
SocietyandthusaccusedintheimpugnedFIR.
8.

Inallthewritpetitionsprayeriscommon,i.e.,forquashing

oftheFIRdated09.09.2014i.e.casecrimeno.862of2014under
Sections 420, 467,468,471, 120B IPC, P.S. Hariparvat, District
Agra.
9.

Petitionerno.1inthefirstpetitionandotherpetitionersin

three writ petitions alongwith some others promoted and

constituted the Society for the purpose of establishing and
promoting educational institutions. It was duly registered under
theSocietiesRegistrationAct,1860 (hereinafterreferredtoasthe
Act,1860).TheSocietyclaimeditselftobeacharitableSociety.
Ithadestablishedseveralinstitutionsofhighereducation,namely,
GalgotiasCollegeofEngineeringandTechnology,G.I.M.T.Institute
ofManagementandTechnology,GalgotiasBusinessSchooletc.It
sponsoredGalgotiasUniversityatGautambudhNagarinStateof
U.P.andtogiveastatutorystatus,U.P.LegislaturepassedGalgotias
UniversityUttarPradeshAct,2011(hereinafterreferredtoasUP
Act2011)whichreceivedassentoftheGovernoron04.04.2011
andwaspublishedinU.P.Gazette(Extraordinary)on07.04.2011.
For the purpose of establishing University and creating its
infrastructure, the Society obtained several loans from M/s S.E.
InvestmentLtd.(hereinafterreferredtoastheFinancier),having
its branch office at Sanjay Place, Agra. Some of the petitioners
stoodguarantorsagainstaforesaidloan.UptoSeptember,2012,it
issaid,monthlyinstallmentsweredulypaidbutthereaftersome

defaultoccurredandpostdatedchequesreceivedbyrespondent
no. 4 returned dishonoured, as a result whereof, there arose a
disputebetweentheparties.
10.

The Society pleaded that Sri Giriraj Kishore Sharma,

Assistant Manager, entered into an oral understanding that the

Society would be given two years' moratorium, but, instead,
proceededtoraisedemandimposingpenalinterestonoutstanding
amountataveryhighrate.Anoticedated07.10.2013weresent
by respondent no. 4 to Society stating that it has committed
defaultinmakingpaymentandhenceinterestatpenalrateofRs.
3/perthousandperdaywouldbecharged.PetitionerGuarantors
werealsoissuednoticeson18.12.2013whichweredulyreplied.
The Society then invoked arbitration clause vide letter dated
10.12.2014,requestingFinanciertoappointArbitrator.AnFIRwas
alsolodgedbypromotersofSociety,i.e.,CaseCrimeNo.141of
2014, under Sections 406, 504, 506 IPC, Police Station Kasna,
District Gautambudh Nagar against Directors of Financiers. In
arbitrationproceedingsthematterwastakeninDelhiHighCourt,
whereretiredJusticeR.C.ChoprawasappointedassoleArbitrator.
An application was filed by Financier under Section 9 of
ArbitrationandConciliationAct,1996(hereinafterreferredtoasthe
Act, 1996) before Delhi High Court but no relief was granted
exceptdirectingtheSocietytodiscloseonaffidavitdetailsofall
assets movable and immovable and file balance sheet, bank
accounts and securities etc. Respondent no.4 thereafter filed an
application under Section 156(3) Cr.P.C. before Chief Judicial
Magistrate, Agra on 25.04.2014 wherein the Additional Chief
Judicial Magistrate VIII, Agra passed order directing Police to
registerFIR,pursuantwhereto,impugnedreporthasbeenlodged.

11.

Respondent no. 4 has filed a counter affidavit in the first

petitionandpartieshaveagreedtoreferitinallotherpetitions
also.IthasbeenswornbyMahendraKumarDixit,LegalManager
of Financier. It is said that petitioner has cheated Financier by
claimingthatGalgotiasUniversityistheassetofSociety,though
both are independent and different legal entities, incapable of
being owned by either one. Balancesheets filed by Society are
false, and, fabricated to induce Financier to advance huge loan
amount. If separate balancesheets of two independent bodies
wouldhavebeenfiled,Financierwouldnothaveadvancedloanto
theextentofsuchahugeamount.ItisadmittedthatSocietyhad
been advanced loan from time to time by Financier in the last
morethanadecadevide40agreementswhichhadbeenentered
bySocietywithopeneyesafterunderstandingprosandconsof
stipulationscontainedintheagreement.Theamountclaimedasa
latefeebyFinancieriswithinthetermsoftheagreementanddoes
not violate guidelines laid down by Reserve Bank of India
(hereinafterreferredtoasRBI).Thesocietyisbusyinmaking
money under the cloak of charitable society. There are serious
allegations of fraud, misappropriations, breach of trust and
extortionofmoneyfromstudents.Thesocietyhassucceededin
defrauding public at large, students, employees, contractors etc.
includingFinancier.Initially,Societywasrunningtwoeducational
institutionsnamely,GIMT(GalgotiasInstituteofManagementand
Technology)andGalgotiasCollegeofEngineering.Subsequently,
another one, i.e., Galgotias' business school was also added.
ThoughunderSection2(1)ofU.P.Act2011,itisprovidedthat
existing college means institution which imparts professional
education and it is proposed to be merged down, run and
maintainedbytheUniversitybutinthelastthreeyears,nomerger

has taken place. The society is mischievously and fraudulently

claiming ownership of University in contravention of U.P. Act,
2011.ManagementofUniversityisnotresponsibletosponsoring
Society and it is only in case of dissolution of University that
assets,propertiesandliabilitiesofGalgotiasUniversityshallgoto
thesponsoringsociety.DuringexistenceofUniversityitsassetsand
liabilities would stand excluded from that of society. When the
agreements were executed, society and other petitioners never
objected to the terms and conditions of agreement and now all
kindsofallegationsarebeingmadewhichdiscloserealintention
ofpetitioners,ofmisappropriationofamounttakenfromFinancier.
Assertion regarding oral agreement with respondent no.4
regardingmoratoriumetc.isdenied.Allegationofcounterblastor
motiveonthepartofFinancierhasbeendenied.Inordertocheat
theFinancier,petitionerSocietygavechequesincludingchequeno.
354826 dated 27.03.2014, bearing amount of Rs. 6,50,00,000/
ostensibly,towardspartpaymentofamounttakenbysocietybutit
instructeditsbanktostoppaymentwhichshowsrealintentionof
societyandpetitionersofcheating.Inanycase,realintentioni.e.
dishonestintentionisanelementwhichcanbeshowntoexistby
adducing evidence in trial and cannot be examined in writ
jurisdiction. At this stage, suffice it to mention that allegations
containedinchargesheetdosatisfyingredientsofvarioussections
ofIPCmentionedthereinandifthoseallegationstakentobetrue
onthefaceofit,cognizableoffenceismadeout.ThisCourtwould
notexerciseitsextraordinaryjurisdictionforquashingsuchanFIR.
Claim ofownershipofUniversitybysponsoringbodyisnothing
butafraudonpublicatlarge.AgainsttheprovisionsofU.P.Act
2011declarationofassetsandliabilitiesofUniversityunderthe
consolidatedbalancesheetisillegal.Italsoamountstofraudand

forgery by treating assets and liabilities of another legal

independentbodytothatofsociety.Thesocietyhasobtainedloans
onthebasisoffalseandfabricateddocuments.
12.

AnaffidavithasbeenfiledbyInvestigatingOfficerannexing

the progress in the investigation stating that pursuant to his

investigation, he has obtained nonbailable warrants against
Suneel Galgotia, Dhruv Galgotia, Smt. Jugnu Galgotia and Smt.
Padmini Galgotia. We will discuss the record placed by
InvestigatingOfficerduringourdiscussion,wheneveritwouldbe
necessary.
13.

Sri Gopal Swaroop Chaturvedi, learned senior counsel

contendedthathereisasimplecaseofadvancementofloanand
allegeddefaultinrepayment,inrespectofwhich,proceedingsof
arbitration are pending before sole Arbitrator. No element of
criminality is involved. Hence, FIR lodged against petitioners,
thoughhasattemptedtosatisfyingredientsofvariousprovisions
mentionedtherein,butineffect,itinvolvesapureandsimplecivil
dispute,hence,nocriminalcasecanbeinitiatedinsuchmatters
and report is liable to be set aside. No offence under various
provisionsmentionedintheFIRhasbeencommitted.ThisCourt
whileexamining,whetherallegationscontainedinFIRsatisfyall
ingredientsofoffence,showingthataccusedhas/havecommitted
suchanoffence,willconsidernotonlythemerementionofwords
chosenbyinformant/complainantbutwillalsolookintosubstance
tofindoutwhetheritisacasewherethereisanycriminalityor
elementofcriminalintention,constitutingoffenceunderalleged
provision.Literalreadingofreportwouldhavetobeavoidedfor
the reason that these days FIRs are lodged with expert legal
opinion and, therefore, one can understand that language of

relevantprovisionswhicharementionedinthereportmusthave
beentakencareofbytheauthortouseandinsuchcircumstances,
carehastobetakentofindoutwhetheritisacase,substantially,
involvingelementofcriminalityornot.TheCourtwouldpeepinto
backgroundfactstofindouttruecontroversy,intentionandnature
ofdisputeandwouldnotbeguidedbybaresimplereadingofFIR.
14.

Percontra,SriBrijeshSahai,learnedcounselappearingfor

respondent no.4 vehemently contended that by producing and

submitting accounts and balance sheets containing wrong and
manipulatedentries,dishonestintentiononthepartofSocietyis
clear. The healthy state shown in balance sheets and accounts
submitted by Society induced Financier to advance loan(s).
Dishonest intention of Society stood proved also by their
subsequentconductincommittingdefaultinpaymentofregular
EMIs.Hesubmittedthatcivilandcriminalliabilitiescancoexist
andbotharenotmutuallyexclusionary.Incidentsortransactions
while resulting in Civil dispute may also cause commission of
offence(s)andbothproceedingscancoexist.Hesubmittedthat
ingredients of various provisions under which FIR was lodged
againstpetitionersarewellsatisfiedinsubstanceandtruespirit,
hencenointerferencewouldbejustifiedinequitablejurisdiction
underArticle226ofConstitutionofIndia.
15.

Before proceeding further it would be appropriate first to

noticethecasesetoutbycomplainant/informantintheimpugned
FIR.TheFIRinteraliastatesthatinformantisAssistantManager
inS.E.InvestmentsLtd.,havingitsHeadOfficeat54,SanjayPlace,
Agra. The Society (Smt. Shakuntala Educational and Welfare
Society) through its office bearers namely, Suneel Galgotia,
President of Society and other petitioners had been obtaining

severalloansforthelast12yearsfromtheaforesaidcompany,on
thebasisofbalancesheetsandotherdocuments.Inthemeantime,
in 2011 the Society secured right from State Government to
sponsorGalgotiasUniversityandbetween2011and2012secured
10 loans by furnishing balance sheets, income and expenditure
accountsetc.Now,theinformanthascometoknowaboutforged
balance sheets and income expenditure accounts were filed by
Societyundercertainconspiracyforthepurposeofsecuringloan.
All loans were obtained from Surya Nagar Branch of Punjab
National Bank, Agra. President of aforesaid Society Sri Suneel
Galgotia and other office bearers while taking loan had
represented that Galgotias University is under the ownership of
Smt. Shankuntala Educational and Welfare Society and entire
assetsandliabilitiesofUniversityarevestedinSociety.Itwasonly
on 25.07.2014, the informant came to know the truth that
GalgotiasUniversity,UttarPradesh,isaseparatecorporatebody,
established under Galgotias University Act, 2011 and Smt.
Shankuntala Educational and Welfare Society is a separate and
independententity,registeredundertheSocietiesRegistrationAct,
1860. The two are separate, distinct and independent legal
corporate bodies and their assets, liabilities and expenses are
separate. Thus fraud was played upon informant's company, by
filing forged and fabricated documents under preplanned
conspiracy, in order to cause benefit to Society and harm the
Financier company. Thus, petitioners have committed offence in
obtainingloans.TheofficebearersofSocietyhaveissuedfalseand
incorrect balance sheets and audit report dated 09.07.2014,
whereinUniversityhasbeenshown,beingownedbySocietyand
on that basis and thereby Society has secured unwanted huge
loansasalsoenjoyedfacilityofoverdraft.TheSocietyhadbeen

10

maintaining and submitting two balance sheets and income

expenditureaccounts,whereasforoneinstitution/bodyonlyone
balancesheetandincomeexpenditureaccountisrequired. One
balancesheetandincomeexpenditureaccountshowsthenameof
Galgotias University and other one is relating to Shakuntala
Educational and Welfare Society. In one balance sheet loss is
shown whereas in the other balance sheet, profit is shown. It
clearly indicates that it has been done under preplanned
conspiracy with malintention to defraud the Financier. The FIR
furtherstatesthatinordertodefraudUGConlyonebalancesheet,
showingprofithasbeenfiledandotherbalancesheetshowingloss
has not been placed before it, concealing the true facts for the
reason that it (UGC) rejects the claim of an applicant/body,
approachingwithlossinbalancesheet/accountbooks.Theactof
accused comes within the purview of cheating and dishonestly
inducing the Financier by committing forgery in preparing
valuablesecurity,therebydefraudingtheinformant'scompany.
16.

From the record, some basic facts, which are discernible,

maybepenneddownfirst.
17.

The Society is registered with Registrar of Society,

GovernmentofNCT,NewDelhivideRegistrationCertificatedated
27.8.1998.Ithasshownitsregisteredofficeas4405/06,Prakash
ApartmentsII,5,AnsariRoad,DaryaGanj,NewDelhi.Theinitial
GoverningBodyhadfollowingnamesanddesignations:
(i) SuneelGalgotia,Gurgaon,HaryanaPesident
(ii)

Smt.PadminiGalgoia,Gurgaon,HaryanaSecretary

(iii) Sm. Jugnu Galgotia, Rajender Nagar, New Delhi

Treasurer
(iv) Dhruv Galgotia, Gurgaon, Haryana Executive

11

Member
(v)

SrikanthVasuRaj,BangaloreExecutiveMember

(vi) Raghuvansh Mathur, Gurgaon, Haryana Executive

Member
(vii) Smt.ChandrikaMathur,ShahNazafRoad,Lucknow
ExecutiveMember
(viii) RachitiBahadur,Durg,ChattisgarhExecutiveMember
(ix) JagdishChandraPrasad,Darbhanga,BiharExecutive
Member
(x)

Kuldeep Chandra, Dehradun, Uttrakhan Executive

Member
(xi) AswaniGupta,Jalandhar,PunjabExecutiveMember
18.

Itsaimsandobjectivesincludedthefollowing:
(i)

Toarrange,establishandrunprimary,middleand/or

higher secondary school and/or educational/vocational

schoolsorinstitutions,colleges,studycentersetc.and/orto
providethegeneraleducationtothestudentsofallsections
andtobringtheeducationofthebeststandardwithinthe
reachofpoorbackwardchildrenespeciallyinthebackward
areaorintheNationalCapitalRegion(NCR)oradjoining
areas.
(ii)

To establish, promote, run manage and organize

universityforcarryingoutresearchandimpartingeducation
in any field such as technology, art, science, commerce,
management, medicine, finance, economics, music, dance,
acting,sport,communicationetc.
(iii) To provide libraries, publish books on educational
social subjects organize discussions and seminars promote
knowledge and understanding amongst the children and
generalpublic.

12

(iv) To uplift and help the poor, orphans and eligible

student and to provide education standards amongst the
children/students.
(v)

To publish books, charts, illustrations, journals,

magazinesandperiodicalsandotherpublicationsindifferent
languagesforthepropagationsofaboveaimsandobjects.
(vi) To arrange and organise social, cultural and
educationalprogrammesfromtimetotime.
(vii) Tomakecorrespondenceinlawfulmannertoarrange
meetings, conferences, seminars with the authorities
concerned.
19.

The Society in furtherance of its objectives, established

educational institutions of higher education, namely, Galgotias

College of Engineering and Technology, G.I.M.T. Institute of
ManagementandTechnology;and,GalgotiasBusinessSchool.The
StateGovernmenthadencouragedestablishmentofUniversitiesin
private sector. In furtherance thereof, Society also proposed to
sponsoranUniversityinfurtherancewhereofU.P.Act,2011was
passedbyU.P.Legislaturewhichcameintoforceon07.04.2011.
Thestatementof objectivesandreasonsthereofclearlymention
thatActisbeingenactedwithaviewtoencourageprivatesectorto
participate in the field of higher education. It was decided to
establish and incorporate a teaching University in the name of
GalgotiasUniversity,UttarPradeshsponsoredbySociety.
20.

The Society already had commercial transactions of

advancementofloanfromrespondentno.4since2000.Itappears
that between the Society and respondent no. 4 several loan
agreementswereexecutedbetween6.4.2011to29.11.2012(total
tenagreements),detailswhereofareasunder:
Sl.No. DateofAgreement FinancedAmount(inRs.)

13

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
21.

06.04.2011
28.12.2011
30.12.2011
21.01.2012
21.01.2012
21.01.2012
21.01.2012
02.03.2012
20.03.2012
29.11.2012

2,25,00,000
2,00,00,000
4,00,00,000
3,00,00,000
3,40,00,000
3,60,00,000
5,00,00,000
5,00,00,000
4,00,00,000
5,35,00,000

Copies of some of loan agreements have been filed along

with investigation progress report filed by Investigating Officer,

which also show that in all the agreements, Society has been
shown as 'borrower'. There are five guarantors, namely, Suneel
Galgotia, Smt. Padmini Galgotia, Dhruv Galgotia, M/s Galgotias
Hotel and Resort Private Limited and M/s Galgotias Publication
PrivateLimited.SriDhruvGalgotiaisguarantoronlyintheloan
agreementdated 29.11.2012andin otheragreements,restfour
areguarantors.
22.

Assets of Society have grown multifold inasmuch on

31.03.2000theassetsofSocietywereshownasRs.2.31crores
whileon31.03.2013,thesameareshownasRs.360.13crores.It
appears that Society already established an institution to be
established as University inasmuch in the returns of Assessment
Year201112(FinancialYearendingon31.03.2011),ithadshown
anexcessofincomeoverexpendituretransferredfromGalgotias
University, as Rs. 2258447.15. The Income and Expenditure
Account of Galgotias University for Assessment Year 201112
(FinancialYearendingon31.03.2011)hasbeenplacedonrecord
showingtransferofRs.2258447.15tothebalancesheetwhichis
actuallyincomefrominterest.Itwasauditedon18.08.2011.
23.

The fact remains that first such agreement was executed

14

betweentheSocietyandrespondentno.4on06.04.2011onwhich
date,UniversitywasnotastatutoryUniversity,havingnotcome
into existence with a statutory status whatsoever. All the
agreementsareinFinancialYears201112and201213.Infact
nineagreementsoutoftenarebetween01.04.2011to31.03.2012,
i.e.,in201112andthelasttenthoneisdated29.11.2012inthe
201213.OnlythereturnofAssessmentYear201112(Financial
Year ending on 31.03.2011) was available when nine loan
agreementswereexecuted.Further,U.P.Act2011wasnotevenin
existenceatthattime.
24.

U.P. Act, 2011, as already said, came to be published on

07.04.2011.SomesalientfeaturesoftheActareasunder.
(i)

ThestatusofSocietyisthatofasponsoringbodyofthe

University.ItisdefinedinSection2(o).
(ii)

Section 3 provides that Society shall establish at

Greater Noida, Gautam Budh Nagar an University by the

nameofGalgotiasUniversity,UttarPradsh.Italsoprovides
thatUniversityshallbeabodycorporate.
(iii) BeforeestablishingUniversity,Society,i.e.Sponsoring
BodyhastofulfillconditionsasprovidedinSection4,which
are:
(a)Itmustpossessaminimum50acrescontiguous
landearmarkedforUniversity.
(b)Itmustconstructontheaforesaidlandbuilding
withatleast24,000squaremeterscarpetarea,out
of which 50 per cent shall be for academic and
administrativepurposes.
(c)Itshallinstallequipmentsinoffices,laboratories
worth minimum Rs. Five crores in the building
referredtoinclause(b).

15

(d) It shall appoint teachers and establish

infrastructure of the department/school for the
purposes of teaching and/or research in at least
seven subjects as per standards laid down by the
UniversityGrantsCommission.
(iv) Section5providesthedateonwhichUniversityshall
startandsaysthatUniversityshallstartoperationonlyafter
State Government issues to the Society a letter of
authorizationofcommencementoffunctioningofUniversity.
Itfurtherprovidesthatsuchletterofauthorizationshallbe
issuedaftertheStateGovernmentreceivesanunambiguous
affidavit along with documents from Society to the effect
that all the conditions referred to in Section 4 have been
fulfilled.
(v)

Officers of University includes at the top 'Chancellor'

andthereafterseveralauthoritiesstatedinSection10.
(vi) Power of appointment of Chancellor and Pro
ChancellorhasbeenconferreduponSocietyandrestofthe
OfficershavetobeappointedbyChancellororotherOfficers.
(vii)Section11(2)declaresthatChancellorbyvirtueofhis
Office shall be the Headof Universityand shallconstitute
interimExecutiveCouncil.
(viii) Section23providesthatExecutiveCouncilshallbethe
principalexecutivebodyoftheUniversity.
(ix) Various administrative, academic and other functions
are given to various authorities of University. The
managementtotheSocietyhasbeengivenoverUniversity
only to the extent of appointing Chancellor and Pro
Chancellor but thereafter the entire management and
functionisinthehandsofvariousauthoritiesandofficersof

16

University,describedinvariousprovisionsofU.P.Act,2011.
(x)

ThereisaPlanningBoardtoensureinfrastructureand

academicsupportsystem,meetingthenormsofUniversity
GrantsCommissionortherespectiveCouncils.
(xi)ThereisaFinanceCommitteecontemplatedtotakecare
of financial matters and there is an Academic Council
contemplated to take care of academic functions of
University.
(xii) Section 31 requires audit of annual accounts of
University.
(xiii)Withregardtothegenerationoffunds,U.P.Act,2011
hasmadeseveralprovisions.Theinitialcontributionhasto
bemadebytheSociety.
(xiv) Section41contemplatesthatSocietyshallestablisha
PermanentEndowmentFund ofatleastRs.10Crore.The
powertoinvesttheamountintheaforesaidfunds,thereafter,
isvestedinUniversityvideSection41(2).
(xv) The another kind of fund is General Fund, which is
governed vide Section 42. It provides that University shall
establishageneralfundtowhichfollowingamountshallbe
credited,namely,
(a)allfees,whichmaybechargedbyUniversity;
(b)allsumsreceivedfromanyothersource;
(c)allcontributionsmadebySociety;and,
(d)allcontributionsmadeinthisbehalfbyanyother
personorbodywhicharenotprohibitedbyanylawfor
thetimebeinginforce.
(xvi) Section 42(2) provides that the money credited to
general funds shall be applied to meet all the recurring
expendituresofUniversity.

17

(xvii)AthirdkindoffundisprovidedvideSection43,i.e.,
Development Fund. University is obliged to establish a
Development Fund and the following money shall be
creditedtherein:
(a) development fees, which may be charged from
students;
(b) all sums received from other sources for the
purposeofthedevelopmentoftheUniversity;
(c)allcontributionsmadebytheSociety;
(d)allcontributionsmadeinthisbehalfbyanyother
personorbodywhicharenotprohibitedbyanylawfor
thetimebeinginforce;and
(e) all incomes received from the permanent
endowmentfund.
(xviii) Section 43(2) provides that money credited to
Development Fund from time to time shall be utilized for
developmentofUniversity.
(xix) Section 44 authorizes the Court, a body constituted
videSection22,tosupervise,control,regulateandmaintain
thethreefundsestablishedunderSection41,42and43in
suchmannerasmaybeprescribed.
(xx) Section 52 contemplates the situation in case where
University is dissolved and provides that all assets and
property including permanent endowment fund, general
fundoranyotherfundandalsotheliabilitiesofUniversity
will belong to the Society. This provision, therefore, will
come into picture only when University is dissolved as
providedinSection48.
25.

Ithasnotcomeonrecordastowhencertificateforstartof

University was/has been issued by State Government as

18

contemplated in Section 5 of U.P. Act, 2011. The Act itself has

comeintoexistenceon07.04.2011.Therequirementofconditions
andcomplianceunderSection4isboundtotakesometime.The
Certificate under Section 5 could have been issued by State
Governmentafter07.04.2011,butthatdateorthatcertificatehas
notcomeonrecord.Evenrespondentno.4hasnotsaidanything
inthisregard.SolongasCertificateunderSection5isnotissued,
itcannotbesaidinlawthatUniversityhasstartedunderU.P.Act,
2011.
26.

IntheincometaxreturnsfortheAssessmentYear201213

(FinancialYearendingon31.03.2011),theexcessofincomeover
expenditureinrespecttoGalgotiasUniversityhasbeenshownas
Rs.42892188inincomeandexpenditureaccounts.Onpage238,
balancesheet of Galgotias University as on 31.03.2012, is on
recordinfirstpetitionshowingPermanentEndowmentFundofRs.
ten crores and development fund of Rs. 10388759/. We are
informedthatSuneelGalgotiahasbeenappointedasChancellorof
UniversityandSmt.PadminiGalgotiahasbeenappointedasPro
chancellor. In the subsequent balancesheets also, Society has
disclosedincome,expenditureandbalancesheetofUniversityasa
partofitsownstatementofaccountsandbalancesheetbesides
othereducationalinstitutionswithwhichwearenotconcerned.
27.

Inabsenceofanyinformation,materialorcertificateunder

Section 5 on record, it is difficult to hold that University is a

separatelegalentityevenasondate.Theincomeandexpenditure
of University even in Financial Year 201112 (Assessment Year
201213) has also not been explained as to whether there was
Universityalreadyfunctioningornotandonthisaspect,wedonot
find any material available on record. The petitioners, however,
didnotdisputethatUniversityisfunctioningandworkingunder

19

the management of Society and consolidated balancesheet is

beingpreparedforSocietywhichincludesindividualbalancesheet
ofeducationalinstitutionsbeingmanagedbySocietyincludingthe
University.
28.

Now before examining other aspects, we first propose to

examinetheprovisionsunderwhichFIRhasbeenlodged,tofind
outwhataretheingredientswhichwehavetoanalyzeintheFIR
inquestion,whethertheyaresatisfiedornot.TheFIRhasbeen
lodgedunderSections420,467,468,471readwithSection120B
I.P.C.
29.

Section420ischeatingwhichisdefinedinSection415.

Therefore, let us examine both these provisions which read as

under:
415. Cheating. Whoever, by deceiving any person,
fraudulentlyordishonestlyinducesthepersonsodeceived
todeliveranypropertytoanyperson,ortoconsentthatany
person shall retain any property, or intentionally induces the
personsodeceivedtodooromittodoanythingwhichhewould
notdooromitifhewerenotsodeceived,andwhichactor
omissioncausesorislikelytocausedamageorharmtothat
personinbody,mind,reputationorproperty,issaidtocheat.
Explanation.A dishonest concealment of facts is a
deceptionwithinthemeaningofthissection.
420.Cheatinganddishonestlyinducingdeliveryof
property.Whoevercheatsandtherebydishonestlyinduces
thepersondeceivedtodeliveranypropertytoanyperson,
ortomake,alterordestroythewholeoranypartofavaluable
security, or anything which is signed or sealed, andwhich is
capable of being converted into a valuable security, shall be

20

punished with imprisonment of either description for a term

which may extend tosevenyears, andshall also be liable to
fine.
30.

Inordertoattractallegationsofcheating,followingthings

mustexist:
(i)

deceptionofaperson;

(ii)

(A)fraudulentordishonestinducementofthatperson,
(a) todeliveranypropertytoanyperson;or,
(b) toconsentthatanypersonshallretainanyproperty,
(B)intentionalinducingthatpersontodooromittodo
anything,
(a)whichhewouldnotdooromitifhewasnotso
deceived,and,
(b) such act or omission causes or is likely to cause
damage or harm to that person in body, mind,
reputationorproperty.

31.

Then in order to attract Section 420 I.P.C., essential

ingredientsare:
(i)

cheating;

(ii)

dishonestinducementtodeliverpropertyortomakeor
destroy any valuable security or any thing which is
sealedorsignedoriscapableofbeingconvertedintoa
valuablesecurity;and,

(iii) mensreaofaccusedatthetimeofmakinginducement
andwhichactofomission.
32.

InMahadeoPrasadVs.StateofWestBengal,AIR1954SC

724 it was observed that to constitute offence of cheating,

intention to deceive should be in existence at the time when
inducementwasoffered.
33.

In JaswantraiManilalAkhaneyVs.StateofBombay,AIR

21

1956SC575theCourtsaidthataguiltyintentionisanessential
ingredientoftheoffenceofcheating.Fortheoffenceofcheating,
"mensrea"onthepartofthatperson,mustbeestablished.
34.

InG.V.RaoVs.L.H.V.Prasadandothers,2000(3)SCC693,

theCourtsaidthatSection415 hastwoparts.Whileinthefirst
part, the person must "dishonestly" or "fraudulently" induce the
complainant to deliver any property and in the second part the
personshouldintentionallyinducethecomplainanttodooromit
todoathing.Inotherwordsinthefirstpart,inducementmustbe
dishonest or fraudulent while in the second part, inducement
shouldbeintentional.
35.

In HridayaRanjanPrasadVermaandothersVs.Stateof

Biharandanother,2000(4)SCC168 thesetwoprovisionscame
upforconsideration.Therewerethreebrothers,HridayaRanjan
PrasadVerma,ManoranjanPrasadVermaandRajivRanjanPrasad
VermasonsoflateSriKashiNathPrasadVerma.Theyhadthree
more brothers but they were not involved in the proceedings,
therefore,thejudgmenthasexcludedthem.Fatherofthesethree
brothers was owner of Khasra No. 213, Plot No. 1172, Village
Srinagar,P.S.Siwan(Bihar).Onhisdeathhissixsonsincluding
aforesaid three brothers succeeded to the property. Sri Hridaya
Ranjan Prasad Verma was a Neurosurgeon at Patna. Sri
Manoranjan Prasad Verma was Manager of Pathar Jhora Tea
Gardens in Jalpaiguri (West Bengal). Sri Rajiv Ranjan Prasad
Verma was a retired Marketing Manager of Jay Shree Tea and
Industries Ltd., Delhi. There was a housing society, namely,
Kanishka Sahkari Grih Nirman Samiti Limited, Sewan, a
Cooperative Society engaged in purchasing land from different
persons and after developing and dividing it into small pieces,
selling the plots to customers. Sri Manish Prasad Singh, an

22

Advocate was Secretary of the said Society. The three brothers,

namedabove, agreedtosell the aforementioned land inVillage
ShrinagartoaforesaidSocietyforconsiderationofRs.16lacs.A
sum of Rs. 11 lacs were paid to vendors by way of draft. The
vendorsexecutedregisteredsaledeedinrespectoflandinfavour
ofsaidSociety.Thetwootherbrothersofaforesaidthreebrothers
signedthesaledeedaswitnesses.Besides,aforesaidthreebrothers
executedaseparateindemnitydeedundertakingtoindemnifyany
losscausedtoSocietyonaccountofanyobjectionwhichmaybe
raised by any cosharer against transfer of land in future. The
possessionoflandwasalsotransferredtosaidSocietyonthesame
day. One more brother, Sri Priya Ranjan Prasad Verma also
executed a sale deed in favour of Society alienating his part of
land. At the time of registration of sale deed, the Secretary of
Society, Sri Manish Prasad Singh, gave three cheques to the
vendors for the sum of Rs. 5,50,000/. The cheques when
presentedtoBank,weredishonouredonaccountofinsufficiency
offundsintheaccountofdrawer.TheSecretaryofSocietyhad
issued a separate cheque in favour of Sri Priya Ranjan Prasad
Verma,fourthbrother,whichwasalsodishonouredforthesame
reason.Furtherbeforeexecutionofsaledeed,SriAkhilRanajan
Prasad Verma, another brother of aforementioned vendors, filed
titleSuitNo.118of1990forpartitionstatingthatthoughthere
wasapartitionamongstbrothersin1971butnotbymetesand
bounds.On05.12.1992anapplicationwasfiledunderOrder39,
whereuponthesubordinateJudge,Siwanpassedaninterimorder
restraining the above named three brothers from disturbing the
statusquoortransferringlandofSchedule1totheplaintbutno
injunctionwaspassedinrespectoflanddescribedinSchedule4of
the plaint, in which the property in dispute was included. The

23

aforesaidvendorsstatedthatplaintiffdidnotpresshisprayerfor
injunctioninrespectofSchedule4property.Between09.12.1992
to18.12.1992theSecretaryofSocietysoldaportionofdisputed
landtoseveralotherpersons.Whenchequeswerebounced,the
vendorsrequestedSecretaryofSocietyforpaymentofamountbut
except of promise todoso, he did not pay. On 21.10.1995 the
aforesaidvendorsthroughtheirAdvocatessentnoticetoSociety
reminding it that cheques issued by it had bounced due to
insufficiency of funds. Thereafter FIR was lodged under Section
406,420,120BIPCatPoliceStationSiwanon22.11.1995.Inthe
saidFIRtheSecretaryofSocietyaswellasoneAvdeshNarayan
Rai, VicePresident, were named as accused. Police after
investigationfiledchargesheetagainstbothofthem.Besides,the
vendors also filed three suits for realization of amount due to
them.On14.12.1995theSecretaryofSocietyfiledComplaintNo.
1282 of 1995 before Chief Judicial Magistrate, Siwan against
vendorsallegingcommissionofoffencesunderSection418,420,
423,469,504and120BIPC.ThevendorsmovedtheCourtfor
quashingofaforesaidcomplaintbutfailed,hencecametoApex
Court.ItisinthisbackgroundtheCourtconsidered,whetherin
the complaint lodged at the instance of Secretary of Society,
ingredientsofSection415or420IPCaresatisfiedornot.
36.

The Court in Hridaya Ranjan Prasad Verma (supra) said

thatinthedefinitionof'cheating'therearesetforthtwoseparate
classesofactswhichthepersondeceivedmaybeinducedtodo.In
thefirstplacehemaybeinducedfraudulentlyordishonestlyto
deliveranypropertytoanyperson.Thesecondclassofactsset
forthinthesectionisthedoingoromittingtodoanythingwhich
thepersondeceivedwouldnotdooromittodoifhewerenotso
deceived.Inthefirstclassofcases,inducingmustbefraudulentor

24

dishonest. In the second class of acts, the inducing must be

intentionalbutnotfraudulentordishonest.Itwaspointedoutthat
thereisafinedistinctionbetweenmerebreachofcontractandthe
offenceofcheating.Itdependsupontheintentionofaccusedat
thetimetoinducementwhichmaybejudgedbyhissubsequent
conductbutforthissubsequentconductisnotthesoletest.Mere
breach of contract cannot give rise to criminal prosecution for
cheatingunlessfraudulentordishonestintentionisshownrightat
thebeginningofthetransaction,thatisthetimewhentheoffence
issaidtohavebeencommitted.Thereforeitistheintentionwhich
is the gist of the offence. In order to hold a person guilty of
cheatingitwouldbeobligatorytoshowthathehadfraudulentor
dishonestintentionatthetimeofmakingthepromise.Merefailure
tokeepuppromisesubsequentlysuchaculpableintentionrightat
the beginning, i.e, when he made the promise cannot be
presumed.
37.

In S.W. Palanitkar and others Vs. State of Bihar and

another, 2002(1) SCC 241, while examining the ingredients of

Section415IPC,theaforesaidauthoritieswerefollowed.
38.

InHiraLalHarilalBhagwatiVs.CBI,NewDelhi,2003(5)

SCC257 theCourtsaidthattoholdapersonguiltyofcheating
under Section 415 IPC it is necessary to show that he has
fraudulentordishonestintentionatthetimeofmakingpromise
withanintentiontoretainproperty.TheCourtfurthersaid:
Section 415 of the Indian Penal Code which defines
cheating, requires deception of any person (a) inducing that
personto:(i)todeliveranypropertytoanyperson,or(ii)to
consent that any person shall retain any property OR (b)
intentionallyinducingthatpersontodooromittodoanything
whichhewouldnotdooromitifhewerenotsodeceivedand

25

whichactoromissioncausesorislikelytocausedamageor
harmtothatperson,anybody'smind,reputationorproperty.In
viewoftheaforesaidprovisions,theappellantsstatethatperson
may be induced fraudulently or dishonestly to deliver any
propertytoanyperson.Thesecondclassofactssetforthinthe
Sectionisthedoingoromittingtodoanythingwhichtheperson
deceivedwouldnotdooromittodoifhewerenotsodeceived.
Inthefirstclassofcases,theinducingmustbefraudulentor
dishonest. In the second class of acts, the inducing must be
intentionalbutnotfraudulentordishonest.
39.

InDevenderKumarSinglaVs.BaldevKrishanSingh2004

(2)JT539(SC),itwasheldthatmakingofafalserepresentation
isoneoftheingredientsofoffenceofcheating.
40.

In Indian Oil Corporation Vs. NEPC India Ltd., 2006(6)

SCC736insimilarcircumstancesofadvancementofloanagainst
hypothecation,thecomplainantreliedonIllustrations(f)and(g)
toSection415,whichreadasunder:
"(f)AintentionallydeceivesZintoabeliefthatAmeanstorepay
any money that Z may lend to him and thereby dishonestly
inducesZtolendhimmoney,Anotintendingtorepayit.A
cheats."
"(g).AintentionallydeceivesZintoabeliefthatAmeansto
delivertoZacertainquantityofindigoplantwhichhedoesnot
intendtodeliver,andtherebydishonestlyinducesZtoadvance
moneyuponthefaithofsuchdelivery.Acheats;butifA,atthe
timeofobtainingthemoney,intendstodelivertheindigoplant,
andafterwardsbreakshiscontactanddoesnotdeliverit,he
doesnotcheat,butisliableonlytoacivilactionforbreachof
contract."

26

41.

TheCourtsaidthatcruxofthepostulateisintentionofthe

personwhoinducesvictimofhisrepresentationandnotthenature
of the transaction which would become decisive in discerning
whethertherewascommissionofoffenceornot.TheCourtalso
referredtoitsearlierdecisionsin RajeshBajajVs.StateNCTof
Delhi,1999(3)SCC259 andheldthatitisnotnecessarythata
complainant should verbatim reproduce in the body of his
complaintalltheingredientsoftheoffenceheisalleging.Norisit
necessarythatthecomplainantshouldstateinsomanywordsthat
theintentionoftheaccusedwasdishonestorfraudulent.
42.

In Vir Prakash Sharma Vs. Anil Kumar Agarwal and

another,2007(7)SCC373itwasheldthatifnoactofinducement
onthepartofaccusedisallegedandnoallegationismadeinthe
complaint that there was any intention to cheat from the very
inception,therequirementofSection415readwithSection420
IPC would not be satisfied. The Court relied on the earlier
decisions in HridayaRanjanPrasadVerma(supra) and Indian
OilCorporationVs.NEPCIndiaLtd.(supra).
43.

InsupportofthecontentionthatnooffenceunderSection

420I.P.C.ismadeout,SriChaturvediplacedrelianceondecisions
of Apex Court in Mohammad Ibrahim andothersVs. State of
Biharandanother(2009)8SCC751 and ParminderKaurVs.
State of Uttar Pradesh and another (2010) 1 SCC 322. He
contended that Society being owner of University has rightly
included assets, funds and liabilities of University in its own
consolidatedaccountsandbalancesheet.Thereisnocheatingor
fraudorforgery.
44.

In Mohammad Ibrahim (supra), the accusedpetitioners

wereprosecutedbyMagistrateunderSection323,342,420,461,
471and504I.P.C.Theprosecutioncommencedafteracomplaint

27

againstMohammadIbrahimandtwootherswasfiledbysecond
respondentbeforeChiefJudicialMagistrateundersection156(3)
Cr.P.C., who took cognizance and referred the complaint for
investigation, pursuant whereto, Police registered F.I.R. dated
10.10.2003andafterinvestigationsubmittedachargesheetunder
theaforesaidSections.TheadmittedfactsbeforetheCourtwere
thatfirstaccusedandthecomplainantwerecousins.BadriMian
(paternalgrandfatherofcomplainant)andMithuMian(maternal
grandfather of first accused) were brothers and owners of plot
number1973and1971.TheplotswereinheritedbysonofBadri
Mian,fatherofcomplainantandchildrenofMithuMianoneof
whomwasGirja,motherofMohammadIbrahimfirstaccused.As
perafamilyarrangement,aportionofthesaidplotscametothe
share of Girja, mother of first accused and that portion was in
possessionofherhusband,whogotitmutatedinhisname,paid
land revenue; and after his death, the said land came into
possessionofherson,i.e.,firstaccused.Hisnamewasenteredin
place of his father. He was paying land revenue and bona fide
believinghimselftobeownerofpropertyindispute,soldaportion
oflandmeasuring8Kathasand13Dhurstothesecondaccused.
The complainant said that saledeed was forged and the land
belongtocomplainant.Thefirstaccusedsaidthatsaledeedswere
validandcomplainantfiledafalsecomplaintonlytoharasshim.
Thefirstaccusedalsocontendedthatallegationsbycomplainant
evenifacceptedtobetrue,wouldonlygiverisetoacivildispute
anddidnotconstituteanyoffencepunishableundertheCodeor
anyotherlaw.TheCourtconsideredthequestionwhethermaterial
onrecord,primafacieconstituteanyoffence,againsttheaccused.
Inthecontextofabove,theCourtalsotookjudicialcognizanceof
thefactthattherehasbeenagrowingtendencyofcomplainants

28

attemptingtogivethecloakofacriminaloffencetomatterswhich
areessentiallyandpurelycivilinnature,eithertoapplypressure
ontheaccused,oroutofenmitytowardstheaccused,ortosubject
the accused to harassment. Criminal courts should ensure that
proceedings before it are not used for settling scores or to
pressurisepartiestosettlecivildisputes.Simultaneously,itshould
be cautioned that several disputes of a civil nature may also
containingredientsofcriminaloffencesandifso,willhavetobe
tried as criminal offences, even if they also amount to civil
disputes. It placedreliance in makingthiscaution on its earlier
decisioninG.SagarSuriVs.StateofU.P.2000(2)SCC636and
IndianOilCorporationVs.NEPCIndiaLtd.(supra).
45.

TheCourtthenconsideredSections467,471,464andheld

thatsaledeedexecutedbyfirstaccuseddidnotfallinthecategory
of false document. The Court held that there is a fundamental
differencebetweenapersonexecutingasaledeedclaimingthat
propertyconveyedishisproperty,andapersonexecutingasale
deed by impersonating the owner or falsely claiming to be
authorisedorempoweredbythe owner to execute the deedon
owner'sbehalf.Whenapersonexecutesadocument,conveyinga
propertydescribingitashis,therearetwopossibilities.Thefirstis
thathebonafidebelievesthatthepropertyactuallybelongstohim.
Thesecondisthathemaybedishonestlyorfraudulentlyclaiming
ittobehis,eventhoughheknowsthatitisnothisproperty.Itwas
alsoheldthattofallunderfirstcategoryof`falsedocuments',itis
not sufficient that a document has been made or executed
dishonestlyorfraudulently.Thereisafurtherrequirementthatit
should have been made with the intention of causing it to be
believedthatsuchdocumentwasmadeorexecutedby,orbythe
authorityofaperson,bywhomorbywhoseauthorityheknows

29

thatitwasnotmadeorexecuted.Whenadocumentisexecutedby
apersonclaimingapropertywhichisnothis,heisnotclaiming
thatheissomeoneelsenorisheclaimingthatheisauthorisedby
someoneelse.
46.

ThentheCourtfurtherconsideredSection420andobserved

that in order to attract Section 420, there should not only be

cheating, but as a consequence of such cheating, the accused
should have dishonestly induced the person deceived either to
deliveranypropertyortoconsenttotheretentionthereoforto
make,alterordestroywhollyorinpartavaluablesecurity.The
Court said that in a given case, when a ownership is wrongly
claimed,itmaybeacasewhereapurchasermayraiseacomplaint
offraud,butsuchacomplaincannotbemadebythirdparty,who
isnotpurchaser.Inthefactsofthecase,theCourtfoundthatno
offenceunderSections417,418,419or420I.P.C.wasmadeout.
Havingsaidso,theCourthasalsogivenaclarificationasunder:
...Weshouldnotbeunderstoodasholdingthatsuchanactcan
neverbeacriminaloffence.Ifapersonsellsapropertyknowing
thatitdoesnotbelongtohim,andtherebydefraudstheperson
whopurchasedtheproperty,thepersondefrauded,thatisthe
purchaser, may complain that the vendor committed the
fraudulent act of cheating. But a third party who is not the
purchaser under the deed may not be able to make such
complaint.
47.

In ParminderKaurVs.StateofUttarPradesh(supra) the

factsofthecasewereverydifferent.TheappellantbeforeSupreme
Courtwasanoldladyofabout74years.Therewasanallegation
thatinacertifiedcopyofrevenuerecordtherewasanalterationin
thedatechangingitfrom6.5.2002to16.5.2002and7.5.2002to
17.5.2002and27.5.2002.Afirstinformationreportwaslodgedby

30

Parminder Kaur wherein the Police after investigation submitted

chargesheet.ShefiledapplicationunderSection482Cr.P.C.before
this Court for quashing of proceedings initiated under Sections
420,467,468,471I.P.C.,buttheapplicationwasrejectedbythis
CourtrelyingonApexCourt'sdecisionin K.RamaKrishnaand
othersVs.StateofBiharandanother(2000)8SCC547.Hence,
thematterwastakenbeforeApexCourt.Theallegationofforgery
was only that the date 6.5.2002 was altered as 16.5.2002 and
7.5.2002wasalteredas17.5.2002and27.5.2002.TheCourtfirst
examined that even if it was accepted that such alteration was
made, it did not give any advantage to Parminder Kaur in any
manner and this position could not be disputed by counsel for
otherside.Thisisevidentfromwhathasbeennoticedinpara27
ofthejudgment.TheCourtfurtherheldthatevenifsomebodyhas
addedthefigureone,itcannotbesaidthatitwouldrenderthe
documenttobeaforgeddocument.Itisinthiscontext,theCourt
examinedSection463andheldthatthisalterationofoneinthe
documentdoesnotsatisfytheingredientsofforgeryunderSection
463I.P.C.inasmuchevenifthisalterationisbroughtin,itcould
notbeshownastohowitwouldcausedamageorinjurytopublic
oranybodyorhowitcouldhavesupportedtheclaimoftitleor
howitcouldcauseanypersontopartwithpropertyorforthat
matterhowtherecouldbeanyintentiontocommitfraud.Itthen
noticedSections467,468I.P.C.andfoundthesealsonotattracted
inthatcase.ThenitexaminedSection464whichspeaksofmaking
a false document and noticed that first and third clauses were
admittedlynotattracted.Theninordertoattractsecondclauseof
Section464,there has tobe alteration of document dishonestly
andfraudulently.Inordertoattractsecondclause,ifthedocument
istobealteredithastobeforsomegainorwithsuchobjecton

31

thepartofaccused.Merely,changingadocumentdoesnotmakeit
afalsedocument.Asnogainwasshown,theCourtheldthateven
second clause was not attracted. The Court held the entire
proceedingsofprosecutionmalafide,maliciousandvengeanceful
looking into the conduct of complainant, as noticed in para 36
whichreadsasunder:
WearesurprisedattheattitudeoftheStatewhenitisapparent
ontherecordthatthewholeprosecutionismalafide,malicious
and vengeanceful only to settle the scores of respondent no.2
against..
48.

The basic ingredient of the relevant provisions cannot be

disputed but their application in each case will have to be

examinedonthebasisofthefactsofthatcaseand,therefore,the
merefactthatApexCourtintheabovetwodecisionsfoundno
offencehavingbeencommittedunderSection420I.P.C.etc.ipso
facto,itcannotbesaidthatinthepresentcasealso,nooffencehas
beencommittedbypetitionerssincethereisonlyacivildispute.
49.

In RashmiJainvs.StateofU.P.andAnr.,2014(1)SCALE

415 the Court said that mere failure of a person to keep up

promisesubsequently,aculpableintentionrightatthebeginning,
i.e.,whenhemadethepromisescannotbepresumed.Adistinction
hastobekeptinmindbetweenmerebreachofcontractandthe
offenceofcheating.Itdependsupontheintentionoftheaccused
atthetimeofinducement.Thesubsequentconductisnotthesole
test. Mere breach of contract cannot give rise to criminal
prosecutionforcheatingunlessfraudulent,dishonestintentionis
shownatthebeginningofthetransaction.
50.

In VesaHoldingsP.Ltd.andOrs.vs.StateofKeralaand

Ors.,2015Cr.L.J.2455(SC) theCourtheldthateverybreachof
contractwouldnotgiverisetoanoffenceofcheatingandonlyin

32

thosecasesbreachofcontractwouldamounttocheatwherethere
wasanydeceptionplayedattheveryinception.Iftheintentionto
cheathasdevelopedlateron,thesamecannotamounttocheating.
In other words, for the purpose of constituting an offence of
cheating,thecomplainantisrequiredtoshowthattheaccusedhad
fraudulentordishonestintentionatthetimeofmakingpromise.
Eveninacasewhereallegationsaremadeinregardtofailureon
the part of accused to keep his promise, in the absence of a
culpable intention at the time of making initial promise being
absent,nooffenceunderSection420IPCcanbesaidtohavebeen
madeout.
51.

NowbeforeexaminingwhetherrequirementsofSection415

and420IPCaresatisfiedinFIR,wemaycrystallizesomeofthe
allegations contained in FIR since there is apparent repetitions.
Theallegationsare:
(i)

Between2011to2012theSocietysecuredtenloansby

furnishingbalancesheets,incomeandexpenditureaccount.
(ii)

Theinformantcametoknowthatforgedbalancesheet,

income and expenditure accounts were filed by Society

underconspiracyforthepurposeofsecuringloan.
(iii) ThePresidentandofficebearersofSocietywhiletaking
loans represented that Galgotia University is under the
ownership of Society and entire assets and liabilities of
UniversityarevestedinSociety.
(iv) On 25.07.2014 the informant came to know that
GalgotiaUniversityisaseparatecorporatebodyunderU.P.
Act,2011.
(v)

The Society is a separate and independent body

registeredunderAct,1860.
(vi) The twoare separate, distinct andindependent legal

33

corporatebodiesandtheirassets,liabilitiesandexpensesare
separate.
(vii) Fraudwasplayeduponinformant'sCompanybyfiling
forged and fabricated documents, as a preplanned
conspiracy to cause benefit to the Society and harm the
complainant.
(viii) The office bearers of Society have issued false and
incorrectbalancesheetsandauditreportsdated09.07.2014
whereinUniversityhasbeenshownasownedbySociety.
(ix) TheSocietyhassecuredunwantedhugeloansasalso
enjoyed facility of over draft by showing itself owner of
University.
(x)

TheSocietyhadbeenmaintainingandsubmittingtwo

balancesheets,incomeandexpenditureaccountswhileonly
one balancesheet and incomeexpenditure account is
required for one institute. One balancesheet and income
expenditureaccountinthenameofUniversitywhileanother
isinthenameofSociety.
(xi) Inonebalancesheetlossisshownwhereasinanother
profitisshown.
(xii) It has been done under preplanned conspiracy with
malintentiontodefraudthefinancier.
(xiii) In order to defraud UGC one balancesheet showing
profit has been filed andother balancesheet showing loss
hasnotbeenplacedbeforeitconcealingtruefactsforthe
reason that UGC rejects balancesheet/accounts book
showingloss.
52.

TheallegationsinFIRareveryvague.Admittedly,tenloans

wereobtainedbySocietyintheyear2011and2012i.e.Financial
Year201112and201213.Infact,nineloanagreementsarein

34

201112, i.e., between 01.04.2011 to 31.03.2012. The tenth is

dated29.11.2011.Itisadmittedthatduringthisperiodofnine
agreements the only balancesheet and account completed and
prepared by Society is of the Financial Year 201011 ending on
31.03.2011.FortheFinancialYear201112,accountsandbalance
sheetcouldhavebeenpreparedafter31.03.2012.Despiterepeated
query, learned counsel appearing for respondent no. 4
complainant,couldnotshowthattherewasanythingwronginthe
accounts and balancesheets submitted upto 31.03.2011, which
was the basis for furnishing loans vide agreements executed
between 01.04.2011 to 31.03.2012. It takes care of nine loan
agreements.ItisnotstatedintheentireFIRthattheaccountsand
balancesheetsendingon31.03.2011,inanymanner,wereforged
or fictitious. It is not the case even before us. With respect to
balancesheetofFinancialYear201112,whichisthebasisforone
loan agreement dated 29.11.2012, again it is not disputed that
thereisnoallegationthateventhatbalancesheetandaccounts
wereforgedandfictitious.
53.

TheU.P.Act,2011cameintoforceon07.04.2011,i.e.,when

Financial Year 201112 has already commenced. So long as

certificateunderSection5ofsaidActisnotissued,separatelegal
entityofUniversitywouldnotcomeintofunction.Neitherinthe
FIRnotbeforeus,complainantrespondentno.4hasstatedthat
balancesheet and accounts of Financial Year 201112 were not
genuine.Initially,anattemptwasmadethattwodistinctaccounts
with distinct entries of Society were prepared and one was
submittedtoFinancierwhileanothertoIncomeTaxDepartment
butwhenwespecificallymadeenquiryinthisregard,petitioners
filed asupplementary affidavit, stating that nosuch twosetsof
accountswereprepared.Theseavermentshavenotbeendenied.

35

Learned counsel for respondent no. 4, on the contrary, when

specifically enquired, admitted that there was only one set of
balancesheet and accounts prepared by Society which was
submittedtoFinancieraswellasIncomeTaxDepartment.Thus,
on the dates when loan agreements were executed, account
statementsofSocietyweregenuineandthereisnocomplaintor
allegation about their inaccuracy. Pursuant to aforesaid
agreements, relying on account statements as available till that
date,loanswereadvancedtoSociety.Itisalsonotindisputethat
inrespectofearliernineloans,paymentswereactuallymadeupto
September, 2012 and thereafter EMI cheques submitted were
dishonoured.Withregardtodisputethatarosebetweentheparties
inbreachofrepaymentschedule,thematterwastakentoDelhi
HighCourtbytheSocietybyfilinganarbitrationapplicationdated
28.03.2014whichwasregisteredasArbitrationPetitionNo.164of
2014.Withtheconsentofparties,Hon'bleR.C.Chopra,aRetired
Judge of Delhi High Court was nominated as Arbitrator and
nominationpetitionstooddisposedofaccordinglyvideorderdated
01.05.2014. Thereafter vide application dated 16.07.2014
FinancierfiledapetitionunderSection9ofAct,1996whereinit
prayedforappointmentofaReceiverandfortakingcustodyand
possession of all finances and receipts of University and other
educationalinstitutionsofSociety.Thematter,itappears,isstill
pending.Thesefactsshowthatonaccountofnonpaymentofloan
amount,thereoccurredadisputebetweenpartiesanditissubject
matterofarbitration.FIRisthesubsequenteventandappearsto
beanafterthought.Anattempthasbeenmadetolevelallegations
therein so as to bring the offences referred therein against
petitioners but on a closer scrutiny we find that complainant
respondentno.4hasnotbeenabletosucceedinitsattempt.

36

54.

ThetimeofinducementisanintegralparttoattractSection

420I.P.C.IntheFIRthereisnotevenawhisperthattherewasa
cheating and dishonest inducement at the time of entering into
loanagreementswhicharedated06.04.2011to29.11.2012.The
FIR is completely silent visvis the time of execution of loan
agreementsandpaymentofloanamountpursuantthereto.Ittalks
of a balancesheet filed on 09.07.2014 but it is not stated
anywhere as to pursuant thereto anypropertywas deliveredby
respondentno.4totheSocietyandaccusedpersonsornot.Infact
balancesheetof2014hasnothingtodowiththeloanagreements
andtheamountofloanadvancedtoSociety.
55.

Whatweactuallyfindfromrecordisthatwhateverwasthe

statusdisclosedearlierintheFinancialYear201112and201213,
remainedthesamefortheFinancialYear201314and201415,
exceptdifference in figuresandamount.Nothing newhas been
doneinthebalancesheetandauditreportdated09.07.2014.The
agreementswereexecutedlongbackandloanamountwasalso
advancedlongback.Infact,fromSeptember2012andonwards
theSocietyhadcommencedcommittingdefaultinrepaymentof
loanamount,resultingincivildisputebetweentheparties.
56.

Thus, the intention to deceive or deception, fraudulent or

dishonest, at the time of inception, i.e., when loan agreements

were executed is conspicuously missing. It is said that on
26.07.2015 the informant came to know that University is a
separatebody.Howandinwhatmannerandonwhatbasisithas
cometoknow,aboutthisfactnothingisstatedintheFIR.Weare
alsonotshownthatiftherearetwolegalentities,oneissponsored
by another, then the sponsoring body is barred from getting
preparedconsolidatedbalancesheetandaccountsshowingfunds,
assetsandliabilitiesofsponsoredbodyalso.

37

57.

It is true that under U.P. Act, 2011 the University is a

corporatebodyhavingitsownidentitybutthereisnothinginU.P.
Act, 2011 which provides that Society cannot or shall stand
deprivedofmaintainingaconsolidatedaccountorwouldnotshow
the assets, liabilities etc. of University in its own accounts as a
consolidated account. The University would maintain its own
separateaccountsandbalancesheetsbeingaseparatelegalentity,
maybeonething,buttheSocietybeingsponsoringbodycannot
maintainconsolidatedaccounts,isneitherprovidedinanystatute
nor shown to be barred under any provision or statute nor is
showntous.Wearealsonotshownanyrecognizedaccounting
systemwhereunderasponsoredbodyisbarredfrommaintaininga
consolidated account, showing assets, funds, liabilities etc. of
sponsoredbodyinitsownaccount.Theentireassumptiononthe
partofinformantisofhisown.Itwasnotshownthatatthetime
ofinceptionofdeliveryoffundstherewasanydishonestintention
ormensreaonthepartofSociety.
58.

DuringcourseofargumentSriBrijeshSahai,learnedcounsel

appearingforrespondentno.4,thoughsoughttoarguethatallthe
ingredientsofSection415readwithSection420IPCaresatisfied
butexceptrepeatingtheallegationscontainedinFIRhecouldnot
explain as to what was the inaccuracy in accounts, how
consolidated accounts of Society was impermissible in law and
whereisdeception.
59.

At this stage, it was sought to argue that University, a

statutoryindependentbodycannotbeownedbySociety.Onthis
aspect, Sri G.S. Chaturvedi, learned Senior Advocate for
petitioners, contended that the Society has an element of
ownershipovertheUniversityand,therefore,intheconsolidated
balancesheet it has rightly shown assets etc. of University

38

alongwiththeassetsetc.ofSociety.
60.

Sri Chaturvedi sought to argue that Society being a

sponsored body is defacto owner of University, even if the

UniversityunderU.P.Act,2011gotstatusofalegalindependent
entity.Inordertoelaboratetheconceptofownership,wedrew
supportfromdecisionsofApexCourtin SwadeshRanjanSinha
Vs.HaradebBanerjee(1991)4SCC572,andB.GangadharVs.
B.G.Rajalingam1995(5)SCC238.
61.

SwadeshRanjanSinha(supra)isamatterwhichhasarisen

fromalandlordtenantdisputeundertheprovisionsofWestBengal
Premises Tenancy Act, 1956 (hereinafter referred to as Act,
1956). Plaintiff's suit for ejectment of tenant on the ground
specifiedunderSection13ofAct,1956wasdecreedbyTrialCourt
but the judgment was reversed by Appellate Court holding that
plaintiffwas not ownerofpremises, hence, not entitledtoseek
evictionandthiswasupheldbyCalcuttaHighCourtbydismissing
appeal preferred by plaintiffappellant. Before the Apex Court,
plaintiff was the appellant and the question considered was
whether plaintiff is owner of suit premises for the purpose of
institutingasuitforevictionintermsofAct,1956.
62.

BrieffactsasdiscussedinthejudgmentofApexCourtare

thataflatwasallottedtotheplaintiffbytheKadamtolaHousing
CooperativeSociety,Calcutta.ThesaidSocietywasgrantedlease
of16flatsbyCalcuttaMetropolitanDevelopmentAuthorityfora
termof99yearsunderaregistereddocument.TheSocietyinturn
allottedtheseflatstoitsmembers,andplaintiffappellantwasone
ofsuchmember,whowasgivenasubleasebySocietyofatermof
99years.Thesubleasewaswithheritableandtransferabletitle.
The plaintiffappellanttheninductedtherespondenttenantona
rentofRs.110permonth.Plaintiffterminatedtenancyandcalled

39

upon respondenttenant to vacate premises which it did not,

hence,thesuitwasfiledwhichwasdecreedbyTrialCourt,but
judgment was reversed by first Appellate Court which was
maintainedbysecondAppellateCourt.TheAppellateCourtheld
thatsinceplaintiffwasonlyalesseeundera99yearsleasegranted
bySociety,hewasnotownerwithinthemeaningofSection13(1)
(ff)ofAct,1956,hencenotentitledforeviction.
63.

Section 13(1)(ff) of Act, 1956 as quoted in para 5 of

judgment,readsasunder:
"S.(13).(1)Notwithstandinganythingtothecontraryin
anyotherlaw,noorderordecreefortherecoveryofpossession
ofanypremisesshallbemadebyanyCourtinfavourofthe
landlordagainstatenantexceptononeormoreofthefollowing
grounds,namely:
...................
(ff)Subjecttotheprovisionsofsubsection(3A),where
thepremisesarereasonablyrequiredbythelandlordforhisown
occupationifheistheownerorfortheoccupationofanyperson
forwhosebenefitthepremisesareheldandthelandlordorsuch
person is not in possession of any reasonably suitable
accommodation.
64.

It entitles a landlord to seek a premises got evicted from

defendant,ifitisrequiredbyhimforhisownoccupationprovided
heisowner.ThedefinitionoflandlordwasgiveninSection2
whichhasbeenquotedinpara6ofjudgmentstating,anyperson
who,forthetimebeing,isentitledtoreceiveorbutforaspecial
contract, would be entitled to receive the rent of any premises,
whether or not on his own account .. The Court held that
definitionshowsiftherentisreceivedbyapersonnotonhisown
accountbutonaccountofanyotherperson,suchashisprincipal

40

orhisward,heisforthepurposeoftheActalandlord.Anysuch
person is, therefore, entitled to institute asuit foreviction. The
CourtthennoticedthatSection13(1)(ff)furtherprovidesthatthe
landlordmustbeownerifherequiredthepremisesforhisown
occupation,orfortheoccupationofanypersonforwhosebenefit
thepremisesareheld.Thecontentionwasthattermownerhas
tobeinterpretedstrictlysoastoexcludeanypersonhavingless
thanfullownershiprights,whileappellantcontendedthatitwas
theleasewithheritableandtransferablerights,and,therefore,for
allpurposes,hewasownerofthepropertyindispute.Itisinthis
contest,theCourtconsideredastowhattermownershipmeans
andinpara8said:
8.Ownershipdenotestherelationbetweenapersonand
anobjectformingthesubjectmatterofhisownership.Itconsists
inacomplexofrights,allofwhicharerightsinrem,beinggood
againstalltheworldandnotmerelyagainstspecificpersons.
(SalmondonJurisprudence,12thed.,Ch.8,p.246et.seq.).
Therearevariousrightsorincidentsofownershipallofwhich
neednotnecessarilybepresentineverycase.Theymayincludea
righttopossess,useandenjoythethingowned;andarightto
consume, destroy or alienate it. Such a right may be
indeterminateindurationandresiduaryincharacter.Aperson
hasarighttopossessthethingwhichheowns,evenwhenheis
notinpossession,butonlyretainsareversionaryinterest,i.e.,a
right to repossess the thing on the termination of a certain
periodoronthehappeningofacertainevent.
65.

TheCourtthensaidthatwhatplaintiffneedstoproveisthat

hehasabetterrightthanthedefendant,hehasnoburdentoshow
thathehasthebestofallpossibletitles.Hisownershipisgood

41

againstalltheworldexcepttrueowner.Therightsofanownerare
seldom absolute,andoften are in many respects controlledand
regulatedbystatute.Thequestion,however,iswhetherhehasa
superiorrightorinterestvisavisthepersonchallengingit.Then
theCourtinpara10saidasunder:
10. The plaintiff is an allottee in terms of the West
BengalCooperativeSocietiesAct,1983:(SeeSections87and
89).Hehasarighttopossessthepremisesforaperiodof99
years as a heritable and transferable property. During that
periodhehasarighttoletoutthepremisesandenjoytherental
incometherefrom,subjecttothestatutorytermsandconditions
of allotment. The certificate of allotment is the conclusive
evidenceofhistitleorinterest.Itistruethathehastoobtain
thewrittenconsentoftheSocietybeforelettingoutthepremises.
But onceletout in accord ance with the terms ofallotment
specifiedinthestatute,heisentitledtoenjoytheincomefrom
theproperty.AlthoughheisalesseeinrelationtotheSociety,
and his rights and interests are subject to the terms and
conditionsofallotment,heistheownerofthepropertyhavinga
superior right in relation to the defendant. As far as the
defendant is concerned, the plaintiff is his landlord and the
owner of the premises for all purposes dealt with under the
provisionsoftheAct.
66.

In view thereof, the plaintiff was held owner and the

judgmentofTrialCourtwasrestoredbysettingasidejudgmentsof
AppellateCourt.
67.

The Apex Court while explaining ownership said that it

denotes arelationbetweena person and objectformingsubject

matterofownership.Theownershipisacomplexofrightsofall

42

which are rights in rem and good against all the world. In the
presentcase,theUniversityowesitsexistencetotheSocietyand
ondissolution,theassetsetc.areboundtoagainvestinSociety.
Even for the management purposes, top officers are to be
appointedbytheSociety.Therefore,itcannotbesaidthatelement
ofownershipofSocietyvisavisUniversityisnotinexistence.
68.

B.GangadharVs.B.G. Rajalingam (supra) was a decision

which has come in appeal from Andhra Pradesh High Court.

PetitionerbeforeSupremeCourtwasthejudgmentdebtor.Asuit
was filed for declaration of title too and for possession of the
propertysituateatChelapura,Hyderabad.TrialCourtdecreedthe
suit holding plaintiffrespondent as absolute owner of suit
property. Decree became final. When warrant was issued in
execution for delivery of possession, bailiff returned it on the
groundthatjudgmentdebtorhadconstructedshopsandinducted
tenants into possession and, therefore, warrant cannot be
executed.ThedecreeholderfiledanapplicationunderOrder21,
Rule98readwithSection151C.P.C.toissuewarranttobailiffto
demolish the shops constructed by judgmentdebtor and deliver
vacantpossessionofthesuitproperty.Theexecutingcourt,after
enquiry,byitsorderdated30.09.1993directedbailiffbywarrant
to demolish the shops and to deliver vacant possession to
respondent.ThejudgmentdebtorbroughtthematterbeforeHigh
Court but failed, hence came to Supreme Court. His contention
was that in absence of mandatory injunction grantedin decree,
executing court is devoid of power and jurisdiction to direct
demolition of the shops constructed by judgmentdebtor. The
second contention was that tenants in possession being not eo
nomineepartiestothedecree,werenotboundbythedecreeand,
therefore,directiontodispossessthemwasillegal.TheApexCourt

43

negativedboththeargumentsandupheldthejudgmentofCourt
below.Order21Rule101whichwasreliedreadasunder:
101. Question to be determined. All questions
(including questions relating to right, title or interest in the
property) arising between the parties to a proceeding on an
applicationunderrule97orrule99ortheirrepresentatives,
and relevant to the adjudication of the application, shall be
determinedbythecourtdealingwiththeapplication,andnotby
a separate suit and for this purpose, the court shall,
notwithstanding anything to the contrary contained in any
other law for the time being in force, be deemed to have
jurisdictiontodecidesuchquestions.
69.

The executing court is mandated to decide all questions

relatingtoright,titleorinterestinthepropertyintheexecution
proceedings. Looking to the nature of tenants inducted by
judgmentdebtor, the Court looked into the meaning of word
possessionandreferredtoHalsbury'sLawsofEnglandandsaid:
Halsbury'sLawsofEngland,IVthEd.,Vol.35inparagraph
1214 at page 735, the word `possession' is used in various
contexts and phrases, for example, in the phrase actual
possessionortotakepossessionorinterestinpossessionor
estateinpossessionorentitledinpossession.Inparagraph
1211 at page 732, legal possession has been stated that
possessionmaymeanthatpossessionwhichisrecognisedand
protected as such by law. Legal possession is ordinarily
associated with de facto possession; but legal possession may
existwithoutdefactopossession,anddefactopossessionisnot
alwaysregardedaspossessioninlaw.Apersonwho,although
havingnodefactopossession,isdeemedtohavepossessionin

44

law is sometimes said to have constructive possession. In

paragraph1216atp.736itisstatedthattherighttohavelegal
anddefactopossessionisanormalbutnotnecessaryincidentof
ownership.Sucharightmayexistwith,orapartfrom,defacto
orlegalpossession,anddifferentpersonsatthesametimein
virtueofdifferentproprietaryrights.
70.

Thus,inthecontextofOrder21Rule101,thequestionof

ownershipandlegalpossessionwasconsideredbyCourtandits
meaningwasexplained.
71.

It is true that the Society cannot be said to possess the

University defacto. It has its own entity, statutory method of

functioningunderU.P.Act,2011andwouldbegovernedthereby.
However, the Society being a sponsoring body having pervasive
controlovertheUniversityanditsfundsandassets,itcannotbe
doubtedthattheSocietycanbesaidtohavelegalpossessionover
University.
72.

Thestatusofsponsorhasnotbeenexplained.However,itis

notdisputedthatforestablishmentofUniversity,entirefundsare
madeavailablebySociety.TheultimatemanagementofUniversity
is also in the hands of Society, inasmuch as the top officers of
University,i.e.,ChancellorandProChancelloraretobeappointed
by Society. If University wants to dispose of any property the
approvalofSocietyisnecessary.Attheend,i.e.,whenUniversityis
dissolved,entireassets,fundsandliabilitiesofUniversitywould
standvestedintheSociety.ThesefactsshowthatSocietyatleast
has some element of ownership rights over University, legal
possession,andsimultaneouslymaintaininterestintheassetsand
funds of University. If Society maintains assets and liabilities of
Universitybypreparingconsolidatedaccountsandbalancesheet
ofitsown,inabsenceofanystatutorybar,wefindnoapparent

45

faultonthepartofSocietyindoingso.Itcannotbesaidthatmere
preparationofaconsolidatedaccountandbalancesheetbySociety
showingfunds,assetsetc.ofUniversityinitsownaccountsisan
act of fraud on the part of the Society. If the Society has an
element of ownership over University, nothing bars it from
showing funds, assets, liabilities etc. of University in its own
consolidatedaccountsandbalancesheets,particularlywhenthere
isnosuchbarandnonehasbeenshowntous.
73.

NowrevertingbacktotheapplicabilityofSection415and

420IPC,wefindthatbasicingredientthatthedeceptionwasat
thetimeofinception,isabsent.
74.

Now wecome to examine whether Sections467,468and

471IPCareattractedinthiscase.Allthethreeprovisionsarepart
ofsamegenusofoffencesdealtwithundertheheadofForgery.
75.

The term forgery has been defined in Section 463 IPC,

whichsaysthatifanyonemakesanyfalsedocumentsetc.tocause
damageorinjuryortosupportanyclaimortitleortocauseany
persontopartwithpropertyortoenterintoanyexpressorimplied
contractetc.,hewouldbesaidtohavecommittedforgery.Section
463readsasunder:
463.Forgery. Whoevermakesanyfalsedocumentsorfalse
electronicrecordorpartofadocumentorelectronicrecord,with
intenttocausedamageorinjury,tothepublicortoanyperson,
ortosupportanyclaimortitle,ortocauseanypersontopart
withproperty,ortoenterintoanyexpressorimpliedcontract,
orwithintenttocommitfraudorthatfraudmaybecommitted,
commitsforgery.
76.

The term forgery' thus brings us to the term false

documentandSection464IPCprovidesastowhenitcanbesaid

46

thatonehasmadefalsedocument.Itreadsasunder:
464Makingafalsedocument.Apersonissaidtomakea
falsedocumentorfalseelectronicrecord
FirstWhodishonestlyorfraudulently
(a)makes,signs,sealsorexecutesadocumentorpartofa
document;
(b)makesortransmitsanyelectronicrecordorpartof
anyelectronicrecord;
(c) affixes any electronic signature on any electronic
record;
(d)makesanymarkdenotingtheexecutionofadocument
ortheauthenticityoftheelectronicsignature,
with the intention of causing it to be believed that such
documentor partof document, electronic record or electronic
signature was made, signed, sealed, executed, transmitted or
affixedbyorbytheauthorityofapersonbywhomorbywhose
authority he knows that it was not made, signed, sealed,
executedoraffixed;or
Secondly Who, without lawful authority, dishonestly or
fraudulently,bycancellationorotherwise,altersadocumentor
anelectronicrecordinanymaterialpartthereof,afterithas
beenmade,executedoraffixedwith electronicsignatureeither
byhimselforbyanyotherperson,whethersuchpersonbeliving
ordeadatthetimeofsuchalteration;or
ThirdlyWhodishonestlyorfraudulentlycausesanypersonto
sign,seal,executeoralteradocumentoranelectronicrecordor
toaffixhiselectronicsignatureonanyelectronicrecordknowing
that such person by reason of unsoundness of mind or

47

intoxication cannot, or that by reason of deception practiced

uponhim,hedoesnotknowthecontentsofthedocumentor
electronicrecordorthenatureofthealteration.
77.

Sections467,468and471IPCcontemplatecertainstagesof

forgeryandreadunder:
467. Forgery of valuable security, will, etc.Whoever
forgesadocumentwhichpurportstobeavaluablesecurityora
will,oranauthoritytoadoptason,orwhichpurportstogive
authority to any person to make or transfer any valuable
security,ortoreceivetheprincipal,interestordividendsthereon,
ortoreceiveordeliveranymoney,movableproperty,orvaluable
security,oranydocumentpurportingtobeanacquittanceor
receiptacknowledgingthepaymentofmoney,oranacquittance
orreceiptforthedeliveryofanymovablepropertyorvaluable
security,shallbepunishedwithimprisonmentforlife,orwith
imprisonmentofeitherdescriptionforatermwhichmayextend
totenyears,andshallalsobeliabletofine.
468. Forgery for purpose of cheating.Whoever commits
forgery,intendingthatthedocumentorelectronicrecordforged
shallbeusedforthepurposeofcheating,shallbepunishedwith
imprisonmentofeitherdescriptionforatermwhichmayextend
tosevenyears,andshallalsobeliabletofine.
471. Using as genuine a forged document or electronic
record.Whoeverfraudulentlyordishonestlyusesasgenuine
anydocumentorelectronicrecordwhichheknowsorhasreason
tobelievetobeaforgeddocumentorelectronicrecord,shallbe
punishedinthesamemannerasifhehadforgedsuchdocument
orelectronicrecord.
78.

OneoftheconditionstoattractSection463isexistenceof

48

falsedocument.Whenafalsedocumentissaidtohavebeenmade,
wegotoSection464.Itisadmittedthatconditionsno.1and3are
not applicable in the case in hand. We go, therefore, to second
conditionwhichprovidesthatifapersonwithoutlawfulauthority,
dishonestly or fraudulently by cancellation or otherwise alters a
documentinanymaterialpartthereof,afterithasbeenexecuted
oraffixedeitherbyhimselforbyanyperson,whethersuchperson
islivingordeadatthetimeofsaidalteration,wouldbesaidto
havemadeafalsedocument.Havingcarefullygonethroughthe
aforesaidclause,wefindthatitisalsonotattractedinthecasein
hand at all. Once the alleged making of false document is not
attracted,therecannotbeanyforgeryandthatbeingso,Sections
467,468and471IPCwouldnotbeattracted.
79.

ToattractSection467IPC,theessentialingredientsarethat

theaccusedhasforgedadocumentandthedocumentmustbeone
ofclassesspecifiedinSection,namely,valuablesecurityorWilletc.
Section 468 would be attracted when there is a forgery of a
documentwithanintentiontousethesameforthepurpose of
cheating. Section 471 would be attracted when someone
fraudulentlyordishonestlyusesadocumentasgenuinedocument,
whichheknowsorhasreasontobelievethatthesameisforged
document.
80.

Inthecaseinhand,wetriedtounderstandastohowthe

accountsandbalancesheetsofSocietycanbesaidtobeforged
when entries contained therein are not claimed to be false or
incorrect but what is charged is that the Society has prepared
consolidated balancesheets by including the assets, income,
expenditure and liabilities of University also, therefore, the
account books, assets and balancesheets are forged. It is not
disputedthatentriescontainedinaccountsandbalancesheetsare

49

true. The only fact is that it is a consolidated accounts and

balancesheetbyincludingtheassets,funds,liabilitiesetc.ofthe
University.Inabsenceofanybar,wedonotfindthatanyofthe
ingredientsofSections467,468,471readwithSections463,464
IPCareattracted.
81.

Learned counsel appearing for complainantrespondent no.

4, contended that while exercising jurisdiction in writ petition

underArticle226oftheConstitutionofIndiaforquashingofFIR
thisCourtshouldexamineonlytheallegationscontainedinFIR
and thereafter find out whether offences mentioned in FIR are
satisfiedarenot.
82. Explaining as to when the Court would be justified in
interferingwithcriminalproceedingsin R.KalyaniVs.JanakC.
Mehtaandothers,2009(1)SCC516,theCourtsaid:
Propositionsoflawwhichemergefromthesaiddecisionsare:
(1) The High Court ordinarily would not exercise its inherent
jurisdictiontoquashacriminalproceedingand,inparticular,a
FirstInformationReportunlesstheallegationscontainedtherein,
evenifgivenfacevalueandtakentobecorrectintheirentirety,
disclosednocognizableoffence.
(2) For the said purpose, the Court, save and except in very
exceptionalcircumstances,wouldnotlooktoanydocumentrelied
uponbythedefence.
(3) Such a power should be exercised very sparingly. If the
allegationsmadeintheFIRdisclosecommissionofanoffence,the
courtshallnotgobeyondthesameandpassanorderinfavourof
theaccusedtoholdabsenceofanymensreaoractusreus.
(4)Iftheallegationdisclosesacivildispute,thesamebyitself
maynotbeagroundtoholdthatthecriminalproceedingsshould

50

notbeallowedtocontinue.
83. ThisdecisionhasbeenfollowedinKamleshKumariandOrs.
vs.StateofU.P.andOrs.,2015(6)SCALE77.
84.

WehaveexaminedonlytheallegationscontainedinFIRbut

tounderstandthesamethedocumentsreferredthereinhavebeen
perused. We have not gone into any defence of petitioners and
havinggonethroughallegationscontainedinFIR,weareclearlyof
the opinion that no offences under various sections mentioned
thereinhavebeenmadeout.
85.

WithregardtoexerciseofjurisdictionunderArticle226of

theConstitutionofIndia,expositionoflawiswellsettled.Atthis
stage,theCourtwouldnotgotoexamineevidencewhichmaybe
placed by accused in defence but if we find that from the
allegationscontainedinFIR,offencesstatedthereinarenotmade
outorthatFIRisotherwisewithmalafideintentionortocloaka
civil dispute into criminal one, this Court wouldnot hesitate in
exercisingitsjurisdictionunderArticle226oftheConstitutionby
quashingsuchFIR.
86. SriG.S.Chaturvedi,learnedSeniorAdvocate,atonestagealso
argued that since arbitration proceedings are already pending,
therefore,thecriminalproceedingscouldnothavebeeninitiated
byrespondentno.4.
87.

However,wehavenodoubtinourmindthatmerefactthata

civildisputeithasarisenbetweenparties,wouldnotmeanthat
simultaneouslyitcannotgiverisetoacriminalliability.Bothcan
exist together. Even if there is civil dispute, still, if from the
allegationscontainedincomplaintorFIR,anoffencecanbemade
out,criminalproceedingscangoon.
88. InVesaHoldingsP.Ltd.andOrs.vs.StateofKerala(supra)
theCourtsaidthatagivensetoffactsmaymakeoutacivilwrong

51

as also a criminal offence. Only because a civil remedymay be

available to the complainant that itself cannot be a ground to
quashcriminalproceeding.Therealtestiswhetherallegationsin
thecomplaintdisclosecriminaloffenceofcheatingornot.Ifsuch
offence is not disclosed still the proceedings are allowed to
continue,itwouldamounttoabuseoftheprocessoftheCourt.
89. InTrisunsChemicalIndustryvs.RajeshAgarwalandothers,
1999(8) SCC 686, there was an arbitration clause in the
agreementbetweenparties.TheCourtdealtwiththeeffectofsuch
clauseoncriminalprosecutionandheldthatmerelybecauseanact
hasacivilprofileisnotenoughtostopactiononcriminalside.It
was further held that a provision made in the agreement for
referringthedisputestoarbitrationisnotaneffectivesubstitute
for a criminal prosecution when the disputed act constitute a
criminal offence also. This decision has been followed in S.W.
PalanitkarandothersVs.StateofBihar(supra).Thesubmission
ofSriChaturvedi,thus,hasnomeritonthisaspect.
90. Bethatasitmay,sinceinourviewtheallegationscontainedin
theimpugnedFIR,takenonitsfacevalue,donotsatisfyoffences
under Sections 420, 467, 468, 471, 120B IPC, continuance of
proceedings in furtherance thereofisan apparent misuse ofthe
processofCourtandthesamecannotbeallowed.
91. The writ petitions are allowed. The impugned FIR dated
09.09.2014 being Case Crime No. 862 of 2014, under Sections
420,467,468,471,120BIPC,PoliceStationHariparvat,Agraand
allsubsequentproceedingspursuantthereto,areherebyquashed.
92. Thereshallbenoorderastocosts.
OrderDate:23.09.2015
Akn/PS/AK