Delhi High Court Upholds FIR Alleging Deceptive Inducement in Investment Fraud: “Withdrawal of Prior Complaint Does Not Preclude FIR Registration Where Cognizable Offense is Disclosed”

Court’s Decision

The Delhi High Court dismissed the petition seeking to quash FIR No. 273/2016, which was filed under Sections 420, 406, 506, and 120B of the IPC. The court held that the FIR could proceed despite the complainant’s prior withdrawal of a related application, citing that the Cr.P.C. permits FIR registration under Section 154 even if a complaint is withdrawn at the magistrate level. The court clarified that the merits of the allegations are matters for trial, particularly given the filed chargesheet and forensic evidence.

Facts

The FIR originated from allegations by the complainant that he had been induced by the petitioners to invest substantial amounts in a business venture, purportedly involving imports of cooling towers. The complainant claimed he paid a total of ₹21 lakhs through a mix of cash and cheques, backed by a loan agreement and promissory note signed by one of the petitioners. Two issued cheques were later dishonored due to signature discrepancies, which the complainant alleged was intentional to defraud him. The case further included allegations of intimidation and threats by the petitioners.

Issues

The primary issues addressed were:

1. Whether the FIR could be quashed on the grounds that a prior complaint on the same facts was withdrawn.
2. Whether the allegations in the FIR were purely civil in nature, rendering criminal prosecution improper.

Petitioner’s Arguments

The petitioners argued that the FIR was not maintainable since the complainant’s prior complaint was dismissed as withdrawn, asserting that this withdrawal was tantamount to acquittal in relation to the FIR. They contended the case was civil, evidenced by the financial transactions and nature of the agreements, with no substantiated claims of criminal intent.

Respondent’s Arguments

The respondent argued that the FIR was legitimate, asserting the existence of fraudulent inducement. The complainant alleged that he was assured a return on investment and presented with post-dated cheques bearing deliberately incorrect signatures to avoid clearance. The respondent maintained that there was sufficient prima facie evidence of deception and intent to defraud.

Analysis of the Law

The court examined provisions under Sections 154, 156, and 210 of the Cr.P.C., emphasizing the permissible registration of an FIR while a complaint case is pending. It referred to legal precedents that bar successive complaints only when they are dismissed on merits, not when withdrawn without such adjudication. The court relied on Lalita Kumari v. Government of Uttar Pradesh to affirm the mandatory registration of FIRs where cognizable offenses are disclosed.

Precedent Analysis

The court discussed multiple precedents, including Samta Naidu v. State of M.P. and Joseph Salvaraj v. State of Gujarat, distinguishing the present case on the basis that the prior complaint withdrawal did not preclude FIR registration. The court highlighted that only cases dismissed on merits restrict subsequent FIRs.

Court’s Reasoning

The court reasoned that FIR registration is a statutory right if allegations disclose a cognizable offense, irrespective of civil dispute elements. It held that the withdrawn complaint under Section 156(3) did not eliminate the option to file an FIR. The court noted that the FIR’s charges were bolstered by forensic evidence and that allegations of deception and fraudulent inducement aligned with the elements of criminal fraud under Section 415 IPC.

Conclusion

The petition was dismissed, allowing the FIR and subsequent criminal proceedings to continue, with the court asserting that any adjudication on the factual disputes and credibility of the evidence should be reserved for trial.

Implications

This decision underscores the court’s commitment to allowing criminal investigations to proceed despite the existence of civil elements in the underlying dispute. It clarifies the distinction between criminal and civil liabilities, reinforcing the mandate for FIR registration in cases alleging cognizable offenses, even if previous complaints were withdrawn.

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