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Supreme Court Quashes Criminal Proceedings in Benami Land Transactions and Establishes Legal Precedents for Government Employees Engaging in Similar Transactions 

Case Name: C Subbiah @ Kadambur jayaraj & Ors v. The Superintendent of Police & Ors 

Case No.: SLP (Criminal) No(s). 8990 of 2019 

Dated: May 15, 2024 

Quorum: Justice B R Gavai and Justice Sandeep Mehta 

 

FACTS OF THE CASE: 

The complainant filed a complaint at the Court of Learned Judicial Magistrate No. II, Kovilpatti, claiming among other things that he was a graduate of the MD programme with an M.Sc. On October 8, 2007, he was hired as a government instructor. The claimant had been making his living from the real estate sector for the previous sixteen years prior to being assigned as a Government teacher.  

The complainant making the complaint was acquainted with Kannabiran, also known as “A-3,” who held a managerial position at the Kovilpatti branch of the State Bank of India (SBI). The complainant met A. Vijaya (hence referred to as “A-2”) and Subbiah @ Kadambur Jeyaraj (hereinafter referred to as “A1”) while working in the real estate industry. 

The complaint was introduced to Chandrasekar (henceforth referred to as “A-4”), his son Pandiyaraj (henceforth referred to as “A-6”), his wife S. Pandiyammal (henceforth referred to as “A-5”), and his brother—all of whom were involved in the real estate industry—through A-1 and A-2.  

Additionally, the plaintiff was duped into thinking that smaller plots would be acquired from the larger pieces of land so be cut up and sold to various people, which would regularly demand the seller’s personal presence, and given that the complainant was a teacher, hence he would experience difficulties if the land lots were to be put on file under his name. 

As the appellants in this case, A 1–12 filed CRL.O.P.(MD) No. 3846 of 2013 to challenge the FIR and the charge sheet before the Madras High Court, Madurai Bench. The appeal by special leave is being challenged in this appeal, and the learned single judge of the Madras High Court dismissed the petition that the appellants had filed in their ruling of April 23, 2018. 

 

LEGAL PROVISIONS:  

• Section 420 IPC- Cheating and dishonestly inducing delivery of property.— If someone deceives someone by cheating and then dishonestly persuades them to give up property to someone else, create, alter, or destroy a valuable security in whole or in part, or create something signed or sealed that has the potential to be turned into a valuable security, they will be subject to a fine and up to seven years of imprisonment of a similar kind. 
• Section 120(B) of IPC- Any individual involved in a criminal conspiracy that is not related to a criminal conspiracy to commit an act listed above faces a maximum sentence of six months in either type of jail, a fine, or both. 

 

CONTENTIONS OF THE APPELLANTS: 

The learned counsel for the appellants fiercely and strongly argued that the charges listed in the charge sheet and the formal complaint are not sufficient to establish the offences claimed, even if they are accepted as genuine on the face of the record. A continuation of the proceedings in accordance with the charge sheet filed against the accused appellants would amount to a flagrant abuse of the legal process, he argued, given the acknowledged facts as stated in the complaint, which indicates that any disagreement between the parties is solely civil in nature. 

The charge sheet makes it very evident that although the complainant received some of the selling proceeds from the land deals, he did not receive the full amount that was due to him. He further argued that since the complainant was a teacher employed by the government and was not permitted to engage in real estate transactions, he made the investments through the accused appellants in this case at his own risk.  

He further said that when the profit-sharing component of the land deals failed to satisfy the complainant, he felt that the criminal legal system had been abused in order to bring a baseless case against the accused appellants. 

The argument put forth by the knowledgeable senior attorney was that there is absolutely nothing in the case file that indicates the accused appellants intended to deceive the complainant at the outset of the transactions.  

Furthermore, the accused appellants would not be found guilty of a criminal breach of trust because the complainant’s accusation concerns a disproportionate sharing of profits from land dealings that he entered into with their knowledge. 

 

CONTENTIONS OF THE RESPONDENTS: 

The arguments put forward by the learned counsel for the appellants were sharply and passionately rejected by the learned counsel for the respondent complaint as well as the learned Standing Counsel representing the State.  

It was argued that the accused appellants deceitfully persuaded the complainant to make large investments in real estate transactions by gaining his trust through the use of phrases like “honey quoted.” The accused repeatedly assured the complainant that he would receive his rightful portion of the profits or the plots from the lands, as the case may be, which would be bought in the accused’s name because the complainant was not permitted to engage in such transactions as a government teacher.  

The complainant committed large sums of money in land agreements, putting total faith in the accused appellants’ guarantees, after falling for their enticements. Nevertheless, the accused appellants broke their word and conned the complainant by not providing him with the necessary number of plots that would have been in line with his investment. 

According to their argument, the fact that the complainant has already used a civil remedy for the same complaints does not automatically bar him from using the criminal court’s jurisdiction to hold the accused appellants accountable for their fraudulent acts. This is because the allegations made in the complaint are equivalent to both criminal and civil offences, allowing for the continuation of parallel legal proceedings. 

 

COURT’S ANALYSIS AND JUDGMENT: 

The court said that it was evident from the complaint that none of the allegations therein could support a finding that the accused appellants’ goal was to deceive the complainant right from the beginning of the transactions. Without a doubt, the accused appellants gave the complainant some plots and a portion of the profits from the land deals, but there is a disagreement over how much profit was made and whether the complainant’s share of the profits was fully satisfied in relation to his investments. 

The court held that, at most, the complainant may use these accusations as justification to file a civil lawsuit against the accused appellants. However, Section 4 of the Benami Act prohibits such a remedy, as was previously mentioned.  

With regard to the accused appellants, the court was firmly of the opinion that the accepted allegations included in the complaint and charge sheet did not establish the requisite elements of the offences punishable under Section 406 and Section 420 IPC. There is no denying that by abusing the criminal justice system, a civil issue has been given a criminal prosecution colour by means of accusations of fraud and criminal breach of confidence. 

At the risk of repetition, it should be emphasised once more that the complainant was not permitted to sue the accused appellants for the identical set of facts and claims that form the basis of the criminal proceedings due to the explicit bar stated in Section 4 of the Benami Act. 

 

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Judgment reviewed by Riddhi S Bhora. 

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