Major relief for Mantri, Karnataka High Court quashes FIR
BENGALURU: In a landmark decision that offered significant relief to real estate giant Mantri Developers, the Karnataka High Court quashed an FIR filed against the company and its founding members. The FIR, lodged at Subramanyapura police station, had accused them of misappropriating funds.
Justice M Nagaprasanna ruled in favour of the petitioners -- Sushil Pandurang Mantri, Pratik Sushil Mantri and Snehal Sushil Mantri -- following their writ petition to nullify the complaint against them. The judgment, made public on October 17, clarifies the boundary between civil and criminal liability in contractual disputes.
The FIR refers to the complainant’s investment to the tune of Rs 69 lakh in the project, and the delay in delivery by Mantri Developers. Hence, a complaint was filed under Section 154 of the Criminal Procedure Code. The verdict said, “Breach of contract may have several hues and forms. Every breach of contract, unless it is shrouded with dishonest intention at the outset, cannot become an offence under Sections 406 or 420 of the IPC.” The court found there was no such dishonest intention in this case, making the criminal charges, as well as subsequent charges under the Prevention of Money Laundering Act (PMLA), unsustainable.
The Enforcement Directorate had initiated an investigation based on the original FIR and had provisionally attached over 380 flats in 2022. The agency later attached properties worth Rs 300 crore, citing misappropriation and diversion of funds to other projects. However, this judgment raises questions about the validity of those actions.
Dhananjaya Padmanabhachar, the complainant, expressed disappointment with the High Court’s ruling. “As the complainant of FIR 0163/2020, I didn’t get justice in the High Court, and I am currently reviewing the court’s orders. I will take appropriate legal action,” he told TNIE. The judgment serves as a crucial guideline for distinguishing between civil and criminal matters in contract-related disputes. Focusing on the lack of fraudulent intent in this particular case, underscores the importance of ‘intent’ as a decisive factor in legal proceedings.
This case sets a precedent that might be cited in future disputes of a similar nature, urging the legal community to be more discerning when invoking criminal charges for what might essentially be a civil dispute.