SHAWN ANTHONY Vs. STATE OF KERALA

JUDGEMENT

(1.) Petitioners are the accused in Crime No.449 of 2024 registered at the Maradu Police Station for offences punishable under Ss. 120B, 406, 420 and 468 read with Sec. 34 of the IPC. The crime was registered based on a complaint filed by the 2nd respondent before the Judicial First Class Magistrate Court - VIII, Ernakulam and forwarded to the Police under Sec. 156(3) Cr.P.C. The allegations in the complaint are to the following effect; The accused approached the complainant, representing themselves to be the active partners of M/s.Parava Films LLP and requested him to invest in the production of a cinematographic film under the name and title "Manjummal Boys". Based on the assurances and promises made by the accused, the complainant entered into Annexure-A3 Investment Agreement dtd. 30/11/2022 with M/s.Parava Films LLP represented by the 1st accused. While entering into the agreement, the accused had made the complainant believe that the total cost of production of the movie is Rs.22.00 crores and the accused will be investing the balance amount. In terms of the agreement, the complainant invested Rs.7.00 crores, out of which Rs.5.99 crores was given by way of bank transfer to the account of M/s.Parava Films LLP, Rs.50.00 lakhs transferred to the account of the 1st accused and the balance Rs.51.00 lakhs handed over in cash. As per the terms of the agreement, the complainant is entitled to 40% of the producer's net profit, which includes the gross receipts from world theatrical rights of the original film, satellite rights, OTT rights, music rights, dubbing rights etc. After investing in the project, the complainant got information that the accused had taken Rs.8.00 crores funding from a third party named 'Listen Stephen' and a further amount of Rs.11.00crores as loan from Dream Big Films Ltd. The complainant also came to know that the accused had received Rs.2.00 crores from Pharse Films, Rs.1,15,00,000.00 from Think Music and Rs.2.00crores from Mythri Movie Makers. The said transactions were undertaken without the knowledge and consent of the complainant. The project culminated with the release of an enormously successful film, which grossed collection of Rs.150.00cores from theatres across India and Rs.75.00 crores from overseas. From the sale of the film's OTT rights, the accused received an amount of Rs.20.00 crores. Thus, the total revenue from the project is nearly Rs.250,15,00,000.00 and after deducting the cost of production, the net profit would be around Rs.100.00 crores. The complainant is therefore entitled to Rs.40.00 crores, being 40% of the producer's share. But, contrary to the promises and assurances given, the accused failed to disburse the amount due to the complainant and even after repeated demands paid only Rs.50,00,000.00. It thus became evident that the accused had no intention of keeping their promise while taking money from the complainant and having utilised the profit for personal purposes, are guilty of cheating and breach of trust.

(2.) Senior Counsel S.Sreekumar appearing for the petitioners made the following forceful submissions; The dispute between the parties is purely civil in nature and as per Clause 15.1 of Annexure-A3 Investment Agreement dtd. 30/11/2022, any dispute or difference arising out of or pertaining to the agreement should first be resolved through negotiation and in case negotiation fails, through arbitration. The criminal complaint is filed after initiating arbitration proceedings by filing a petition under Sec. 9 of the Arbitration and Conciliation Act, 1996 and obtaining an order of attachment. Having thus invoked the proper remedy, the de facto complainant cannot seek to criminally prosecute the petitioners based on the same allegations. A breach of contract by itself will not give rise to cause of action for initiating criminal prosecution for cheating, unless fraudulent or dishonest intention is shown right at the beginning of the transaction. The petitioners having repaid the amount invested by the 2nd respondent and the exact amount of profit not yet fixed, there is reason to allege cheating and breach of trust. The 2nd respondent failed to make the investment of Rs.7.00 crores in accordance with the schedule in Clause 2.4 of Annexure-A3 agreement, compelling the petitioners to raise funds for the project from other sources at exorbitant interest. Having himself committed breach of the agreement, the 2nd respondent has no right to seek criminal action against the petitioners. The initiation and continuation of the criminal prosecution is therefore nothing but an abuse of process and is hence liable to be quashed, by invoking the inherent power vested with the High Court as per Sec. 482 of the Code of Criminal Procedure.

(3.) The following decisions of the Apex Court are cited to bolster the contention that, when disputes which are essentially civil in nature are seen converted as criminal proceedings, the courts have a duty to check the abuse of process; B.Suresh Yadav v. Sharifa Bee and Another [(2007) 13 SCC 107] and Mohammed Ibrahim and Others v. State of Bihar and Another [(2009) 8 SCC 751].