New Delhi, October 14 — In a long-drawn legal battle stretching over two decades, the Delhi High Court has refused to quash the criminal proceedings initiated against Sunair Hotels Limited and its directors in a dispute involving VLS Finance Ltd. Justice Sanjeev Narula, pronouncing the verdict on Monday, dismissed two connected petitions, saying there was no “manifest illegality” in the Magistrate’s decision to summon the accused.
The Court’s order effectively clears the way for the trial to proceed in the case, which revolves around allegations of malicious and false complaints filed by the hotel company to pressure the finance firm into withdrawing its claims.
Background
The controversy began back in 1995, when VLS Finance Ltd. entered into a Memorandum of Understanding (MoU) with Sunair Hotels for financial assistance to develop a five-star hotel project in Delhi. Soon after, relations soured, leading to multiple criminal complaints and civil proceedings in different forums.
VLS alleged that Sunair and its directors had committed fraud and misappropriated funds, prompting the registration of several FIRs, including those at Connaught Place and Defence Colony police stations. Sunair retaliated with its own complaints accusing VLS of cheating and breach of trust.
One such complaint from Sunair in 2005 accused the directors of VLS of “unlawful procurement” of documents from the Income Tax Department, alleging that they had obtained and used confidential reports to their advantage. However, the Income Tax Department later clarified that the documents were not stolen and remained in official custody, leading to the closure of the complaint.
VLS Finance then filed a counter-complaint accusing Sunair of filing false and malicious cases with the intent to cause injury—an act punishable under Sections 211, 34, and 120-B of the Indian Penal Code. Acting on this complaint, a Magistrate in Patiala House Courts had summoned the hotel company and its directors in December 2009.
Petitioners’ Arguments
Appearing for the petitioners, Senior Advocate Tanveer Ahmed Mir argued that the complaint filed by VLS could not stand in law. He contended that even if Sunair’s complaints were considered false, the appropriate charge would be under Section 182 IPC (providing false information to a public servant), not Section 211 IPC (false charge of an offence).
He further submitted that under Section 195(1)(a)(i) of the Criminal Procedure Code, such an offence can only be pursued on the written complaint of a public servant, not through a private complaint like the one filed by VLS. Hence, the Magistrate’s decision to take cognizance was “legally untenable.”
Court’s Observations
Justice Narula, after examining the lengthy record, disagreed with the petitioners’ position. The Court noted that at the summoning stage, a Magistrate is only required to determine whether a prima facie case exists, not to weigh evidence or predict guilt.
He found that the Magistrate had indeed applied his mind and that the material on record “satisfied the limited threshold” required for issuing summons.
Addressing the argument about Section 195 Cr.P.C., the Court clarified that this statutory bar applies only when the alleged offence under Section 211 IPC is committed in or in relation to judicial proceedings. In this case, Sunair’s complaints were made to the police, not before any court, and thus no such bar applied.
“The embargo under Section 195(1)(b)(i) Cr.P.C.,” Justice Narula observed, “is inapplicable, as no judicial proceeding was pending or concluded in connection with the alleged act of theft.”
He cited precedents including M.L. Sethi v. R.P. Kapur (1966) and Iqbal Singh Marwah v. Meenakshi Marwah (2005), which emphasize that the bar must not be interpreted so broadly as to leave a complainant without remedy.
Concluding the matter, the Court held that there were no grounds to interfere with the Magistrate’s order or the criminal complaint. “The impugned order demonstrates consideration and cannot be said to suffer from procedural impropriety,” the bench said.
The petitions are dismissed.