Research › Search › Judgment

J&K High Court · body

2003 DIGILAW 149 (JK)

Prakash Aggarwal v. Escort Finance Co. Ltd.

2003-05-22

Y.P.NARGOTRA

body2003
Y.P. Nargotra 1. The petitioners through this petition filed under section 561-A Cr. P.C. are seeking quashment of the order dated 6.4.2002 as well as the proceedings initiated by the court of learned City Munsiff, Judicial Magistrate, Srinagar, on a complaint of the respondent against the petitioner. The complainant a company incorporated and registered under the Companies Act, 1956 having its registered office at N-6 Partap Building, Cannought Circus, New Delhi and branch office at Car Bazar, Zero Bridge, Srinagar, filed a complaint for trial of the accused petitioner for commission of the offences under Sections 415,417,418,420,422,424 NS 425 RPC on the allegation that petitioner Nos.1 and 3 who are the Directors of M/s Avon Industries Limited and petitioner No. 2 their associate approached the complainant-Company and requested for finance for the purchase of one number of Fortune injunction moulding machine on higher purchase basis. The complainant-company acceded to the request of the petitioners and entered into a higher purchase agreement and provided finance to the tune of Rs. 23 lakhs for the purchase of said machine. As per the said agreement, the loan obtained by the petitioners was repayable by the said petitioners within a time span of 36 calendar month alongwith interest @ 10.85% per annum. The petitioners defaulted in the payment. The complainant company has filed this complaint alleging that accused-petitioners No. 1 and 2 whose guarantor was accused-petitioner No. 3 had entered into a conspiracy to defraud and cheat the complainant-company and in pursuance of that conspiracy have with held the repayment of the loan which has accumulated of the tune of Rs. 25 lakhs. It is averred in the complaint that few months back accused No. 1 approached the complainant-company at its head office at New Delhi and assured that all the outstanding payments would be cleared soon, so in that behalf the complainant granted further time for the repayment of the loan, out the amount has not been paid from which the complainant inferred that right from the beginning the accused never had any intention to pay back the money. 2. Learned trial court after recording the preliminary statement of PW Irfan Nadeem who on behalf of the company has filed the complaint, has taken the cognizance against the accused under section 420 RPC and has issued the process against the accused by his order dated 6.4.2002. 3. 2. Learned trial court after recording the preliminary statement of PW Irfan Nadeem who on behalf of the company has filed the complaint, has taken the cognizance against the accused under section 420 RPC and has issued the process against the accused by his order dated 6.4.2002. 3. I have heard the learned counsel appearing for the parties. 4. Learned counsel for the petition has argued that the parties have entered into a higher purchase agreement and if there is a default in the repayment of the loan, such dispute is purely of a civil nature, cannot go to show that the intention of the petitioners was to cheat the respondent. He has submitted that in order to settled such civil dispute arising between the parties, the respondent has even filed a civil suit under O. 37 of C.P.C. for recovery of an amount of Rs. 15,95,147 against the petitioners before the High Court at Delhi in its ordinary original jurisdiction, being Suit No. 902/1998. On the other hand the contention of the learned counsel for the respondent is that though it is correct that the suit for recovery of the amount due from the petitioners has been filed in the High Court of Delhi but at the same time the complaint cannot be said to involve a dispute of civil nature only. The petitioners knew that they will not be able to pay back the loan amount but still entered into the agreement with the respondent with the intention of defrauding it. 5. I have considered the respective contentions of the parties. 6. Section 420 RPC reads as follows: "420. Cheating and dishonestly inducing delivery of property: -- Whoever cheats and thereby dishonestly induces the person deceives to deliver any property to any person or to make, alter or destroy the whole or any past of a valuable security, or anything which is signed or sealed, and which is capable of being converted into a valuable security, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine." 7. From the bare perusal of this section it is manifest that for constituting an offence under this section, the following ingredients must be satisfied:(i) there should be fraudulent or dishonest inducement of a person by deceiving him; (ii) (a) the person so deceived should be induced to deliver any property to any person or to consent that any person shall retain any property or;(b) the person so deceived should be intentionally induced to do or omit to do anything which he should do or omit if he were not so deceived (iii), in eases covered by (ii) (b) the act of omission should be one which causes or is likely to cause damage or harm to the person induced in body, mind, reputation or property. To hold a person guilty of cheating it is necessary to show that he had fraudulent or dishonest intention at the time of making the promise. From his mere failure to keep up promise subsequently such a culpable intention right at the beginning that is when he made the promise cannot be presumed. 8. In the present case there is nothing to show that at the time when the parties entered into higher purchase agreement, intention of the petitioners was dishonest or fraudulent. The dispute raised appears to be of a civil nature and it is more so when the complainant has already approached the Civil Court claiming the repayment of the loan on account of which the present complaint has been filed. Therefore, it cannot be said that offence under section 420 RPC has been prima facie constituted against the accused. The complaint and the order of cognizance of the learned Judicial Magistrate, City Munsiff, Srinagar merits to be quashed. Accordingly proceedings and the order of Judicial Magistrate, City Munsiff, Srinagar dated 6.4.2002 is hereby quashed.