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2004 DIGILAW 1431 (AP)

N. Vasanthatal Chunilal Shah v. State Of A. P.

2004-11-26

K.C.BHANU

body2004
K. C. BHANU, J. ( 1 ) THIS Criminal Petition is filed under section 482 of the Code of Criminal procedure, 1973 (for short cr. P. C ) by the accused Nos. 1 and 2, who are petitioners herein, to quash the proceedings in Crime no. 85 of 2000 of Madanapalle Taluk P. S. , registered for the offences punishable under sections 403, 406 and 409 of the Indian penal Code. ( 2 ) THE brief facts that are necessary for disposal of the present criminal petition may be stated as follows: the second respondent-company herein filed a private complaint under Sections 190 and 200 of Cr. P. C. against the petitioners herein for the offences punishable under sections 403,406 and 409 IPC alleging that it was registered under the provisions of the indian Companies Act, 1956 and is engaged in production of cotton yarn of various counts. The second respondent-company appointed the first accused firm represented by A-2 and a-3 as an agent to sell the yarn on behalf of the second respondent-company, which is the complainant, under an agreement dated 01-04-1978. At the time of entering into agreement A-2 and A-3 who are the petitioners herein had represented that they are the partners of the first accused firm and they have been carrying on the business dealing with the second respondent-company jointly and severally. It is the further case of the second respondent-company that it has been supplying yarn from Madanapalle to the accused to effect sales on behalf of the company and the accused were selling the yarn to various persons on behalf of the company as a depot agent of the company. The second respondent-company has been paying commission to the accused for the services rendered as depot agent, after the accounts for the relevant year are fully settled and after approval of the same in Annual general Body Meeting of every year. As per the practice and terms of the agreement entered into between the second respondent- company and the accused, it is the duty of the accused to collect the amounts from the yarn purchasers who have purchased yarn from the second respondent-company and deposit the same in the bank account of the second respondent-company in Mumbai payable at madanapalle immediately after collection, which practice was followed by the accused upto 31-03-1996. Thereafter, the accused discontinued the above practice and started dishonestly adjusting the amounts of the compiainant after collection from the buyers towards the alleged commission due and thereby committed misappropriation of funds and breach of trust. It is further alleged that accused unilaterally adjusted the collected amount towards alleged commission showing the balance of Rs. 4,46,522/- to the credit of the complainant-company. Accordingly, as on 31-05-1997, the accused have misappropriated an amount of 28,49,306/ -. Hence, the complaint. ( 3 ) THE said complaint was forwarded, but the learned Magistrate directed the complainant to approach the S. H. O. , Taluk police Station. Accordingly, the second respondent herein filed a complaint, which is registered as Crime No. 85 of 2000 for the offences punishable under Sections 403,406 and 409 IPC on 25-05-2000. Thereafter, the police did not file charge-sheet and therefore, the learned Magistrate closed the First information Report and consigned the same to the record room in pursuance of the Circular issued by the High Court in Roc. No. 274/so/ 80, dated 09-0/-1980. ( 4 ) ON 10-03-2003, the Assistant Sub-Inspector of Police made a request to the court to reopen the Fl R so as to proceed with the further investigation. Basing on the request made by the Police, the learned magistrate made an endorsement on the first Information Report on 11-03-2003 stating that the FIR is reopened as per the orders, dated 11-03-2003, on the requisition filed by the police officials. The present petition is filed to quash the proceedings. ( 5 ) SRI V. Pattabhi, the learned counsel appearing for the petitioners, argued at considerable length of time stating that the allegations in the complaint do not make out a prima facie case of the offence alleged against the accused that the accused retained the amount, which is legally due to them by the complainant, and that does not amount to misappropriation. He further contended that on the facts of the case, it is basically at best based on the accounts, and therefore, there was no misappropriation or criminal breach of trust and that in respect of the same incident a civil suit is also filed to recover the alleged misappropriated amount and in order to harass the accused, the present complaint is filed by using criminal prosecution and that the entire allegations persedo not make out any prima facie case under Sections 403, 406 and 409 I PC. His further contention is that as per the Circular instructions of the high Court, the First Information Report was closed and therefore, the learned Magistrate has no power to review or recall the order of closing the First Information Report as it amounts a judicial order. He further contended, at best that it is a case of breach of promise, which gives rise to a civil cause of action but not criminal prosecution, and therefore, prays to quash the proceedings ( 6 ) ON the other hand, the learned Public prosecutorappearing for the first respondent contended that it is the statutory duty of the police to conduct the investigation. Till police files the charge sheet or final report as contemplated under Section 173 Cr. P . C. , the FIR remains in force and the instructions given by this Court are only administrative instructions and the order passed by the learned Magistrate does not fall within the category of judicial order and the allegations if taken together, made out a prima facie case and therefore, there are no grounds to quash the proceedings. ( 7 ) THE learned counsel appearing for the second respondent company Sri T. Bali reddy contended that once the FIR is registered, it cannot be cancelled or closed because the Criminal Procedure Code does not contemplate cancellation or closure of fir and that the Circular instructions would only be administrative instructions to save the time consumption in keeping the FIRs, wasting the energy of the Presiding Officer. Further, it is only consigning the FIRs to the record room of the concerned Court and thereafter whenever a need or occasion arises, the FIR will be called back to the Court from the record room so as to take further steps and, therefore, it is not a judicial order and it is purely an administrative order passed by the learned Magistrate. Therefore, recalling of FIR from the record room does not affect the rights of the parties. He furthercontended that the accused are not supposed to keep the commission or any amount and their duty is to collect the amount from the yarn purchasers and deposit the same into the bank and after that as per the agreement, the accounts of the relevant year will be settled and the commission will be paid after approval of the same in the Annual General Body meeting every year. But, this practice was given up by the accused, and therefore, they have misappropriated the amounts received from the yarn purchasers. Hence, there are no grounds to quash the proceedings. ( 8 ) THE learned counsel for the petitioners placed reliance on the decision reported in alpic Finance Ltd. v. P. Sadasivan, wherein it is held that:"when somebody suffers injury to his person, property or reputation, he may have remedies both under civil and criminal law. The injury alleged may form the basis of civil claim and may also constitute the ingredients of some crime punishable under criminal law. When there is dispute between the parties arising out of a transaction involving passing of valuable properties between them, the aggrieved person may have a right to sue for damages or compensation and at the same time, law permits the victim to proceed against the wrongdoer for having committed an offence of criminal breach of trust or cheating. "basing on the above judgment, it is contended by the learned counsel for the petitioners that the allegations in the complaint at best amounts to a breach of trust for which the second respondent-company has already filed a civil suit for recovery of the same. The learned counsel for the petitioners also relies on a decision of the Supreme court in Madhavarao J. Scindia v. Sambhajirao C. Angre, wherein it is held that:"the legal position is well settled that when a prosecution at the initial stage is asked to be quashed, the test to be applied by the Court is as to whether the uncontroverted allegations as made prima facie establish the offence. It is also for the Court to take into consideration any special features which appear in a particular case to consider whether it is expedient and in the interest of justice to permit a prosecution to continue. It is also for the Court to take into consideration any special features which appear in a particular case to consider whether it is expedient and in the interest of justice to permit a prosecution to continue. This is so on the basis that the court cannot be utilized for any oblique purpose and where in the opinion of the court chances of an ultimate conviction is bleak and, therefore, no useful purpose is likely to be served by allowing a criminal prosecution to continue, the court may while taking into consideration the special facts of a case also quash the proceeding even though it may be at a preliminary stage. "he also relied upon a decision reported in state of Haryana v. Bhajan Lal, Wherein the apex Court held that:"in the backdrop of the interpretation of the various relevant provisions of the code under Chapter XIV and of the principles of lawenunciated by this Court in a series of decisions relating to the exercise of the extraordinary power under Article 226 or the inherent powers under Section 482 of the code which we have extracted and reproduced above, we give the following categories of cases by way of illustration wherein such power could be exercised either to prevent abuse of the process of any Court or otherwise to secure the ends of justice, though it may not be possible to lay down any precise, clearly defined and sufficiently channelised and inflexible guidelines or rigid formulae and to give an exhaustive list of myriad kinds of cases wherein such power should be exercised. (1) Where the allegations made in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused. (2) Where the allegations in the first information report and other materials, if any, accompanying the fir do not disclose a cognizable offence, justifying an investigation by police officers under Sec. 156 (1) of the Code except under an order of a Magistrate within the purview of section 155 (2) of the Code. (3) Where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused. (3) Where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused. (4) Where, the allegations in the FIR do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated under section 155 (2) of the Code. (5) Where the allegations made in the fir or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceedings against the accused. (6) Where there is an express legal bar engrafted in any of the provisions of the Code orthe concerned Act (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/ or where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party. (7) Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge. "he further relied upon a decision reported in s. W. Palanitkar v. State of Bihar, wherein it is held that:"no doubt, exercise of inherent power under Section 482 Cr. P. C. by the High court should be limited to very extreme exceptions but in a case where ingredients of alleged offences are not satisfied, even prima facie, it cannot be said that power under Section 482 cr. P. C. should not be exercised to quash the process issued by a Magistrate. " ( 9 ) IN the decision reported in Union of india v. Prakash P. Hinduja, on which the learned counsel for the second respondent- company placed reliance, it is held that:"section 482, Cr. P. C. saves inherent powers of the High Court and such a power can be exercised to prevent abuse of the process of any Court or otherwise to secure the ends of justice. The power can therefore be exercised to quash the criminal proceedings. P. C. saves inherent powers of the High Court and such a power can be exercised to prevent abuse of the process of any Court or otherwise to secure the ends of justice. The power can therefore be exercised to quash the criminal proceedings. The grounds on which the prosecution initiated against an accused can be quashed by me High Court in exercise of power conferred by Section 482, cr. P. C. has been settled by a catena of decisions of this Court rendered in r. P. Kapoor v. State of Punjab, AIR 1960 SC 866 ; Madhu Limaye v. State, air 1978 SC 47 ; Delhi Municipality v. Ram Kishan, AIR 1983 SC 67 ; Raj kapoorv. State, AIR 1980 SC 258 . The matter was examined in considerable detail in State of Haryana v. Bhajan Lal, air 1992 SC 604 and after review of practically all the earlier decisions, the court in para 108 of the Reports laid down the grounds on which power under section 482, Cr. P. C. can be exercised to quash the criminal proceedings. "so, from the reading of the above decisions, it is clear that when the allegations in the complaint do not make out a prima facie case or to prevent an abuse of process of the Court or otherwise to procure the ends of justice, this Court can exercise inherent powers under Section 482 Cr. P. C. Bearing the above principle in mind, it is to be seen whetherthe allegations in the complaint made out a prima facie case or not. The allegations in the complaint would clearly indicate that contrary to the agreement, the accused withheld an amount of Rs. 28,49,306/- and converted the same into their own use without depositing the said amount into the bank of the complainant at Mumbai. Therefore, this court is of the opinion that the allegations in the complaint made out a prima facie case against the accused. ( 10 ) THE case was registered against the petitioners herein under Sections 403, 406 and 409 IPC. Under Section 403 IPC, whoever dishonestly misappropriates or converts to his own use any movable property, shall be punished with. To constitute an offence under this Section, there must be misappropriation of movable property and the misappropriation must be dishonest. ( 10 ) THE case was registered against the petitioners herein under Sections 403, 406 and 409 IPC. Under Section 403 IPC, whoever dishonestly misappropriates or converts to his own use any movable property, shall be punished with. To constitute an offence under this Section, there must be misappropriation of movable property and the misappropriation must be dishonest. In order to be dishonest, the property must be misappropriated or converted with the intention of causing wrongful gain to one person or wrongful loss to another that is with the intention of causing gain by unlawful means of property to which the person gaining does not legally entitled to or the loss by unlawful means of property to which the person loosing it legally entitled to. ( 11 ) FOR the offence under Section 406 ipc, whoever committed the criminal breach of trust, he shall be punished with imprisonment. What is criminal breach of trust is defined under Section 405 IPC. Section 409 IPC deals with criminal breach of trust by Public servant, or banker or merchant or agent. In order to bring the application of the said provision, entrustment has to be proved. In order to sustain conviction, two ingredients are required to be proved or established for the charge under section 409 IPC. They are: (1) the accused, a public servant, or a banker or agent was entrusted with property of which he is duty-bound to account for; and (2) the accused has committed criminal breach of trust. The ingredients of the offence of criminal breach of trust as provided under Sec. 405 ipc are (1) Entrusting any person with property, or with any dominion over property. (2) The person entrusted (a) dishonestly misappropriating or converting to his own use that property; or (b) dishonestly using or disposing of that property or will fully suffering any other person so as to do in violation (i) Ofanydirectionoflawprescribing the mode in which such trust is to be discharged; or (ii) Of any legal contract made touching the discharge of trust. Therefore, the ingredients of the offence of criminal breach of trust are; the accused must have been entrusted with the property or dominion over it and the accused must have misappropriated the property or disposed of that property in violation of such trust. Therefore, the ingredients of the offence of criminal breach of trust are; the accused must have been entrusted with the property or dominion over it and the accused must have misappropriated the property or disposed of that property in violation of such trust. Bearing the above principles in mind, it is to be seen whether it is a case of exercising inherent powers under Section 482 Cr. P. C to quash the proceedings. ( 12 ) AS seen from the allegations in the complaint, it is clear that the petitioners accused have to collect the amounts from the yarn purchasers as agents of the complainant in pursuance of the agreement dated 01-04-1978 and deposit the collected amount into the bank of the second respondent-company at Mumbai payable at madanapalle. It is also further clear from the complaint that the accused are entitled for the commission for their services rendered as depot agents and the same shall be settled after the approval of the Annual General body Meeting every year. Therefore, the accused as agents were entrusted with the property, of which they are duty bound to account for it and as per the agreement they are not entitled for the commission or they cannot retain the amounts towards their commission though they are legally entitled to the commission, if any, which can only be decided and settled after the approval of the annual General Body Meeting of the second respondent-company. As per the agreement, the accused are bound to deposit the amount to the credit of the bank at Mumbai to be payable at Madanapalle. Instead of doing so, they converteditto theirown use, detrimental to the interest of the second respondent. According to the allegations in the complaint, it is also clear that the accused misappropriated an amount of rs. 28,49,306/- as on 31-05-1997. It is for the second respondent-company to settle the accounts for the relevant year and after the approval in the Annual General Body Meeting, the commission, if any, the accused are entitled shall be paid to them. Before that, if the accused retained the property, it amounts to a prima facie breach of trust. 28,49,306/- as on 31-05-1997. It is for the second respondent-company to settle the accounts for the relevant year and after the approval in the Annual General Body Meeting, the commission, if any, the accused are entitled shall be paid to them. Before that, if the accused retained the property, it amounts to a prima facie breach of trust. ( 13 ) THE second contention raised by the learned counsel for the petitioners is that recalling of the order passed by the learned magistrate is a judicial order for which he has no authority to reopen the FIR as per the administrative instructions of the High Court except after filing of the charge sheet. The high Court on administrative side issued instructions vide Roc. No. 274/so/80, dated 09-0/-1980, which reads as follows:"sub: COURTS - Criminal - FIRs filed by the Police and Excise Department - certain Instructions Issued. Read: High Court s Circular p. Dis. No. l78/76-E6, dated 20-12-1976. It is seen from the Inspection Notes of the Judicial Second Class Magistrates courts and First Class magistrate courts submitted by the District and sessions Judges that a number of Flrs. , are kept pending in their Courts for want of charge sheets or final reports to be filed either by the police or by the Excise department and that reminders are being issued to them from time to time indefinitely. The High Court after careful consideration is of the opinion that such a procedure of keeping the FIRs pending and issuance of reminders to the police officers from time to time will consume a lot of time and waste of energy to the presiding officers of Criminal Courts. Under the circumstances and in modification of the high Court s Circular read above, the High Court hereby directs that all the Judicial Magistrates in the State shall close the FIRs registered in their Courts and consign them to the record room if no charge sheets or final reports under section 173 of the Code of Criminal procedure are filed within one year in respect of the said FIRs. The High Court further directs that during this one year period, the Judicial magistrates shall not only issue reminders to the concerned Police stations but also send a list of such cases after every three months to the respective Sessions Judges who in turn send the same to the concerned superintendents of police enabling them to take necessary action so that the firs, are notunnecessarily kept pending on the file of the Courts as and when the charge-sheets are filed in respect of the closed FIRs. , the judicial magistrates can call for the concerned FIRs. , from the record room for further action. "a perusal of the above Circular shows that keeping the FIRs pending and issuance of reminders to the police will not only consume lot of time but also it is waste of energy of the presiding officers and therefore, directed all the Magistrates to close the Flrs. and consign them to the record room if no charge sheets or final reports are filed under Section 173 cr. P. C. within one year from the date of offence. The Circular also made it clear that as and when the charge sheets are filed in respect of the closed FIRs. , the Magistrate can call the concerned FIR from the record room for further action. ( 14 ) CHAPTER 12 of Cr. PC. deals with information to the police and their powers to investigation. The criminal law will be set into motion by registering the case under section 154 Cr. P. C. Once the F. I. R is registered, neither the police nor the Courts have power to cancel or close it, in any manner whatsoever. Of course, this Court can quash the same by exercising the inherent powers under Section 482 of Cr. P. C. basing on the settled legal position as enumerated in the preceding paragraphs. Therefore, the provisions of Chapter 12 of Cr. P. C. show the manner of taking investigation, recording an offence and the manner and method of conducting investigation by the police. There is no time limit prescribed after registration of the case forfiling charge sheet under Cr. P. C. But, sub-section (1) of Section 173 of Cr. P. C says that every investigation under chapter 12 of Cr. P. C. shall be completed without unnecessary delay. There is no time limit prescribed after registration of the case forfiling charge sheet under Cr. P. C. But, sub-section (1) of Section 173 of Cr. P. C says that every investigation under chapter 12 of Cr. P. C. shall be completed without unnecessary delay. Sub-section (2) shows that as soon as the investigation is completed, the officer in charge of the Police station shall forward to a Magistrate empowered to take cognizance of the offence on a police report, a report in the form prescribed by the State Government. In the absence of any specific provision, the FIR cannot be cancelled or closed by the subordinate Courts. In pursuance of the directions issued by the High Court on administrative side, the Flrs will be consigned to the record room. The word closed used in this Circular does not mean to cancel or closure forever. In order to avoid certain exigency, the FIRs. are required to be consigned to the record room which does not mean the police have no powerto investigate into the case. Once the FIR is consigned to the record room, conducting of investigation is left entirely to the officer in charge of the police station. Till the charge-sheet is filed, the FIR remains alive and it is deemed to be pending. Therefore, recalling the F. I. R from the record room, in my considered opinion, does not amount to a judicial order. It is purely an administrative order based upon administrative instructions of High Court. A power is given to a Magistrate by superior court to close the FIRs and consign them to record room in view of the fact that issuance of the reminders to the concerned police would consume a lot of time and waste of energy to the Presiding Officers. Therefore, in the circumstances, the Magistrates are directed to consign the F. I. R. to the record room. The power to recall is an incidental one, to the substantive power which is given by the High Court to the Magistrates to consign the FIRs to the record rooms. Therefore, under no stretch of imagination, it can be said that the order of the learned Magistrate dated 11 -03-2003, which reads as "fir is reopened as per the orders dated 11 -03-2003, on the requisition filed by the police officials" is a judicial order. Therefore, under no stretch of imagination, it can be said that the order of the learned Magistrate dated 11 -03-2003, which reads as "fir is reopened as per the orders dated 11 -03-2003, on the requisition filed by the police officials" is a judicial order. ( 15 ) THE learned counsel relied upon a decision reported in Shankarlal Aggarwal v. Shankarlal Poddar, wherein it is held that:"it is perhaps not possible to formulate a definition which would satisfactorily distinguish, in this context, between an administrative and a judicial order. That the power is entrusted to or wielded by a person who functions as a Court is not decisive of the question whetherthe Act or decision is administrative or judicial. But we conceive that an administrative order would be one which is directed to the regulation or supervision of matters as distinguished from an order which decides the rights of parties or confers or refuses to confer rights to property which are the subject of adjudication before the court, one of the tests would be whether a matter which involves the exercise of discretion is left for the decision of the authority, particularly if that authority were a court, and if the discretion has to be exercised on objective, as distinguished from a purely subjective, consideration, it would be a judicial decision. It has sometimes been said that the essence of a judicial proceeding or of a judicial order is that there should be two parties and a Us between them which is the subject of adjudication, as a result of that order or a decision on an issue between a proposal and an opposition. No doubt, it would not be possible to describe an order passed deciding a Us before the authority, that it is not a judicial order but it does not follow that the absence of a snecessarily negatives the orderbeing judicial. Even viewed from this narrow standpoint it is possible to hold that there was a lis before the Company judge which he decided by passing the order. On the one hand were the claims of the highest bidder who put forward the contention that he had satisfied the requirements laid down for the acceptance of his bid and was consequently entitled to have the sale in his favour confirmed, particularly so as he was supported in this behalf by the official liquidators. On the one hand were the claims of the highest bidder who put forward the contention that he had satisfied the requirements laid down for the acceptance of his bid and was consequently entitled to have the sale in his favour confirmed, particularly so as he was supported in this behalf by the official liquidators. On the other hand there was the 1 st respondent and not to speak of him, the large body of unsecured creditors whose interests, even if they were not represented by the 1 st respondent, the court was bound to protect. If the sale of which confirmation was sought was characterized by any deviation from the conditions subject to which the sale was directed to be held or even otherwise was for a gross undervalue in the sense that very much more could reasonably be expected to be obtained if the sale were properly held, in view of the figure of rs. 3,37,000/- which had been bid by nandlal Agarwalla, it would be the duty of the court to refuse the confirmation in the interests of the general body of creditors and this was the submission made by the 1st respondent. There were thus two points of view presented to the court by two contending parties or interests and the court was called upon to decide between them. And the decision vitally affected the rights of the parties to property. In this view were clearly of the opinion that the order of the court was, in the circumstances, a judicial order and not an administrative one and was therefore not inherently incapable of being brought up in appeal. "even applying the ratio laid down in the above decision, the order passed by the learned Magistrate closing and consigning the FIR to the record room is for the purpose of regulation of court affairs in pursuance of the directions given by the High Court on administration side. The order of recalling flr from the record room does not decide the rights of the parties or adjudicate the lis of the parties. For the purpose of convenience, the fir was sent to the record room and when need arises, the learned Magistrate is entitled to call back the FIR. Merely because the FIR was closed and consigned to the record room that does not mean that it was closed forever. For the purpose of convenience, the fir was sent to the record room and when need arises, the learned Magistrate is entitled to call back the FIR. Merely because the FIR was closed and consigned to the record room that does not mean that it was closed forever. The FIR, whether in the office of the learned Magistrate or in the record room, remains to be alive and pending till the police files charge sheet under Section 173 Cr. P. C. Thereafter, to what extent it can be used in the trial is regulated by the provisions of the indian Evidence Act. Forthe reasons herein above mentioned, this court is of the opinion that recalling the first Information Report from the record room is not a judicial order. ( 16 ) WITH regard to the pendency of civil suit for recovery of certain amount, law is also well settled that filing of the civil suit by itself is not a ground not to prosecute the accused under the provisions of the Indian penal Code. An act may give rise to both civil and criminal consequences. Forthe purpose of criminal prosecution, there must be a dishonest intention so as to misappropriate the entrusted amount contrary to the discharge of trust. ( 17 ) VIEWED from any angle, it is not a fit case to quash the proceedings. The contentions raised by the learned counsel for the petitioners are wholly devoid of merits and untenable. Even if there is some delay on the part of the investigating agency in not conducting any investigation that does not give rise to a right in any manner to quash the proceedings. ( 18 ) FORTHE aforesaid reasons, the Criminal petition deserves to be dismissed and accordingly it is dismissed.