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2004 DIGILAW 467 (PAT)

Raghunath Prasad Srivastava v. State of Bihar

2004-04-23

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JUDGMENT Navin Sinha, J 1. This application under Section 482 of the Code of Criminal Procedure has been filed for quashing the order dated 30.5.2003 passed by the Judicial Magistrate, Motihari in Enquiry Case no. 218/2002, arising out of Complaint Case no. 1670(C)/ 2002 filed by the opposite party no. 2 herein. By the said order processes has been issued against the petitioners and another accused Panna Lal Gupta to face prosecution under Section 471 and 418 of the Indian Penal Code in the complaint case, as aforesaid, filed by the opposite party no. 2. 2. The contention of the learned Counsel for the petitioners is that the present prosecution is an abuse of the process of law. The complaint does not disclose any offence under Sections 471 and 418 of the Penal Code against the petitioner herein. Lastly the present prosecution has been filed, in the facts of the case, with the design to preempt the filing of prosecution against the opposite party no. 2 under Sections 420, 406, 120B of the Indian Penal Code read with Section 138 of the Negotiable Instrument Act. 3. The matter was heard on 29.3.2004 when during course of hearing learned Counsel for the opposite party no. 2 sought time to file a counter affidavit, more particularly with regard to Annexues 11, 12 and 13. No counter affidavit was filed. When the matter was taken up on 16.4.2004, as recorded in the order of the said date, learned counsel for the opposite party no. 2 stated that he would not be desirous of filing a counter affidavit and that the matter be heard on the basis of the record before this Court as it is. 4. The facts giving rise to the present prosecution as culled out from the complaint cases filed by the opposite party no. 2 and the Bihar Co-operative Sugar Factories Federation Ltd. need to be stated for better appreciation. The petitioners are officers and employee of the Bihar Cooperative Sugar Factories Federation Limited, hereinafter referred to as 'the Federation' for brevity. The aim and object of the Federation is to carryon business of sugar Mill, purchase, manufacture, produce, refine, promote import-export, sell and generally to deal in sugar etc. The Federation is a registered body under the Bihar and Orissa Cooperative Societies Act. The aim and object of the Federation is to carryon business of sugar Mill, purchase, manufacture, produce, refine, promote import-export, sell and generally to deal in sugar etc. The Federation is a registered body under the Bihar and Orissa Cooperative Societies Act. The Federation in course of business enters into agreement with the interested parties who hold whole-sale licence for trading of free sale Sugar. Under the agreement the Federation gives bank drafts/cheques of the required amount to the concerned party for lifting of Sugar from the nominated Factories. The contractual agency lifts the Sugar from the concerned Factory and the money so paid to it by the Federation earlier for such lifting is then required to be refunded by the contractual agency to the Federation along with the amount of profit thereon after deduction of the commission agreed to be payable to the contracting agency under the agreement. The principal amount with profit was thus required to be returned by the contracting agency to the Federation within 28 days of the supply of such drafts/cheques by Federation to the contracting agency. In case of delay the contracting agency was required to pay penalty to the Federation. 5. One Panna Lal Gupta (also impleaded as accused no. 4 in the Complaint Case no. 1670(C)/2002) approached the Federation for entering into such agreement for sale and purchase of free sale sugar in the trade name of M/s Panna Lal Prasad Gupta, a proprietorship firm. The Opposite party no. 2 herein also offered to act as a guarantor and take necessary steps under an agreement executed on 11.9.2001 between the Federation and the said Panna Lal Gupta. Panna Lal Gupta gave certain postdated cheques as security for due performance of the contract. It would be relevant to mention at this stage that the opposite party no. 2 signed this agreement as a witness. For better fulfilment of this agreement dated 11.9.2001 said Panna Lal Gupta executed a power of Attorney in favour of Opposite party no. 2 Ajay Kumar Gupta to act on his behalf under the aforesaid agreement. By virtue of the agreement dated 11.9.2001 and the Power of Attorney dated 12.9.2001 the Federation gave various drafts and cheques (the specific details of which need not be mentioned hers) over a period from 22.4.2002 to 2.5.2002 for a total value of Rs. 2 Ajay Kumar Gupta to act on his behalf under the aforesaid agreement. By virtue of the agreement dated 11.9.2001 and the Power of Attorney dated 12.9.2001 the Federation gave various drafts and cheques (the specific details of which need not be mentioned hers) over a period from 22.4.2002 to 2.5.2002 for a total value of Rs. 39,88,125/- all drawn on State Bank of India, Kurji Branch, Patna. This amount was to be used for purchase of free sale sugar and was to be returned with profit, sans the commission amount as provided for in the agreement dated 11.9.2001, within a period of 28 days. For due performance of the agreement Panna Lal Gupta gave several cheques for a total value of Rs. 40,80,085/- to the Federation over a period from 15.5.2002 to 5.6.2002. The Opposite party no. 2 herein Ajay Kumar Gupta, the power of Attorney holder from Panna Lal Gupta also gave two cheques as security to the Federation. Under the agreement these cheques as also those given by Panna Lal Gupta were to be encashed and utilised by the Federation in the event of failure of the contracting agency to act in accordance with the contractual agreement. The details of the two cheques so given by the said Ajay Kumar Gupta are required to be mentioned below for proper appreciation : Cheque No. Date Bank Amount 878491 17.7.2002 SBI Kasaria Rs. 20,00,000/- 878492 17.7.2002 SBI Kesaria Rs. 20.60,085/- Rs. 40,60,085/- These cheques were given in the pen of Ajay Kumar Gupta by his letter dated 26.2.2002 as contained in Annexure 10 to the present application. 6. The contracting agency acted through Opposite party no. 2 Ajay Kumar Gupta, in pursuance of the drafts/cheques given by the Federation between the period 22.4.2002 to 2.5.2002 for a total value of Rs. 39,86,125/- as mentioned hereinabove, lifted Sugar from the concerned factories but failed to deposit the principal amount along with the profit with the Federation within the time stipulated of 28 days. 7. It is note worthy that on 26.4.2002, 6.5.2002 and lastly on 6.5.2002 as contained in Annexures 11, 12 and 13 to the present application, Opposite party no. 2 Ajay Kumar Gupta kept asking the Federation for release of further funds for lifting of Sugar as the Power of Attorney holder of the proprietorship firm Panna Lal Gupta under the Power of Attorney dated 12.9.2001. 2 Ajay Kumar Gupta kept asking the Federation for release of further funds for lifting of Sugar as the Power of Attorney holder of the proprietorship firm Panna Lal Gupta under the Power of Attorney dated 12.9.2001. Consequent to the failure of the said Panna Lal Gupta or his Power of Attorney holder Ajay Kumar Gupta to deposit the principal amount with interest as aforesaid, the Federation on 3.6.2002, 25.6.2002 and 2.7.2002 wrote to Panna Lal Gupta for payments required to be made under the agreement and that the same was still awaited. Copies of those letters were duly marked to Opposite Party no. 2 Ajay Kumar Gupta, the Power of Attorney holder of said Panna Lal Gupta and in pursuance of which Opposite Party no. 2 was dealing with the Federation. At this stage upon failure of the contracting agency to pay, the Federation initially presented the cheques given as security by Panna Lal Gupta between 21.5.2002 to 6.6.2002 in the concerned Bank. All the cheques were dishonored for insufficient fund. The Federation accordingly gave registered notice to the said Panna Lal Gupta on 3.6.2002 and 25.6.2002 with copies marked to opposite party no. 2 Ajay Kumar Gupta demanding payment within 15 days from the receipt of notice. Despite such notice when payment was still not forthcoming the Federation wrote to the Opposite party no. 2 Ajay Kumar Gupta by letter dated 1.7.2002 that the specified two cheques mentioned above given by this letter dated 28.2.2002 would not be presented for encashment to the Bank if the moneys were not forthcoming to the Federation under the agreement dated 11.9.2001. 8. Opposite party no. 2 Ajay Kumar Gupta by his letter dated 30.7.2002 and 1.8.2002, upon receipt of aforesaid letter of the Federation denied having given any postdated cheques to the Federation and alleged that the said cheques, if there, were obviously forged. Nonetheless the cheques were presented by the Federation to the Bank. The cheques were returned on 27.7.2002 and 5.8.2002 with the endorsement of the Bank 'signature differed' and that there were instruction to 'stop payment'. This led to two notices under the Negotiable Instrument Act to the opposite party no. 2 from the Federation, dated 4.8.2002 and 8.8.2002. These notices were received by the Opposite party no. 2 on 19.8.2002 but payment of the aforesaid two bounced cheques was not forthcoming from the opposite party no. 2. This led to two notices under the Negotiable Instrument Act to the opposite party no. 2 from the Federation, dated 4.8.2002 and 8.8.2002. These notices were received by the Opposite party no. 2 on 19.8.2002 but payment of the aforesaid two bounced cheques was not forthcoming from the opposite party no. 2. In the meantime the said proprietor Panna Lal Gupta on 14.8.2002 and 16.8.2002 gave two fresh cheques to the Federation and requested that no legal action be taken. Once again these two cheques were returned by the Bank for reason of 'insufficient fund'. The Federation then served a notice on 31.8.2002 under the N.I. Act but payment was still not forthcoming. 9. In the aforesaid facts and circumstances it is manifest that the Opposite party no. 2 was conscious and aware of the coming litigation and its difficulties against him by reason of bouncing of the two cheques which were issued by him as security and the failure by him to deposit the principal money with profit under the agreement as also the liability of Panna Lal Gupta and his as the Power of Attorney holder. In such situation, the Opposite party no. 2 in a preemptive move proceeded to file Complaint Case no. 1670(c)/ 2002 before the Chief Judicial Magistrate, East Champaran, against the three officials of the Federation who are the petitioners, herein along with the said Panna Lal Gupta as accused. This complaint was filed on 7.9.2002. The complaint case on the face of it reflects a preemptive move to thwart possible litigation against himself. The facts noticed hereinabove with regard to the contractual relationship between the parties including the responsibility to pay interest @ 18% are not in dispute. Surprisingly opposite party no. 2 in the complaint case took the stand that the Power of Attorney executed in his favour by Panna Lal Gupta on 12.9.2001 was revoked on 18.4.2002 and thus there was no occasion for him to give any postdated cheques on 17.7.2002 to the Federation. This was in support of his plea in his letter that the cheques were obviously forged. When the matter was being heard on 29.3.2004 learned counsel for the petitioners very emphatically relied upon Annexures 11, 12 and 13 which are dated 26.4.2002, 6.5.2002 and 8.5.2002 to contend that if the Power of Attorney in favour of opposite party no. This was in support of his plea in his letter that the cheques were obviously forged. When the matter was being heard on 29.3.2004 learned counsel for the petitioners very emphatically relied upon Annexures 11, 12 and 13 which are dated 26.4.2002, 6.5.2002 and 8.5.2002 to contend that if the Power of Attorney in favour of opposite party no. 2 stood revoked on 18.4.2002 where was the occasion for opposite party no. 2 to deal with the Federation and demand further payments for lifting Sugar. It was thus contended that entire complaint case was based on fraud. It was under these circumstances that the Counsel for the Opposite party no. 2 during course of hearing prayed for time to file a counter affidavit to deal with Annexure 11, 12 and 13. Surprisingly when the matter was taken up on 16.4.2002 Counsel for the opposite party no. 2 stated that he did not wish to file a counter affidavit. Under these circumstances this Court is free to draw its inferences. Opposite party no. 2 further stated in the said complaint case that he had on 23.5.2002 lost his bag containing cheque book etc. for which a Station Diary Entry no. 586 was made on 23.5.2002. Surprisingly no FIR was lodged. It was perhaps more than a co incidence that these cheques supposed to have been lost included the cheque said to have been issued as security by him. Opposite party no. 2 further contended that after he received the notice under the N.I. Act from the Federation dated 4.8.2002 and 8.8.2002 with regard to non-encashment of the two cheques as mentioned hereinabove he realised that his lost cheques had been fraudulently used for their own use by the Federation with intention of wrongful gain. Opposite party no. 2 on these allegations then proceeded to file the present complaint on 7.9.2002. The impugned order of process came to be issued thereupon on 30.5.2003. 10. In course of all these transactions when both the proprietor Panna Lal Gupta and the Power of Attorney holder Ajay Kumar Gupta, Opposite party no. 2 herein, failed to pay money of the Federation under the agreement and the cheques issued by them were dishonoured, the Federation then filed Complaint Case no. 1959(c)/2002 against Panna Lal Gupta and Ajay Kumar Gupta on 17.9.2002 alleging cheating, breach of trust, conspiracy and violation of Section 138 N.I. Act. 2 herein, failed to pay money of the Federation under the agreement and the cheques issued by them were dishonoured, the Federation then filed Complaint Case no. 1959(c)/2002 against Panna Lal Gupta and Ajay Kumar Gupta on 17.9.2002 alleging cheating, breach of trust, conspiracy and violation of Section 138 N.I. Act. This complaint petition is appended as Annexure 7 to the present application. The court below took cognizance of the said complaint under Sections 420, 406 and 120B IPC along with Section 138 of the N.I. Act against Panna Lal Gupta and Ajay Kumar Gupta, the opposite party no. 2 herein. 11. Three aforesaid narration of facts, by the Court, in the present order, is culled out from the two complaint cases filed by the opposite party no. 2 and the Federation against each other. This Court is conscious of the limitation of entering into the assessment of evidence etc. of the two sides in proceeding under Section 482. This court therefore proceeds upon materials as available on record in the two complaint cases. This Court also records the adverse inference which it draws against the Opposite party no. 2 for the present purpose consequent to his having first sought time to file a counter affidavit and then having taken the stand that he does not wish to file a counter affidavit. 12. The facts of the case, though lengthy, were required to be stated for appreciation of the contentions of the Counsel for the petitioners as stated in Para 2 of this order hereinabove. A bare perusal of the facts and contentions hereinabove would reveal that the opposite party no. 2 had given certain cheques as security. These cheques were presented for encashment and were dishonoured. Due notice under Section 138 of the N.I Act was given to opposite party no. 2. Faced with imminent prosecution Opposite party no. 2 first denied having issued the cheques and then in a preemptive move proceeded to file the present complaint case as a measure of defence. The contractual relationship between the parties was not denied by the Opposite party no. 2 himself. 2. Faced with imminent prosecution Opposite party no. 2 first denied having issued the cheques and then in a preemptive move proceeded to file the present complaint case as a measure of defence. The contractual relationship between the parties was not denied by the Opposite party no. 2 himself. The fact of his having sought funds repeatedly even after the alleged termination of his Power of Attorney on comparative assessment of dates as mentioned hereinabove coupled with his initial seeking time to file a counter affidavit and then refusing to do so, compels this Court to reach the conclusion that the Complaint Case no. 1670(C)/2002 was filed by him purely to overcome the possible prosecution which he well knew was coming for the two bounced cheques given as Security by him. 13. Learned counsel for the Opposite party no. 2 placed reliance on a decision reported in 2004(1) PLJR 167 (SC), to submit that Annexures 11, 12 and 13 of the present application were not part of the record and therefore could not be seen in the present proceeding under Section 482. Learned counsel may have been right if the facts as culled out from the two complaint cases were not so candid and compelling coupled with the conduct of Opposite party no. 2 in first offering to explain the documents and then completely backing out from the same. This court would be falling in proper exercise of its power under Section 482 if the same were to be accepted. 14. Learned counsel for the petitioners, Shri Akhileshwar Prasad Singh, thus contended that the present prosecution of the petitioners in Complaint Case no. 1670(C)/2002 was malicious and was thus fit to be quashed. He contended that the complaint did not disclose any offence under Section 471 and 418. A bare perusal of the complaint would reveal that Section 418 IPC would have no application in the facts of the case, it cannot be said that the Federation cheated the complainant in any manner or that it acted contrary to its dues under a legal contract where it was required to protect the interest of opposite party 2. The basic allegation and ingredients required for the same are completely missing in the complaint. The basic allegation and ingredients required for the same are completely missing in the complaint. Likewise Section 471 IPC which deals with usages of a forged document also is not applicable in the facts of the case as culled out from the two complaint cases only. 15. The proposition of the learned Counsel for the petitioners that the present complaint case by the opposite party no. 2 was basically to prevent and thwart the complaint proposed to be filed by the Federation and which actually came to be filed on 17.9.2002 finds support as a ground for exercise of powers under Section 482 from a judgment of the Apex Court reported in AIR 2000 SC 27 . In the said case a similar situation arose where it was contended that to permit such prosecution to continue would amount to putting an instrument in the interest of the private complainant as vendetta to harass a person. The necessary ingredients under Section 471 and 418 being missing and the facts of notice under 138 of the N.I. Act having been given to Opposite party no. 2 followed by filing of complaint case by him before the Federation could do so are facts which are telling. 16. In the aforesaid facts and circumstances, this Court on consideration of entire gamut of facts as available from the two complaint cases comes to the conclusion that the present prosecution of the petitioners has been initiated malafide in abuse of the process of law. The present prosecution was initiated by the Opposite party no. 2 to thwart the prosecution against himself. In the facts and circumstances of the case it would not be in the interest of, justice to permit the present prosecution to continue. The prosecution of the petitioners in Complaint Case no. 1670(C)/2002 and the order taking cognizance dated 30.5.2003 are therefore quashed. 17. The application is thus allowed.