Judgment : 1. Crl.O.P.No.7574 of 2005 is filed against C.C.No.6205 of 2004 pending on the file of the learned XI Metropolition Magistrate, Saidapet, Chennai. 2. Crl.O.P.No.24542 of 2005 is filed to set aside the order passed in Crl.M.P.No.3157 of 2004 dated 20.12.2004 in C.C.No.6205 of 2004 by the learned XI Metropolitan Magistrate, Saidapet, Chennai. 3. Crl.O.P.No.24543 of 2005 is filed to set aside the order passed in Crl.M.P.No.1245 of 2005 dated 7.4.2005 in C.C.No.6205 of 2004 by the learned XI Metropolitan Magistrate, Saidapet, Chennai. 4. Crl.O.P.No.7574 of 2005 is filed for quashing the criminal proceedings in C.C.No.6205 of 2004 pending on the file of the learned XI Metropolitan Magistrate, Saidapet, Chennai. 5. Crl.O.P.No.24542 of 2005 is filed by the 4th accused Mrs.Parvathi Madhava to set aside the order dated 20.12.2004 passed in Crl.M.P.No.3157 of 2004 in C.C.No.6205 of 2004 pending on the file of the learned XI Metropolitan Magistrate, Saidapet, Chennai. 6. Crl.O.P.No.24543 of 2005 is filed by the 2nd accused S.Madhava and 5th accused Mallikaarjunappa to set aside the order dated 7.4.2005 passed in Crl.M.P.No.1245 of 2005 in C.C.No.6205 of 2004 pending on the file of the learned XI Metropolitan Magistrate, Saidapet, Chennai. 7. The accused face a charge under Secs.406, 409 and 420, I.P.C. The complainant M/s.Man Takraf (India) Private Limited has alleged that it is carrying on the business of manufacturing, assembling of equipments and activities associated with engineering and consulting services. The 2nd, 3rd, 4th and 5th accused on behalf of the first accused, with clear dishonest intention of cheating and causing wrongful loss to the complainant, approached the complainant in the month of January 1998 to supply stacker including trailor, unloader, wheel-on-boom, reclaimer and transfer car. The first accused placed orders valued at Rs.8 crores with an intention of cheating and causing wrongful loss to the complainant. 8. It is further alleged in the complaint that based on the representations of accused 2 to 5, the complainant shipped around 36 consignments upto 7.10.1999. The accused on receipt of the supplied goods made meagre payments and thereafter purposefully neglected to make any farther payment. The accused failed to make payment as per the promises made by them. The accused had the intention to cheat and defraud the complainant right from the beginning. The proceeds received from various financial institutions were misappropriated by the accused for their personal unlawful enrichment. The accused failed to make payment as per the promises made by them. The accused had the intention to cheat and defraud the complainant right from the beginning. The proceeds received from various financial institutions were misappropriated by the accused for their personal unlawful enrichment. The accused falsely stated, by letter dated 27.3.2003, that M/s.Eastern Investments Limited has sanctioned USD 15 million in favour of the accused and it would be released within 30 to 60 days. The accused gained time and falsely represented that they would clear the dues at the earliest and that there was no such dealing with the bank. 9. It is further alleged in the complaint that the machinery supplied was a ‘State of the Art’ and as such the items manufactured are tailor-made for the accused and no other company can use it. The accused are now offering to give back the machinery which itself would show the intention of the accused to cheat and defraud the complainant. Thus the accused have committed offences under Secs.406, 409 and 420 of the I.P.C. 10. As against the order of directing the Regional Passport Authority, Bangalore to impound the passport issued in favour of the 3rd and 4th accused, the other two criminal original petitions viz., Crl.O.P.Nos.7574 and 24542 of 2005 have been preferred by them respectively. 11. Learned senior counsel appearing for the petitioners in Crl.O.P.No.7574 of 2005 would submit that unless there is a criminal intention at the very inception of the commercial transaction to dupe the respondent, the offence under Sec.420, I.P.C., is not attracted. He brings to the notice of the Court that out of the value of Rs.3.81 crores for the machineries supplied by the respondent to the petitioners, the petitioners have made payment of Rs.2.80 crores. Therefore, the respondent cannot validly contend that there was a fraudulent intention on the part of the petitioners to deceive the respondent at the very inception of the transaction. He would further contend that in the winding up proceedings initiated by the respondent against the petitioners before the High Court of Karnataka long prior to the origin of this complaint, the respondent has not spoken anything about the evil design of the petitioners herein as detailed in the present complaint. 12. He would further contend that in the winding up proceedings initiated by the respondent against the petitioners before the High Court of Karnataka long prior to the origin of this complaint, the respondent has not spoken anything about the evil design of the petitioners herein as detailed in the present complaint. 12. Per contra, learned senior counsel appearing for the respondent would submit that the machineries manufactured are tailor made for the accused and no other company can use it. The petitioners have caused huge loss to the respondent, for the machineries could not be supplied to the petitioners as the payment was not forthcoming. The subsequent conduct of the petitioners would disclose their fraudulent intention to deceive the respondent. The amounts mobilised by the petitioners by hypothecating the machineries supplied by the respondent were completely misappropriated without settling the amounts due to the respondent, it is submitted. False representations were made by the petitioners as though they had arranged for finance to settle the dues of the respondent just to delay the payment, it is contended. Finally, it is submitted that it is not an exclusively civil commercial transaction as there had been a fraudulent intention to deceive the respondent, and the petitioners will have to face the trial. 13. To constitute the offence of cheating there should have been a fraudulent or dishonest inducement. The mental element is a strong and integral part of the offence under Sec.420, I.P.C. In the complaint itself, the respondent has categorically admitted that some payments were made by the petitioners towards the goods supplied to them. In the Company Petition No.49 of 2001 filed by the respondent against the petitioners herein before the High Court of Karnataka at Bangalore, the respondent has categorically admitted a sum of Rs.2.80 crores was given credit to the accounts of the petitioners herein towards the supply of machineries out of the value of machineries to the tune of Rs.3.61 crores supplied by the respondent to the petitioners. If there was any fraudulent intention to deceive the respondent, the petitioners would not have made any payment towards the supply of machineries. 14. The petitioners have mobilised some finance by mortgaging the machineries to the financial institutions. If there was any fraudulent intention to deceive the respondent, the petitioners would not have made any payment towards the supply of machineries. 14. The petitioners have mobilised some finance by mortgaging the machineries to the financial institutions. When there is no agreement to settle the dues from out of such finance arranged by the petitioners, the non-payment of the dues from out of such finance arranged by the petitioners will not amount to misappropriation of the properties of the respondent. 15. There is an allegation that there was misrepresentation that M/s.Eastern Investments Limited coordinated on behalf of the petitioners with Barclays Bank, London which agreed to sanction USD 15 Million in favour of the accused. The efforts taken by he petitioners to mobilise the fund to settle the amounts and the exercise ended in futility will on no account amount to unlawful enrichment by gaining time. In fact, there is an averment in the complaint that the petitioners offered to give back the machinery. The petitioners have every right to hypothecate the machineries available in their premises for mobilising funds and the bank which extended the financial facility is entitled to sell those machineries to realise their dues. Such a contract between the petitioners and the financial institutions is quite legal and at any rate, it does not violate the terms and conditions of the contract between the petitioners and the respondent. 16. It is pertinent to refer to the winding up proceedings initiated by the respondent against the petitioners before the High Court of Karnataka initiated on 9.3.2001 long prior to the launching of prosecution against the petitioners on 13.9.2004. In the winding up proceedings under the Companies Act, 1956, the respondent has not whispered anything about fraudulent intention of the petitioners to cheat the respondent or the alleged misappropriation or any breach of trust. The civil commercial transaction between the petitioners and the respondent which culminated in the nonpayment of the dues have been categorically spoken to in the winding up proceedings by the respondent. 17. The Hon’ble Supreme Court has laid down in Hira Lal Hari Lal Bhagwati v. CBI, New Delhi (2003) 3 S.C.C.(Crl.) 1121, that an offence under Sec.420, I.P.C., will not be made out unless there is an existence of fraudulent or dishonest intention at the time of making promise or representation. 18. 17. The Hon’ble Supreme Court has laid down in Hira Lal Hari Lal Bhagwati v. CBI, New Delhi (2003) 3 S.C.C.(Crl.) 1121, that an offence under Sec.420, I.P.C., will not be made out unless there is an existence of fraudulent or dishonest intention at the time of making promise or representation. 18. Learned senior counsel appearing for the respondent submitted an authority in Lal Muni Devi v. State of Bihar (2001)2 S.C.C. 17 , wherein it has been held that the facts and circumstances of a case may give rise to a civil claim and the same may also amount to an offence. Quashing of criminal complaint merely because the complaint spelt out a civil wrong also is not at all justified if the alleged acts make out an offence. That was a case where the accused fraudulently induced the father of the complainant to execute a gift deed. Such an allegation has provided scope for civil as well as criminal action. But here in this case, business agreement was entered into between the petitioners and the respondent for the supply of the machineries and on supply of part of the machineries, some payment was made by the petitioners to the respondent and the respondent had not come out with such a lethal allegation against the petitioners at the first point of time when they had an opportunity to speak about the business transaction clinched by them in the winding up proceedings. 19. The Hon’ble Supreme Court in the authority in Rajesh Bajaj v. State, N.C.T. of Delhi 1999 S.C.C. (Crl.) 401, holds that many a cheating is committed in the course of commercial or money transaction and therefore quashing of complaint on the ground that the complaint discloses a commercial or money transaction is not justified. That was a case where the accused having received the goods sold them to others and still he did not pay the money to the complainant. Here in this case, the averment in the winding up proceedings initiated by the respondent against the petitioners discloses that the petitioners’ company is in a very bad shape and its financial health is found to be completely discouraging. This is not a case of receiving the supply of materials in bulk and selling the same to the third parties for profit and thereafter duping the supplier without making any payment. This is not a case of receiving the supply of materials in bulk and selling the same to the third parties for profit and thereafter duping the supplier without making any payment. The inability to make payment for the goods supplied under certain unavoidable circumstances will not at any rate amount to cheating. 20. As the element of fraudulent or dishonest intention is not found at the very inception of the commercial transaction and the remaining dues were not settled on account of the ill health of the company and that there was no breach of trust spoken to by the respondent, the Court finds that criminal prosecution has been launched against the petitioners in order to settle the dues on a faster phase. Such misuse of process of the Criminal Court cannot be permitted, as it will intimidate and harass the persons who are unable to honour the business commitment. Therefore, the criminal proceedings in C.C.No.6205 of 2004 pending on the file of the learned XI Metropolitan Magistrate, Saidapet, Chennai is liable to be quashed. As the criminal proceedings is quashed, the orders passed in Crl.M.P.No.3157 of 2004 dated 20.12.2004 in C.C.No.6205 of 2004 and Crl.M.P.No.1245 of 2005 dated 7.4.2005 in C.C.No.6205 of 2004 by the learned XI Metropolitan Magistrate, Saidapet, Chennai, to impound the passport stand consequently invalidated. 21. In the result, criminal proceedings in C.C.No.6205 of 2004 pending on the file of the learned XI Metropolitan Magistrate, Saidapet, Chennai is quashed and the orders passed in Crl.M.P.No.3157 of 2004 dated 20.12.2004 in C.C.No.6205 of 2004 and Crl.M.P.No.1245 of 2005 dated 7.4.2005 in C.C.No.6205 of 2004 by the learned XI Metropolitan Magistrate, Saidapet, Chennai, to impound the passport stand automatically invalidated. Accordingly Crl.O.P.Nos.7574, 24542 and 24543 of 2005 are allowed. Consequently, connected criminal miscellaneous petitions are closed.