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Madhya Pradesh High Court · body

2008 DIGILAW 1022 (MP)

Makson Food (Private) Ltd. v. Sterling Agro Industries Ltd. , Gwalior

2008-08-13

S.S.DWIVEDI

body2008
ORDER 1. The present applicant has filed this petition under section 482, Criminal Procedure Code for quashment of the order dated 27.2.2008 passed by Chief Judicial Magistrate, Gwalior in Criminal Case No. 2101/ 2008, whereby taken the cognizance against the applicant for the offence punishable under section 138 of the Negotiable Instruments Act (hereinafter referred to as the 'N.I. Act' for brevity) and also under section 420 of Indian Penal Code. 2. Brief facts of the case are that respondent No.1 had supplied certain milk powder to respondent No.2 - M/s Gelus Food Pvt. Ltd. on his order and this had been supplied as per the direction of the respondent No.2 to the factory of the present applicant - M/s Makson Food Private Limited, Rajkot, for which necessary invoice had also been issued and for the payment of the aforesaid article it is alleged that the respondent No.2 had issued a cheque to the respondent No.1 complainant. When the complainant produced this cheque to the bank, the same had been bounced, after that the complainant had issued a legal notice to the respondent No.2 and the present applicant as per the provisions of N.I. Act and after statutory period of notice, the complainant had filed a private complaint under section 138 of the N.I. Act and also under section 420 of Indian Penal Code before the Chief Judicial Magistrate at Gwalior. The learned trial Court after taking the primary evidence under section 420 of Indian Penal Code and section 138 and 141 of the N.I. Act and directed for issuance of the bailable warrant for the presence of the applicant also. Feeling aggrieved by the aforesaid order of taking cognizance against the applicant, the applicant came up before this Court by this petition under section 482, Criminal Procedure Code for quashment of the proceedings. 3. Having heard the learned counsel for the applicant as well as the counsel appearing on behalf of respondent No.1 complainant and perused the impugned order and other relevant documents. 4. It is submitted by the learned counsel for the applicant that neither the applicant has contacted to the complainant for any supply of the milk powder nor he had issued any cheque for the payment of the due amount to the complainant. 4. It is submitted by the learned counsel for the applicant that neither the applicant has contacted to the complainant for any supply of the milk powder nor he had issued any cheque for the payment of the due amount to the complainant. The concerning cheque had been issued by respondent No.2 - M/s Gelus Food Pvt. Ltd. and on his instructions complainant had supplied the milk powder to the applicant for preparation of the article concerned and for its supply to the respondent No.2/the main accused, who had issued concerning cheque for the payment of the amount. In such circumstances if the applicant is not having any contract for the payment or supply of the concerning article with the complainant then no grounds are available for taking cognizance against the applicant for the offence under section 420, Indian Penal Code or under section 138 of N.I. Act and the learned trial Court without application of mind mechanically ordered for taking of the cognizance against the applicant also. Therefore, prayed for quashment of the proceedings registered against the applicant. 5. Learned counsel for the complainant-respondent No.1 supported the impugned order and submits that at the instructions of respondent No.2 the complainant had supplied the concerning milk powder to the' present applicant and thus privity of contract is apparent and the liability for the payment of the concerning article is against both the parties concerned and if the payment has not been made then certainly the offence of cheating is clearly made out against both the accused persons and thus the trial Court has rightly taken the cognizance against the applicant also and, therefore, no grounds are available for quashment of the proceedings concerned and prayed for dismissal of the petition. 6. Considering the rival contentions made by both the counsel and on perusal of the statement of the complainant recorded under section 200, Criminal Procedure Code by the trial Court it is apparent that the privity of contract for supply of the milk powder is with the respondent No.2 and on the instructions of respondent No.2 the complainant had supplied the milk powder to the applicant-company. There is no liability of the applicant-concern for the payment of the concerning article, which had been supplied by the complainant. There is no liability of the applicant-concern for the payment of the concerning article, which had been supplied by the complainant. The main liability of payment is of respondent No.2 - M/s Gelus Food Pvt. Ltd. and on this liability the respondent No. 2 had issued the concerning cheque in favour of the complainant for Rs 1,45,7501-- and if that cheque duly signed by the respondent No.2 had been bounced then certainly the cause of action for launching of prosecution under the provisions of section 138 of N.1. Act arises only against the signatory of the concerning cheque. 7. Similarly it is also apparent that when there is a transaction of supply of goods and when the payment has not been made by the concerning party then certainly the offence of cheating cannot be made out. The case is covered under only breach of contract, which comes in the civil liability as held by the Hon'ble apex Court. Also in Veer Prakash Sharma v. Anil Kumar Agarwal and another, reported in 2007 (3) Crimes 314 (SC), wherein the Hon'ble apex Court held here as under: "9. We are, therefore, left only with the question as to whether in a situation of this nature any offence of cheating can be said to have been made out. Section 415 of the Indian Penal Code defines cheating to mean: "Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to "cheat". In Hridaya Ranjan Prasad Verman and others v. State of Bihar and another [ (2000) 4 SCC 168 ], this Court held: "14. On a reading of the section it is manifest that in the definition there are set forth two separate classes of acts which the person deceived may be induced to do. In the first place he may be induced fraudulently or dishonestly to deliver any property to any person. On a reading of the section it is manifest that in the definition there are set forth two separate classes of acts which the person deceived may be induced to do. In the first place he may be induced fraudulently or dishonestly to deliver any property to any person. The second class of acts set forth in the section is the doing or omitting to do anything which the person deceived would not do or omit to do if he were not so deceived. In the first class of cases the inducing must be fraudulent or dishonest. In the second class of acts, the inducing must be intentional but not fraudulent or dishonest. 15. In determining the question it has to be kept in mind that the distinction between mere breach of contract and the offence of cheating is a fine one. It depends upon the intention of the accused at the time to inducement which may be judged by his subsequent conduct but for this subsequent conduct is not the sole test. Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction, that is the time when the offence is said to have been committed. Therefore it is the intention which is the gist of the offence. 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. On the basis of the aforesaid law laid down by the Hon 'ble apex Court it is apparent that prima facie there is no privity of the contract in between the applicant and complainant. The applicant had also not issued any cheque by his signature for the payment of any amount to the complainant. In such circumstances the applicant cannot be held prima-facie liable for the prosecution under section 420, Indian Penal Code or under section 138 of the N.I. Act. Under such circumstances the order passed by the trial Court for taking cognizance against the applicant for the offence under section 138 of N.I. Act and section 420 of Indian Penal Code is erroneous and liable to be quashed. 9. Under such circumstances the order passed by the trial Court for taking cognizance against the applicant for the offence under section 138 of N.I. Act and section 420 of Indian Penal Code is erroneous and liable to be quashed. 9. Resultantly, this petition filed by the applicant is allowed; the impugned order passed by the trial Court for taking cognizance against the applicant for the offence under section 420, Indian Penal Code and section 138 of N.!. Act is hereby quashed. 10. Petition is disposed of finally. 11. A copy of this order be sent to the trial Court. Certified copy as per rules.