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2008 DIGILAW 1027 (CAL)

Asish Pandey v. Syntech Informatics Pvt. Ltd.

2008-11-26

ARUNABHA BASU

body2008
JUDGMENT Arunabha Basu, J. Both the revisional application filed under section 482 of the Code of Criminal Procedure (hereinafter called the Code) is directed to quash the proceeding in connection with the B.G.R. Case No. 2063 of 2004 now pending before the Court of learned Additional Chief Judicial Magistrate, Alipore. 2. The petitioners herein are arrayed as accused in connection with the above-noted criminal case which was instituted by the O.P. against the petitioner by filing a petition of complaint to the learned Chief Judicial Magistrate, Alipore. The learned Chief Judicial Magistrate directed registration of the case and initiation of investigation in terms of provisions under section 156(3) of the Code. 3. The allegation against the petitioner that the company of the petitioner namely, M/s. Calvin Basil Info Solution Pvt. Ltd. being represented by other accused persons entered into an agreement with the complainant company whereby it was agreed between the parties that accused company will generate business for the complainant company to the extent of Rs. 6 croes in the financial year 2003-04. It was further agreed that in case the accused company fails to generate the business as per agreement the accused company shall return 75% amount of the fees out of total fees received by it. Consequent to the said agreement the complainant company on 8th July, 2003 paid a sum of Rs. 60 lacs to the accused company in anticipation that they will receive order of 6000 pieces of computers from the Government of Chattisgarh and also from other Government of the country. The aggregate value of such business will be around Rs. 6 crores. The accused persons could not procure any contract in favour of the complainant company. Subsequently, the complainant company sent a letter to accused company but the same was returned with the postal endorsement "refused". Over this occurrence the above-noted criminal case was instituted. 4. In the revisional application the main contention of the petitioners is that the allegations in the petition of complaint, even if taken in its entirety do not disclose commission of any offence by the petitioners. There is no allegation that since the inception of the transaction the accused persons had no intention to honour the same. 4. In the revisional application the main contention of the petitioners is that the allegations in the petition of complaint, even if taken in its entirety do not disclose commission of any offence by the petitioners. There is no allegation that since the inception of the transaction the accused persons had no intention to honour the same. There is also no recital in the petition of complaint that the accused persons knowingly and intentionally gave false promise and the complainant company was induced or deceived by the accused company to part with the money. It is further submitted that mere breach of contract does not attract criminal prosecution and remedy of the complainant, if any, lies initiation of the civil proceeding. It is further stated that there was subsequent agreement executed on 29th November, 2006 between the Managing Director of the complainant company and the Managing Director of the accused company whereby it was agreed that the amount shall be paid by the accused company by depositing 3.15 lacs within December, 2006 and the remaining amount shall be paid in equal instalment of Rs. 50,000/- per month for the first six months and the rest amount by equal instalment of Rs. 1.4 lacs for the next 30 months. It was further agreed between the parties that the criminal case instituted by the complainant company against the accused company shall be withdrawn. The petitioners on these grounds moved this Court for quashing the aforesaid criminal proceeding. 5. The learned Advocate for the petitioner during the course of his submission pointed out that the recital in the petition of complaint which was lodged before the learned Chief Judicial Magistrate does not disclose that there was any intention on the part of the petitioners since inception of the transaction between the parties that the petitioners induced the complainant company to enter into the contract and the complainant company being deceived by such inducement paid a sum of Rs. 60 lacs to the accused company. 6. In support of his contention the learned Advocate for the petitioners has referred to the following decisions : 1. Anil Mahajan vs. Bhor Industries Ltd. & Anr., reported in 2006(1) SCC (Cri) 746; 2. Murari Lal Gupta vs. Gopi Singh, reported in 2006(2) SCC (Cri) 430; 3. Vijaya Rao vs. State of Rajasthan & Anr., reported in 2005(7) SCC 69 ; 4. Anil Mahajan vs. Bhor Industries Ltd. & Anr., reported in 2006(1) SCC (Cri) 746; 2. Murari Lal Gupta vs. Gopi Singh, reported in 2006(2) SCC (Cri) 430; 3. Vijaya Rao vs. State of Rajasthan & Anr., reported in 2005(7) SCC 69 ; 4. Alpic Finance Ltd. vs. P. Sadasivan & Anr., reported in JT 2001(2) SC 588; 5. Thelapalli Raghavaiah vs. Station House Officer & Ors., reported in JT 2007(4) SC 493; and 6. State of Kerala vs. A. Pareed Pillai & Anr., reported in AIR 1973 SC 326 . 7. In Anil Mahajan's case (supra), three-Judge Bench of Hon'ble Supreme Court considered a case under section 415/418/420 of IPC and held that : "From mere failure of a person to keep up promise subsequently, a culpable intention right at the beginning, that is, when he made the promises cannot be presumed. A distinction has to be kept in mind between mere breach of contract and the offence of cheating. It depends upon the intention of the accused at the time of inducement. The subsequent conduct is not the sole test. Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent, dishonest intention is shown at the beginning of the transaction. The substance of the complaint is to be seen. Mere use of the expression 'cheating' in the complaint is of no consequence." The Supreme Court further held that : ‘In the present case except for mention of the words "deceive" and "cheat" in the complaint filed before the Magistrate and "cheating" in the complaint filed before the police, there is no averment about the deceit, cheating or fraudulent intention of the accused at the time of entering into MOU wherefrom it can be inferred that the accused had the intention to deceive the complainant to pay. It is clear from the substance of the complaint that present is a simple case of civil disputes between the parties. Requisite averments so as to make out a case of cheating are absolutely absent. The Sessions Court had rightly set aside the order of the Magistrate issuing process to the appellant.’ 8. It is clear from the substance of the complaint that present is a simple case of civil disputes between the parties. Requisite averments so as to make out a case of cheating are absolutely absent. The Sessions Court had rightly set aside the order of the Magistrate issuing process to the appellant.’ 8. In Murari Lal Gupta's case (supra), the Supreme Court while allowing the application for quashing the case under section 420/406 of the IPC held that in the absence of any averment in the complaint so as to infer fraudulent or dishonest inducement having been made by the petitioner and pursuant to which respondent parted with the money it cannot be said that the petitioner had cheated the respondent. No case for prosecution under sections 420 or 406 is made out. 9. In Vijaya Rao's case (supra) the Supreme Court quashed the proceeding after considering the fact situation of that case that there is no ingredient to constitute the offence of cheating disclosed in the petition of complaint. 10. In Alpic Finance Ltd. 's case (supra) the Supreme Court considered a case under section 420/406/423 read with section 120B IPC and held which is set out below : "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 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 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. Here the main offence alleged by the appellant is that the respondents committed the offence under section 420 IPC and the case of the appellant is that the respondents have cheated him and thereby dishonestly induced him to deliver property. To deceive is to induce a man to believe that a thing is true which is false and which the person practising the deceit knows or believes to be false. It must also be shown that there existed a fraudulent and dishonest intention at the time of commission of the offence. To deceive is to induce a man to believe that a thing is true which is false and which the person practising the deceit knows or believes to be false. It must also be shown that there existed a fraudulent and dishonest intention at the time of commission of the offence. There is no allegation that the respondents made any wilful misrepresentation. Even according to the appellant, parties entered into a valid lease agreement and the grievance of the appellant is that the respondents failed to discharge their contractual obligations. In the complaint, there is no allegation that there was fraud or dishonest inducement on the part of the respondents and thereby the respondents parted with the property. It is trite law and common sense that an honest man entering into a contract is deemed to represent that he has the present intention of carrying it out but if, having accepted the pecuniary advantage involved in the transaction, he fails to pay his debt, he does not necessarily evade the debt by deception. Having regard to the fact" 8.nd circumstances, it is difficult to discern an element of deception whole transaction, whereas it is palpably evident that the app' an oblique motive of causing harassment to the respondents b, 1e entire articles through magisterial proceedings. We ar, " that the learned Judge was perfectly justified in quashin i.ings and we are disinclined to interfere in such matters." 11. In Thelapalli Rc. ~ase (supra) the Hon'ble Supreme Court considered the case unci , 120B/196/199/403/406 and 418 IPC has held that in case of const! _ontract between the parties the dispute as made out in the petition of cUlllplaint makes out a civil dispute relating to measurement and only a criminal flavour is given to institute the criminal case. The Hon'ble Supreme Court affirmed the order of the Hon'ble High Court and dismissed the special leave petition. . 12. In State of Kerala (supra) the Supreme Court held while considering the scope of an offence under section 420 IPC in the manner as stated below : "To hold a person guilty of the offence of cheating, it has to be shown that his intention was dishonest at the time of making the promise. Such a dishonest intention cannot be inferred from the mere fact that he could not subsequently fulfil the promise." 13. Such a dishonest intention cannot be inferred from the mere fact that he could not subsequently fulfil the promise." 13. So far as the present case is concerned the petition of complaint only discloses that in course of commercial transaction between the parties a regular agreement was entered into between the parties after negotiations between them. It appears under the term of the said agreement the complainant company paid in advance a sum of Rs. 60 lacs in anticipation that the said company will receive business amounting to Rs. 6 crores from different Governments. The advance amount was paid in terms of the said agreement reached between the parties, however, the accused company in spite of receiving the money could not generate any business to the complainant company. A careful perusal of the recital in the petition of complaint does not show that the complainant company was deceived by any representation of the accused company or by the petitioners. Mere failure or breach to fulfil the condition of the contract may lead to civil liability. This fact can further be gathered from the agreement which was subsequently entered between the parties on 29.11.2006 i.e., after registration of the criminal case on 27.5.2004. In terms of the said agreement both the parties accepted that the accused company shall repay the money in the manner as disclosed in the said agreement. 14. Learned Advocate for the O.P. however drew attention of this Court to the recital in the application filed by the O.P. herein praying for vacating the interim order passed by this Court and submitted that so far as the present case is concerned, it cannot be stated that the petition of complaint instituted before the learned Chief Judicial Magistrate, Alipore does not disclose commission of cognizable offence. It is the contention by the learned Advocate for the O.P. that a fact may lead to initiation of civil case as well as criminal case. Merely because the amount is recoverable by institution of civil case the same by itself does not take out the case from the criminal liability, as because the ingredient of the offence to attract section 420 as well as section 406 IPC is very much present. Merely because the amount is recoverable by institution of civil case the same by itself does not take out the case from the criminal liability, as because the ingredient of the offence to attract section 420 as well as section 406 IPC is very much present. It is the contention of the learned Advocate for the O.P. that at this stage when the investigation is pending then it will be premature on the part of this Court to interfere with the investigation to quash the proceeding. 15. After hearing the submissions by learned Advocate appearing for the respective parties and after going through the recital in the petition of complaint it appears to me that there is no recital with supporting fact that the complainant company was induced and deceived within the meaning of section 415 IPC and as a consequence of such inducement or deceit entered into the contract with the accused company. In the decision by Supreme Court as referred to above, the Supreme Court on repeated occasions held that mere breach of contract by itself cannot attract criminal offence. In order to constitute criminal offence the ingredient of the offence must be present and disclosed in the petition of complaint. Mere use of words, "fraudulently", "dishonestly", "inducement", or such other word in the petition of complaint will not be sufficient to initiate a criminal prosecution against another person. The petition of complaint must disclose specifically highlighting fact to constitute the criminal offence and the Court shall examine whether the recital in the petition of complaint discloses commission of offence. So far as, the present case is concerned, I am of the view that the parties entered into a regular agreement after negotiation and at the time of entering into the agreement there is nothing to show that the petitioners or the accused company induced the complainant company to enter into such agreement. The amount of Rs. 60 lacs was paid to accused company in terms of the agreement reached between the parties and such payment cannot be said to be on the basis of any inducement or deceit committed by the accused company or the petitioners herein. Subsequent breach of the agreement arises out of the fact that the accused company in spite of receiving the money failed to generate the business to the expectation of the complainant company. Subsequent breach of the agreement arises out of the fact that the accused company in spite of receiving the money failed to generate the business to the expectation of the complainant company. Such failure on the part of the accused company or the petitioners herein do not constitute the offence either under section 420 or under section 406 IPC. The subsequent agreement reached between the parties whereby it was agreed that the amount which was received by the accused company will be repaid to the complainant company in the manner as agreed between the parties gives an indication about the civil nature of transaction. 16. Under these circumstances, I am of the view that no offence within the meaning of sections 420 or 406 of IPC can be said to have been committed either by the accused company or by the petitioners herein and as such further continuation of the criminal case would be an abuse of the process of Court. In view of my above findings, I am of the view that it is a fit case to invoke the inherent power of this Court under section 482 of the Code and the proceeding in connection with B.G.R Case No. 2063 of 2004 so far as the petitioners are concerned is liable to be quashed and the same is hereby quashed. The revisional applications are disposed of accordingly. 17. In view of disposal of the revisional applications being CRR No. 1335 of 2007 and CRR No. 4287 of 2006, no separate order is required to be passed in connection with application being C.R.A.N. No. 1037/2008, C.R.A.N. No. 969/2007, CRAN No. 1040 of 2008 and CRAN No. 720 of 2007 and the same stand disposed of along with the aforesaid revisional applications. 18. There shall be no order, as to costs. 19. Criminal Section is directed to forward a copy of this order to the learned Court below. 20. Criminal Section is further directed to supply urgent photostat copy of the order to the parties as and when applied for. 21. Case diary be returned. Appeals disposed of.