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Madhya Pradesh High Court · body

2008 DIGILAW 529 (MP)

SURESH GOEL v. GRASIM INDUSTRIES LTD.

2008-04-03

S.C.VYAS

body2008
Judgment S.C.Vyas, J. ( 1. ) Invoking extraordinary inherent jurisdiction of this Court, this petition has been filed under Section 482 of Cr.P.C , seeking quashment of Complaint Case No. 4717/04 and the order of taking cognizance of the offences punishable under Section 420/34 and Section 120-B of IPC against the petitioners passed on 27.5.2004, on the ground that the dispute between the parties is purely of civil nature and necessary ingredients of the offences are missing. ( 2. ) Respondent No. 1 Grasim Industries Ltd., through its General Manager filed a complaint against the petitioners and four other persons with a prayer to take cognizance of the offences punishable under Sections 120-B, 420/34 and 409 of IPC. At initial stage the complaint was sent to police station Nagda under Section 156 (3) of Cr.P.C. for investigation, but police simply made an inquiry on the allegations and submitted a report that no cognizable offence is made out. Thereafter, again police was requested to file a final report after conducting investigation, but no such report was submitted, then complainant was. permitted to lead evidence under Sections 200 and 202 of Cr.RC. After recording such evidence, on 27.5.2004 cognizance against present petitioners as well as one more person Aditya Goel was taken for the offences punishable under Sections 420/34 and 120-B of IPC, holding that prima facie these offences are made out against these three accused persons and, therefore, order of issuance of process was passed. Then present petitioners appeared before trial Court and moved an application under Section 245 of Cr.P.C, claiming discharge. That application was decided by the trial Court vide order dated 11.4.2005 and the same was dismissed. Feeing aggrieved by that order present petition has been filed. ( 3. ) It has been averred in the complaint by the respondent/complainant that the respondent was having business dealings with the present petitioners for many years. Respondent having his manufacturing unit of Caustic Soda and other chemicals at Nagda, Ujjain. Caustic Soda Lai and Caustic Soda Flakes were being sold to the present petitioners for last so many years. ( 3. ) It has been averred in the complaint by the respondent/complainant that the respondent was having business dealings with the present petitioners for many years. Respondent having his manufacturing unit of Caustic Soda and other chemicals at Nagda, Ujjain. Caustic Soda Lai and Caustic Soda Flakes were being sold to the present petitioners for last so many years. Present petitioners were partners of a partnership firm along with Aditya Goel and doing business in the name of a company M/s Cosco Sales and Services Ltd. Huge amount of money was due against these petitioners and other accused persons on account of the business transactions, because the goods were taken by them on credit with the assurance that payment would be made very shortly after selling the same. When present petitioners and the third accused failed to make payment in due time, then business dealings were stopped by the respondent with them. Thereafter wife of the petitioner Suresh Goel came to Nagda along with petitioner Suresh Goel and assured that all the dues of the respondent would be paid after selling or mortgaging the property belonging to them. Meetings in this regard were held between the parties. It is alleged that petitioners then started a new concern in the name of M/s Consumer Services Corporation Ltd. and the property belonging to them were handed over to the new concern. It is also alleged that 40 cheques were given by the petitioners to clear the dues, but those cheques could not be enchashed by their bank and the respondent was to suffer a huge loss, then complaints under Section 138 of Negotiable Instrument Act were filed. When those complaints were pending, then some pressure tactics were adopted by the petitioners and respondent was forced to withdraw those complaints. The respondent was to receive "C" Forms worth Rs. 9.65 crores from the petitioners and it was made a condition precedent that first criminal complaints be withdrawn then only such Forms would be delivered to the complaint/respondent. In these circumstances those complaints were withdrawn and then only "C" Forms were issued by the petitioners to the respondent. On 1.6.1998 petitioner Suresh Goel again came to Nagda and assured that petitioners will very soon sale their immovable properties situated near Delhi Airport and will make payments of all arrears. In these circumstances those complaints were withdrawn and then only "C" Forms were issued by the petitioners to the respondent. On 1.6.1998 petitioner Suresh Goel again came to Nagda and assured that petitioners will very soon sale their immovable properties situated near Delhi Airport and will make payments of all arrears. Again petitioner Suresh Goel and his wife visited Nagda on 18.2.1999 and assured that the properties of Delhi which are in the name of their son Gautam Goel will be sold and payments would be made. Documents of the properties were also pledged with the complainant to assure the payment. It was also requested that business dealings be continued and goods be supplied to the petitioners and a promise was made that immediately after selling of those goods payments would be made. Believing these promises again goods were supplied by the complainant/respondent to the petitioners, which was sold by them in the market, but no money was paid. It was also found that the properties of which documents were given to the complainant were not in salable condition and those properties cannot be sold. It has been averred that the intention of present petitioners as well as third accused was criminal, when false promises were made and complainant was induced to supply goods on the false assurance that payment would be made soon after selling those goods and by selling the properties of the petitioners. Averting all these facts complaint was filed, which has been registered and summons have been issued. ( 4. ) The contention of learned counsel for the petitioner Shri Ashok Arora is that complainant as well as petitioners were having business dealings for years together and, therefore, simply because petitioners have failed to pay some outstanding dues, it cannot be said that they have cheated the complainant. It has also been contended that the dispute between the parties is purely of civil nature and the necessary ingredients of the offence punishable under Sections 420 and 120-B of IPC are totally missing. It has also been submitted that if the allegations made in the complaint are taken at their face value and accepted in their entirety, then also they do not prima facie constitute any offence or make out a case against the accused persons and, therefore, learned trial Magistrate was wrong in issuing process against the petitioners. It has also been submitted that if the allegations made in the complaint are taken at their face value and accepted in their entirety, then also they do not prima facie constitute any offence or make out a case against the accused persons and, therefore, learned trial Magistrate was wrong in issuing process against the petitioners. It has also been submitted that the matter was inquired into by the police and a report has been submitted to the effect that the dispute between the parties is purely of civil nature and no cognizable offence is made out against the petitioners. It has been submitted that as per the settled law in this regard laid down by the Honble Supreme Court in catena of decisions, when the dispute between the parties is purely of a civil nature and ingredients of the alleged offence are totally missing, then the prosecution is required to be quashed. ( 5. ) In this regard many judgments of the Supreme Court have been referred by the petitioners in their petition itself, but while arguing the matter special attention of this Court has been drawn towards the case of Vir Prakash Sharma Vs. Anil Kumar Agarwal and another [ (2007) 7 SCC 373 ], wherein it has been held that "non payment or under payment of price of goods by itself does not amount to commission of offence of cheating or criminal breach of trust and when the dispute between the parties is essentially a civil dispute no offence having regard to the definition of criminal breach of trust contained in Section 405 of the Penal Code can be said to have been made out." In the facts of that case parties entered into a contract of sale and purchase and welding rods and the appellant allegedly did not pay some amount due from him and he issued two cheques for the sum of Rs. 3559/- and Rs. 3776/- in the year 1983. The said cheques were dishonoured and on the basis of these facts complaint was filed for commission of the offence under Sections 406, 409, 420 and 417 of the IPC, then in the facts of that case it was held that the offence is not made out. 3559/- and Rs. 3776/- in the year 1983. The said cheques were dishonoured and on the basis of these facts complaint was filed for commission of the offence under Sections 406, 409, 420 and 417 of the IPC, then in the facts of that case it was held that the offence is not made out. It was also held that what has been alleged in the complaint petition as also the statement of the complainant and his witnesses relate to the subsequent conduct of the accused. When the cheques were not encashed and the accused was contacted by the complainant, then he told that he had issued fabricated cheques knowingly with an intention of cheat him and grab his money. He would not pay his money and he is free to take any action, whatever he likes. In this regard it was held that it is really absurd to opine that any such statement would be made by the appellant before all of them at the same time and that too in his own district and it was held unnatural. ( 6. ) The facts of the present case are quite different. In the present case in fact when as per the allegations cheques were not encashed then complainant was forced to take back the complainants filed under Section 138 of Negotiable Instrument Act, on the ground that otherwise "C" Forms of the value of Rs. 9 Crores and above will not be supplied to him and so business dealings were stopped by him and then again assurance was made to continue supply with a promise to make payment immediately after selling the goods and the property, which were ultimately found unsalable and no payment was made. ( 7. ) Learned counsel for the petitioners has also placed heavy reliance on the recent judgment of Supreme Court in the case of B. Suresh Yadav Vs. Shareefa Bee and another (2008 Cri.L.J. 431). In that case the allegation was mat of dishonest concealment of fact. It was found in that case that different stands were taken by the complainant in a civil suit as well as in the private complaint and the fact of demolition of construction was already in the knowledge of the complainant before execution of sale deed, so no offence of cheating was found made out. It was found in that case that different stands were taken by the complainant in a civil suit as well as in the private complaint and the fact of demolition of construction was already in the knowledge of the complainant before execution of sale deed, so no offence of cheating was found made out. Learned counsel on the basis of this citation submitted that the complainant herein has also filed a civil suit in the High Court of Delhi, wherein the cause of action has been shown under jurisdiction of Delhi High Court. It has been submitted that copy of that civil suit has been filed before trial Court along with application. Some other documents were also filed and it has been requested that those documents be also perused. ( 8. ) It is difficult to understand at this stage as to how the documents which are not part of the case of prosecution or not admitted documents or proved documents can be looked into for quashing the private complaint case. Even then a complainant may have both the remedies that of filing of civil suit as well as filing of a complaint case in suitable cases and simply because a civil suit has been filed at the place where the accused persons are residing it cannot be said that criminal Court cannot be approached by the same persons, when ingredients of the offence are available in the complaint. ( 9. ) In the facts of the present case there are allegations as to the act of inducement on the part of the petitioners and intention to cheat the complainant from the date when supply was stopped. Cheques were dishonoured, complaint was forced to take back 40 complaint cases filed under Section 138 of Cr.P.C. and then was promised for repayment, if the supply is continued. ( 10. ) For the purpose of establishing the offence of cheating the complainant is required to show that the accused had fraudulent or dishonest intention at the time of making promise or representation. Certain illustrations have also been given in Section 415 of IPC to demonstrate as to when the offence of cheating can be said to be made out. ) For the purpose of establishing the offence of cheating the complainant is required to show that the accused had fraudulent or dishonest intention at the time of making promise or representation. Certain illustrations have also been given in Section 415 of IPC to demonstrate as to when the offence of cheating can be said to be made out. In this regard illustration (f) of Section 415 of IPC is pertinent to mention, which is as under :- "Section 415 (f)- A intentionally deceives Z into a belief that A means to repay any money that Z may lend to him and thereby dishonestly induces Z to lend him money. A not intending to repay it. A cheats." ( 11. ) From this illustration it is clear that when the accused deceives the complainant into a belief that he means to repay any money that complainant may lend to him and thereby dishonestly induced complainant to lend him money having no intention to repay it, then he cheats the complainant. ( 12. ) Some other cases have also been cited by learned counsel for the petitioner, but they are also having different facts. In the case of Netai Dutta Vs. State of West Bengal ( AIR 2005 SC 1775 ), though offence punishable under Section 306 of IPC was alleged by the prosecution, but no material was found to substantiate this charge. In the case of MA. Pepsi Foods Ltd. and another Vs. Special Judicial Magistrate and others (1998 Cri. L.J. 1), a bottle of beverage under the brand of Lehar Pepsi Was sold and was found adulterated, but no material was found to show that the article was either manufactured by the petitioner of that case or he was holding license for manufacture of offending beverage, so the complaint was quashed. In the case of Anil Mahajan Vs. Bhor Industries Ltd. and another [ (2006) 1 SCC (Cri) 746], it was found that it was a case of some failure of promise subsequently, and there was no material to presume a culpable intention right at the beginning. That was merely a case of breach of contract. Out of the amount of Rs. 3,38,62,860/- (Rs. Three Crores Thirty Eight Lacs Sixty Two Thousand Eight Hundred Sixty) only balance of Rs. 33,23,774/- (Rs. That was merely a case of breach of contract. Out of the amount of Rs. 3,38,62,860/- (Rs. Three Crores Thirty Eight Lacs Sixty Two Thousand Eight Hundred Sixty) only balance of Rs. 33,23,774/- (Rs. Thirty Three Lacs Twenty Three Thousand Seven Hundred and Seventy Four) was remaining to be paid which was not paid, despite repeated demands. Such are not the facts of the present case. Another case which has been cited is Alpic Finance Ltd. Vs. P. Sadastvan and another (2001 Cri. L.J. 1246). In that case also the respondent made substantial payment as per the the Higher Purchase Agreement and no allegation of misappropriation or cheating was found. In the case of S. N. Palanitkar and others Vs. State of Bihar and another (2001 Cri.L.J. 4765). Intention to deceive at the time when inducement was made was not found in existence and mere failure to keep up promise subsequently was found, therefore, it was held that ingredients of the offence of cheating are missing. ( 13. ) In this regard learned counsel for the respondent Sr. Advocate Shri A. M. Mathur has drawn attention of this Court towards a recent pronouncement of the Supreme Court in the case of Central Bureau of Investigation V Shri Ravi Shankar Srivastava, IAS and another - (JT 2006 (7) SC 313), in which it has been held that though the power to quash the criminal proceedings is wide, the inherent power should not be exercised to stifle a legitimate prosecution and should refrain from giving a prima facie decision in a case where the entire facts are incomplete and hazy. In another case which has been cited by learned counsel for the respondent is Zandu Pharmaceuticals Works Ltd. and others Vs. Mohd. Sharaful Haque and others, [ (2005) 1 SCC 122 ]. Honble Supreme Court in Paragraph No. 8, 9 and 10 has held as under :- "Para 8 - Exercise of power under Section 482 of the Code in a case of this nature is the exception and not the rale. The section does not confer any new powers on the High Court. It only saves the inherent power which the Court possessed before the enactment of the Code. The section does not confer any new powers on the High Court. It only saves the inherent power which the Court possessed before the enactment of the Code. It envisages three circumstances under which the inherent jurisdiction may be exercised, namely, (i) to give effect to an order under the Code, (ii) to prevent abuse of the process of court, and (iii) to otherwise secure the ends of justice. It is neither possible nor desirable to lay down any inflexible rule which would govern the exercise of inherent jurisdiction. No legislative enactment dealing with procedure can provide for all cases that may possibly arise. Courts, therefore, have inherent powers apart from express provisions of laws which are necessary for proper discharge of functions and duties imposed upon them by law. That is the doctrine which finds expression in the section which merely recognises and preserves inherent powers of the High Courts. All courts, whether civil or criminal, possess, in the absence of any express provision, as inherent in their constitution, all such powers as are necessary to do the right and to undo a wrong in course of administration of justice on the principle "quando lex aliquid alicui concedit, concedere videtur et id sine quo res ipsae esse non potest" (when the law gives a person anything, it gives him that without which it cannot exist). While exercising powers under the section, the Court does not function as a court of appeal or revision. Inherent jurisdiction under the section though wide has to be exercised sparingly, carefully and with caution and only when such exercise is justified by the tests specifically laid down in the section itself. It is to be exercised ex debito justitiae to do real and substantial justice for the administration of which alone courts exist. Authority of the court exists for advancement of justice and if any attempt is made to abuse that authority so as to produce injustice, the courts has power to prevent abuse. It would be an abuse of process of the court to allow any action which would result in injustice and prevent promotion of justice. In exercise of the powers, court would be justified to quash any proceeding if it finds that initiation/continuance of it amounts to abuse of the process of court or quashing of these proceedings would otherwise serve the ends of justice. In exercise of the powers, court would be justified to quash any proceeding if it finds that initiation/continuance of it amounts to abuse of the process of court or quashing of these proceedings would otherwise serve the ends of justice. When no offence is disclosed by the complaint, the court may examine the question of fact. When a complaint is sought to be quashed, it is permissible to look into the materials to assess what the complainant has alleged and whether any offence is made out even if the allegations are accepted in toto." "Para 9- In R.P. Kapur V State of Punjab ( AIR 1960 SC 866 ) this Court summarised some categories of cases where inherent power can and should be exercised to quash the proceedings: (i) where it manifestly appears that there is a legal bar against the institution or continuance e.g. want of sanction; (ii) Where the allegations in the first information report or complaint taken at its face value and accepted in their entirety do not constitute the offence alleged; (iii) where the allegations constitute an offence, but there is no legal evidence adduced or the evidence adduced clearly or manifestly fails to prove the charge." "Para 10 - In dealing with the last case, it is important to bear in mind the distinction between a case where there is no legal evidence or where there is evidence which is clearly inconsistent with the accusations made, and a case where there is legal evidence which, on appreciation, may or may not support the accusations. When exercising jurisdiction under Section 482 of the Code, the High Court would not ordinarily embark upon an enquiry whether the evidence in question is reliable or not or whether on reasonable appreciation of it accusation would not be sustained. That is the function of the trial Judge. Judicial process should not be an instrument of oppression, or, needless harassment. Court should be circumspect and judicious in exercising discretion and should take all relevant facts and circumstances into consideration before issuing process, lest it would be an instrument in the hands of a private complainant to unleash vendetta to harass any person needlessly. At the same time the section is not an instrument handed over to an accused to short-circuit a prosecution and bring about its sudden death." ( 14. At the same time the section is not an instrument handed over to an accused to short-circuit a prosecution and bring about its sudden death." ( 14. ) It is clear that the scope of interference under Section 482 of Cr.P.C. very wide and the very plenitude of the power requires great caution in its exercise and, therefore, it is expected from this. Court to be careful to see that its decision in exercise of this power is based on sound principles. The inherent power should not be exercised to stifle a legitimate prosecution and this Court is expected normally to refrain from giving a prima facie decision in a case where the entire facts are incomplete and hazy, more so when the evidence has not been collected and produced before the court and the issues involved, whether factual or legal, are of magnitude and cannot be seen in their true perspective without sufficient material. ( 15. ) In the case of M. Krishnan Vs. Vijay Singh and another - ( AIR 2001 SC 3014 ) in paragraph No. 6 it has been held that "where factual foundation of the offence have been laid down in the complaint, the High Court should not hasten to quash criminal proceedings. Merely in the premise that one or two ingredients have not been stated with the details or that the facts narrated reveal the existence of commercial or money transaction between the parties"" In the case of MEDCHL Chemicals and Pharma (P) Ltd. Vs. Biological E. Ltd. and others - [ (2000) 3 SCC 269 ] it has been held that "to exercise powers under Section 482 of the Code, the complaint in its entirety will have to be examined on the basis of the allegation made in the complaint and the High Court at that stage has no authority or jurisdiction to go into the matter or examine its correctness. Whatever appears on the face of the complaint shall be taken into consideration without any critical examination of the same. But the offence ought to appear ex facie on the complaint. The truth or falsity of the allegations would not be gone into by the Court at this earliest stage. Whether or not the allegations in the complaint were true is to be decided on the basis of the evidence led at the trial. But the offence ought to appear ex facie on the complaint. The truth or falsity of the allegations would not be gone into by the Court at this earliest stage. Whether or not the allegations in the complaint were true is to be decided on the basis of the evidence led at the trial. So the question is: Can it be said that the allegations in the complaint do not make out any case against the accused nor do they disclose the ingredients of an offence alleged against the accused or the allegations are patently absurd and inherently improbable so that no prudent person can ever reach to such a conclusion that there is sufficient ground for proceeding against the accused ?" and ultimately it was held that considering the factual aspect of the matter, we unhesitatingly state, however, that the issue involved in the matter under consideration is not a case in which the criminal trial should have been short-circuited and with this remark the order of quashment passed by the High Court was set aside. The facts of that case were also that of some business transactions along with averments for causing wrongful loss and getting wrongful gains. ( 16. ) Thus, it is clear that if from the averments made in the complaint, necessary ingredients of the offence or at least substantial ingredients of the offence are made out, then merely on the basis of defense available to the accused, the legitimate prosecution cannot be terminated or cannot be quashed. All questions of magnitude are involved in this case and at present the facts are incomplete and hazy and evidence is yet to be recorded. The matter is pending in the trial Court for last four years. So considering the nature of the allegations, I do not find it a fit case in which jurisdiction available to this Court under Section 482 of Cr.P.C. can be exercised for quashing the prosecution. ( 17. ) Thus the petition has not force and is dismissed. Petition dismissed.