Research › Search › Judgment

Bombay High Court · body

2008 DIGILAW 546 (BOM)

M & B Footwear Pvt. Ltd. v. R. K. Sales

2008-04-11

S.R.DONGAONKAR

body2008
JUDGMENT Heard Shri A. M. Nabira, Advocate for the petitioners & Shri D.P. Lalwani, Advocate for the respondent. 2. This petition has been filed under article 227 of the Constitution of India read with section 482 of the Criminal Procedure Code seeking quashing of the order of issuance of process against the petitioners. It may be stated that the respondent has preferred a Criminal Complaint No.326/2005 in the court of J.M.F.C. Nagpur The complaint was for the offences punishable under section 406, 420, read with section 34 of I.P.C. It was alleged that the petitioners – accused have committed criminal breach of trust and caused financial losses to the respondent – complainant by not refunding security deposit amongst other allegations. The process was issued against the petitioners by the order dated 1.9.2007 passed by the learned J.M.F.C. Nagpur. Petitioners are challenging that order. Petitioners also seek quashing of the proceedings in Criminal Complaint Case No.326/2005. 3. Brief facts which need to be noted are that – the respondent – complainant and the petitioners are business firms. They entered into Distributorship Agreement on 31.12.2002 for distributing goods of the petitioner no.1 company in some parts of Maharashtra. Petitioner no.2 is the director of petitioner no. 1 which is a registered company. It is alleged that respondent approached with the proposal for carrying on the business of the distribution of the goods marketed by the petitioners. It is alleged that thereafter, there were some disputes between parties; so also exchange of notices and even civil suit was filed by the respondent – (complainant). Respondent – complainant also filed a criminal complaint as stated above for the aforesaid offences. When the said complaint was filed, the learned Magistrate initially called report under section 202 of Cr.P.C. After hearing the complainant, perusing his verification statement and report under section 202 of Cr.P.C., he issued process against the petitioners for the offences under section 406 and 420 of the I.P.C. This order dated 1.9.2007 is challenged in this petition. The quashing of the complaint case proceedings instituted by respondent – complainant is also sought. 4. Learned counsel for the petitioners – Shri Nabira submitted that there was an agreement of business between the parties. The bank guarantee was also to be furnished by the respondent. The agreement of business with all details was entered into between the parties on 31.12.2002. 4. Learned counsel for the petitioners – Shri Nabira submitted that there was an agreement of business between the parties. The bank guarantee was also to be furnished by the respondent. The agreement of business with all details was entered into between the parties on 31.12.2002. Thereafter, there was exchange of letters and notices between the parties. Respondent also filed Civil Suit for recovery of the due amount against the petitioners. The suit was for recovery of rupees nine lacs and odd bearing Civil Suit No.1032/2005. Almost simultaneously respondent – complainant filed the instant complaint against the petitioners for the aforesaid offences. It is further submitted that that the transaction between the complainant and the petitioners was of commercial & civil nature and therefore, there could not be any offence under section 420 or section 406 of the Indian Penal Code. According to him, as it was a matter of civil nature, criminal complaint would not lie. The same should not have been entertained by the learned Magistrate. According to him; the order of issuance of process was totally illegal. It causes prejudice and it is clearly abuse of process of law inasmuch as the matter between the parties is of civil nature and in fact civil suit was filed. Criminal complaint proceedings instituted against the present petitioners is one of the coercive method for getting success in the civil suit. It is also submitted by him that Director of the petitioner's company never signed any agreement and therefore, Director is not liable for any criminal offence. It is also his submission that during the exchange of correspondence and even notices there was no whisper of criminal intention attributed to the petitioners and therefore, there cannot be any criminal liability of the petitioners. He therefore, submitted that as the matter between the parties is of civil nature, it does not constitute any mens rea for invoking jurisdiction of the criminal courts for the offences under section 406 and 420 of the Indian Penal Code. Therefore, according to him, it is sheer abuse of process of law as such the proceedings against the petitioners need to be quashed so also the order of issue of process against them; under section 482 of Criminal Procedure Code. 5. Learned counsel has also relied on some authorities which needs brief reference: A. 1996(2)R.C.R. 791 – Pradip Kumar ..vs.. Therefore, according to him, it is sheer abuse of process of law as such the proceedings against the petitioners need to be quashed so also the order of issue of process against them; under section 482 of Criminal Procedure Code. 5. Learned counsel has also relied on some authorities which needs brief reference: A. 1996(2)R.C.R. 791 – Pradip Kumar ..vs.. State of Haryana, wherein it has been held that: “ The offence under section 406 is antithesis to an offence under section 420 IPC. Even otherwise, dishonest intention is an essential ingredient of both these offences. To constitute an offence under section 406 or section 420 I.P.C. it is for the prosecution to allege and prove that there was dishonest intention to do the particular act on the part of the accused person. B. AIR 1989 Bombay 108 Adol Vogel ..vs.. Jimmy D. Nanovutty, wherein it is held that - when the issues in civil suit and proceedings are same, and the complicated mixed questions of facts and law are involved and no element of criminality seen in complaint, the latter is liable to be quashed. C. AIR 2001 SUPREME COURT 2960 S.N.Palanitkar & others ..vs.. State of Bihar and another wherein it has been observed in paragraph 18 and `19 as under: “18- Cautioning against issuing of process so that it should not be an instrument in the hands of the private complainant as vendetta to harass the person needlessly, this Court in Punjab National Bank ..vs.. Surendra Prasad Sinha (1993 Supp (1) SCC 499) has this to say in para 6:- “It is also salutary to note that judicial process should not be an instrument of oppression or needless harassment. The complaint was laid impleading the Chairman, the Managing Director of the Bank by name and a host of officers. There lies responsibility and duty on the Magistracy to find whether the concerned accused should be legally responsible for the offence charged for. Only on satisfying that the law casts liability or creates offence against the juristic person or the persons impleaded then only process would be issued. There lies responsibility and duty on the Magistracy to find whether the concerned accused should be legally responsible for the offence charged for. Only on satisfying that the law casts liability or creates offence against the juristic person or the persons impleaded then only process would be issued. At this stage the Court would be circumspect and judicious in exercising discretion and should take all the relevant facts and circumstances into consideration before issuing process lest it would be an instrument in the hands of the private complaint as Vendetta to harass the persons needlessly – Vindication of majesty of justice and maintenance of law and order in the society are the prime objects of criminal justice but it would not be the means to wreak personal vengeance. Considered from any angle we find that the respondent had abused the process and laid complaint against the appellants without any prima facie case to harass them from vendetta.” 19- Similarly in Madhvrao Jiwajirao Scindia and others ..vs.. Sambhajirao Chandrojirao Angre (1996(1) SCC 692), this Court has stated that “The legal position is well settled that when a prosecution at the initial stage is asked to be quashed, the test to be applied by the Court is as to whether the uncontroverted allegations as made prima facie establish the offence. it is also for the Court to take into consideration any special features which appear in a particular case to consider whether it is expedient and in the interest of justice to permit a prosecution to continue. This is so on the basis that the Court cannot be utilized for any oblique purpose and where in the opinion of the Court chances of an ultimate conviction is bleak and, therefore, no useful purpose is likely to be served by allowing a criminal prosecution to continue, the Court may while taking into consideration the special facts of a case also quash the proceeding even though it may be at a preliminary stage.” D. 2007(12)SCALE 15 Inder Mohan Goswami & another ..vs.. State of Uttaranchal & others, wherein the Apex Court has observed thus: “22- The veracity of the facts alleged by the appellants and the respondents can only be ascertained on the basis of evidence and documents by a civil court of competent jurisdiction. State of Uttaranchal & others, wherein the Apex Court has observed thus: “22- The veracity of the facts alleged by the appellants and the respondents can only be ascertained on the basis of evidence and documents by a civil court of competent jurisdiction. The dispute in question is purely of civil nature and respondent no.3 has already instituted a civil suit in the court of Civil Judge. In the facts and circumstances of this case, initiating criminal proceedings by the respondents against the appellants is clearly an abuse of process of the court.” E. (2005) 10 SCC 228 Anil Mahajan ..vs.. Bhor Industries Ltd & another wherein the Apex Court has 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.” F. In (2007)7 Supreme Court Cases 373 Vir Prakash Sharma ..vs.. Anil Kumar Agrawal & another, it has been observed that: “8- The dispute between the parties herein is essentially a civil dispute. Non – payment or underpayment of the price of the goods by itself does not amount to commission of an offence of cheating or criminal breach of trust. 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 instant case. Section 405 of the Penal Code reads thus: “405. 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 instant case. Section 405 of the Penal Code reads thus: “405. Criminal breach of trust – Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract express or implied, which he has made touching the discharge of such trust, or willfully suffers any other person so to do, commits' criminal breach of trust'” Neither any allegation has been made to show existence of the ingredients of the aforementioned provisions or any statement in that behalf has been made.” G. 1999(1) Mh.L.J. 5, Kiran Desai ..vs.. M/s Nepolean Chemicals (I) Pvt. Ltd., wherein this court has held that: “Mere allegations in the complaint that the accused had fraudulently and dishonestly induced the complainant by false representation to enter into contract are not sufficient to constitute ipso facto an offence under section 420 of the Indian Penal Code specially in commercial contracts. it must be discernible or inferable from the circumstances pleaded and the material placed before the court along with the complaint that even at the initial stage of the contract one party had an evil design to defraud the other party.” 6. The learned counsel for the respondent Shri Lalwani, raised preliminary objection to the maintainability of this petition saying that the “accused” has not verified the petition. Petition is verified by one Mr. Vimal Verma Manager (Legal) of the petitioner company. In fact the petition should have been verified on solemn affirmation by one of the accused or at least by some Director of the company. It is further submitted that the accused no.2 had to act on behalf of the Board of the Directors. Manager cannot get a power to contest the petition on behalf of Board of Directors unless there is specific resolution. It is also submitted by him that for criminal matters, there cannot be any resolution inasmuch as the criminal liability is personal liability of the Director. Manager cannot get a power to contest the petition on behalf of Board of Directors unless there is specific resolution. It is also submitted by him that for criminal matters, there cannot be any resolution inasmuch as the criminal liability is personal liability of the Director. As such it is contended that when Director is an accused, unless he signs & verify the petition, petition is not maintainable. As regards merits it is submitted that the complaint clearly makes out the offences under section 406 and 420 of the IPC against the petitioners, as such the order of issue of process is correct. According to him, the conduct of the petitioners in not following or taking any steps in pursuance of the agreement after accepting the necessary deposit from the respondent (complainant), would definitely amount to reflect & exhibit mens rea on the part of the petitioners and therefore, when the complaint discloses the ingredients of offence, the complaint; even if civil suit has been filed; would be maintainable. According to him, the agreement between the parties required material steps to be taken by the petitioners i.e. the appointment of Marketing Officers and promoting sale. It was clearly provided that the respondent complainant would be placing orders of goods, but marketing would be done by the petitioners accused. It was provided that the respondent – complainant would keep Rs.2,00,000/- as cash security and furnish bank guarantee of the required amount. This was done by the respondent complainant, but the amount was not returned after the efflux of time for which the agreement was entered into. It is the case of the complainant – respondent that despite agreement the petitioners never appointed any Marketing Officer nor took any steps in terms of the said agreement and it clearly demonstrates the evil and criminal intention on the part of the petitioners. It only means that the petitioners had the requisite criminal dishonest intention since beginning and therefore, all the Directors of the said company were liable though the complainant has impleaded only one Director as an accused. It is also his submission that in view of the decision of this court in 2006 Cri.L.J. 3680 Natural Sugar & Allied Industries & another ..vs.. It is also his submission that in view of the decision of this court in 2006 Cri.L.J. 3680 Natural Sugar & Allied Industries & another ..vs.. Razzak Gaffar & others- wherein it has been held: “20- As already discussed herein above, it is not permissible at this stage to go into the truthfulness or otherwise of the allegations in the complaint. The only scrutiny that would be permissible, would be as to whether after reading the complaint as a whole and taking the averments on its face value and accepting them in entirety whether the ingredients to constitute an offence, for which the process has been issued are made out or not. i am of the considered view that upon perusal of the complaint as a whole, and taking th allegation at their face value and accepting them in entirety, at least, prima facie, the ingredients to constitute the offence for which the process has been issued are made out. I, therefore, do not find that this is a rarest of the rare case, wherein this Court should exercise its jurisdiction under S. 482 of the Code for quashing the proceedings.” the complaint would be maintainable. He has also relied on the decision of the Apex Court in 2008 1 Supreme 598 , wherein it has been observed that – powers under section 482 of the Cr.P.C. should be exercised in rarest of rare case and as such according to him the criminal complaint filed by respondent – complainant clearly make out a case of dishonest intention since very inception of the agreement on the part of the petitioners and therefore, despite filing of civil suit between the parties; the criminal complaint would be maintainable. Further according to him all other ancillary matters can be decided at the time of trial. As there is sufficient ground to proceed, the order of issue of process by the learned Magistrate impugned in this petition is clearly legal and as such according to him the petition is liable to be dismissed. 7. In reply, the learned counsel for the petitioner has invited my intention to paragraph 19 of the judgment of the Apex Court in 2008(1) Supreme 598 Som Mittal ..vs.. Government of Karnataka, case which reads : “15. 7. In reply, the learned counsel for the petitioner has invited my intention to paragraph 19 of the judgment of the Apex Court in 2008(1) Supreme 598 Som Mittal ..vs.. Government of Karnataka, case which reads : “15. While I agree with my learned brother, Honble Sema J. that the power under section 482 Cr.P.C. is to be exercised sparingly, I cannot agree with my learned brother that it should be exercised in the rarest of the rare case. 16. The expression rarest of the rare cases was used in connection with Section 302 IPC to hold that death penalty should only be imposed in rarest of rare cases vide Constitution Bench decision of this Court in Bachan Singh ..vs.. State of Punjab (vide para 207) AIR 1980 SC 898 . In my opinion, this expression cannot be extended to a petition under Section 482 of Cr.P.C. Though I agree with my learned brother Honble Sema J. that the power under Section 482 Cr.P.C. should be used sparingly, yet there may be occasions where in the interest of justice the power should be exercised.” 8. Considering the authorities referred by learned counsel it would be seen that the criminal complaint filed by respondent – complainant should disclose the dishonest intention of accused since beginning. It is well settled that even if the civil suit has been filed, if the criminal complaint discloses all the ingredients of the offence for which the complaint is lodged, the complaint would be maintainable. Merely because, civil suit has been filed, that fact by itself would not lead to the conclusion that the criminal complaint is not at all maintainable. In this regard the decision of the Apex court in 2008(3) SCALE 501 P. Swaroopa Rani ..vs.. M. Hari Narayana @ Hari Babuara may be referred wherein it has been observed: “13. It is, however, well settled that in a given case, civil proceedings and criminal proceedings can proceed simultaneously. Whether civil proceedings or criminal proceedings shall be stayed depends upon the fact and circumstances of each case. [See M.S. Sheriff ..vs.. State of Madras AIR 1954 SC 397 , Iqbal Singh Marwah ..vs.. Meenakshi Marwah (2005) 4 SCC 370 and Institute of Chartered Accountants of India ..vs.. Assn. Whether civil proceedings or criminal proceedings shall be stayed depends upon the fact and circumstances of each case. [See M.S. Sheriff ..vs.. State of Madras AIR 1954 SC 397 , Iqbal Singh Marwah ..vs.. Meenakshi Marwah (2005) 4 SCC 370 and Institute of Chartered Accountants of India ..vs.. Assn. of Chartered Certified Accounts (2005) 12 SCC 226]” While appreciating the rival contentions, it is necessary to keep in mind the authorities (2001) 8 SCC 645 M. Krishnan ..vs.. Vijaysingh and another wherein it has been observed in paragraph 5 thus: “5. Accepting such a general proposition would be against the provisions of law inasmuch as in all cases of cheating and fraud, in the whole transaction, there is generally some element of civil nature. However, in this case, the allegations were regarding the forging of the documents and acquiring gains on the basis of such forged documents. The proceedings could not be quashed only because the respondents had filed a civil suit with respect to the aforesaid documents. In a criminal court the allegations made in the complaint have to be established independently, notwithstanding the adjudication by a civil court. Had the complainant failed to prove the allegations made by him in the complaint, the respondents were entitled to discharge or acquittal but not otherwise. If mere pendency of a suit is made a ground for quashing the criminal proceedings, the unscrupulous litigants, apprehending criminal action against them, would be encouraged to frustrate the course of justice and law by filing suits with respect to the documents intended to be used against them after the initiation of criminal proceedings or in anticipation of such proceeding. Such a course cannot be the mandate of law. Civil proceedings, as distinguished from the criminal action, have to be adjudicated and concluded by adopting separate yardsticks. The onus of proving the allegations beyond reasonable doubt, in a criminal case, is not applicable in the civil proceedings which can be decided merely on the basis of the probabilities with respect to the acts complained of. Civil proceedings, as distinguished from the criminal action, have to be adjudicated and concluded by adopting separate yardsticks. The onus of proving the allegations beyond reasonable doubt, in a criminal case, is not applicable in the civil proceedings which can be decided merely on the basis of the probabilities with respect to the acts complained of. The High Court was not, in any way, justified to observe: “In my view, unless and until the civil court decides the question whether the documents are genuine or forged, no criminal action can be initiated against the petitioners and in view of the same, the present criminal proceedings and taking cognizance and issue of process are clearly erroneous.” and in (2007) 3 SCC 548 Rashida Kamaluddin Syed and another ..vs.. Shaikh Saheblal Mardan (DEAD), in paragraph 27 it has been observed thus: “27. Finally, the contention that a civil suit is filed by the complainant and is pending has also not impressed us. If a civil suit is pending, an appropriate order will be passed by the competent court. That, however, does not mean that if the accused have committed any offence, jurisdiction of criminal court would be ousted. Both the proceedings are separate, independent and one cannot abate or defeat the order.” 9. Here is the case where the complaint has been filed by the respondent for the offence under section 406 and 420 of the IPC. It is not disputed that the civil suit no.1032/2005 has also been filed by the complainant for the recovery of Rs. nine lacs and odd against the petitioners. Only question would be whether the complaint makes out a case against petitioners for dishonest intention for the aforesaid offence with a requisite contentions and constituting mens rea. For this it is necessary to closely peruse the complaint instituted by the respondent. 10. nine lacs and odd against the petitioners. Only question would be whether the complaint makes out a case against petitioners for dishonest intention for the aforesaid offence with a requisite contentions and constituting mens rea. For this it is necessary to closely peruse the complaint instituted by the respondent. 10. In paragraph 3 of the complaint it has been mentioned thus: “3- That, as per the terms and conditions of the Distributorship Agreement entered into between the parties on 31.12.2002 the business of this distributorship of the said produce was started w.e.f. 8.1.2003 , according to which the entire sale and marketing of the produce of accused no.1 company was to be done in the State of Maharashtra through their Sales Executive only and the entire expenses of such marketing is to be borne by the accused no.1 company.” In paragraph 4 of the complaint it has been mentioned thus: “4-That, initially the accused no.1 company supplied the goods till March 2003, but thereafter the accused no.1 company not only discontinued the marketing without any prior intimation with a clear dishonest and malafide intention to cheat the complainant and to misappropriate the huge amount of Rs.5,00,000/- lying with them as security/ trust money which they have extorted by inducing the complainant to depart from their valuable hard earned money by way of bank draft and bank guarantee.” In paragraph 7 of the complaint it has been mentioned thus: “7-That, the complainant thereafter wrote several letters to the accused no.1 and vide letter dated 9.8.2003 accused has confirmed that some of their employees had discontinued their services and further assured that they will appoint new persons for the functioning of their affairs of their organisation. (Photo copy of letters dated 9.8.2003 is filed on record” In paragraph 10 and 11 of the complaint it has been stated thus: “10- That, due to the said fraudulent deceptive act and unfair trade practice of the accused no.1 and 2 which they have done with some per planning in order to cause wrongful financial loss to the complainant and to take wrongful gain, the complainant sustained huge losses as there is no sale of the product of the entire stocks, which is still kept idle in the godown and the complainant is making payment of godown charges for which the complainant earlier got the accused informed vide their letter dated 11.8.2003, 27.5.2003, 3.12.2003 also got; issued registered A.D. legal notice through his counsel Vinod Lalwani on 31.12.2003 the accused no.1 and 2 were called upon to take back their entire stock of Rs.4,00,000/- and to refund the security of Rs.5,00,000/- to the complainant with liquidated damages and godown charges @ Rs.1500/- p.m. from July 2003 along with interest @ 18% p.a. and notice charges of Rs.2000/- (photo copies filed herewith) 11. That, the accused no.1 after the great persuasion admitted their liability and wrote a letter dated 26.3.2004 / 31.3.2004 to the complainant for settlement of account after admitting their guilt (photo copy of said letter are filed herewith), but even after admitting their liability and guilt the accused persons have never settled the account, nor lifted their stock and or refunded the security amount with interest and godown charges inspite of another legal notice got issued by complainant through their counsel on 19.11.2004 which they have got replied evasively through their counsel on 26.11.2004 (Photo copy of legal notice, postal receipt and reply filed herewith). In Paragraph 13 and 14 of the complaint it has been mentioned thus: “13- That, the above narrated facts, makes it clear that on one hand due to the said fraudulent deceptive act and unfair trade practice of the accused no.1 and 2 which they have done with some pre-planning in order to cause wrongful financial loss to the complainant and to take wrongful gain and thereby put the complainant to sustain huge losses as there is no sale of produce of the entire stock, which is still kept idle in the godown and the complainant is making payment of godown charges of which accused were earlier informed by complaint as stated above, and on the other hand all efforts made by complainant to make amicable settlement with accused persons in the matter went futile and even after admitting their liability and guilt by the accused persons, they never settled the account. It is further pertinent to note here that when son of complainant and his business partner Vipin Dudani at the request of accused no.1 and 2 visited to their factory / works at Noida settle the matter finally and to refund security with interest and godown charges stated above, instead of settling the account called his security men and gunda elements who beated said son of complainant by fist and mukka blows and kick and hit the son of complainant on his stomach and back side and caused / inflicted him injuries and hurt and further accused no.2 has threatened the complainant / his son to go away and if he will be there and come to their office or factory he will be done to death. Such an act of the accused pesons are illegal, and not sustainable, thereby they have committed on offence punishable u/s 406 and 420 r/w Sec.34 of I.P.C. That, therefore, left with no other alternative, the complainant has approached before this Hon'ble Court for redressal of his grievances in accordance with law and filed present complaint against the accused for due cognizance of this case and prosecution of the accused persons. 14. 14. That, the cause of action for filling this case accrued firstly on 3.3.2003 when the accused has failed to provide regular services of their sales officer, and continued thereafter day to day, it lastly arose when the accused persons committed above narrated criminal acts and same is continuous one till filing of their complainant.” 11. At this stage it is also necessary to see the terms of the agreement between the parties. As regards the promotional activity it has been stated thus: “Any expenses on account of any promotional activity like printing of posters, pamphlets, advertisements etc. will be allowed only if permission for the same is sought in writing from the company and sanctioned by the General Manager – sales and all the relevant supporting documents are submitted to the company by the 5th of the next month.” 12. As regards security deposit it has been stipulated thus: “You will deposit Rs.2 lacs (Rupees Two Lacs only) as security deposit with the company which will attract interest @ 10% per annum to secure due performance and fulfillment of terms and conditions of this agreement. The amount of deposit will be refunded on fulfillment of all the conditions of agreement otherwise liable to be appropriated towards the losses suffered in addition to other actions that may be necessitated. Company will pay the interest after receiving all the relevant Sales Tax forms etc. pertaining to the previous financial year. In addition you will open an irrevocable Bank Gank Guarantee of Rs.3.00 lacs (Rupess Three Lacs Only) in favour of M & B Footwear Pvt. Ltd. to cover the value of goods, sales tax forms etc. or any other liability that may exist. ” 13. Further it has been stipulated : “You as our Distributor shall during the continuance of this appointment make best efforts for promoting the sales of the products of the company and act in the best interest of the company. You will not have any cash transactions with any of the company's field force unless you are requested specifically in writing by the competent authority from the Head Office. In case of any cash transactions without the approval of the competent authority from Head Office, the company will not be responsible for any liabilities.” 14. You will not have any cash transactions with any of the company's field force unless you are requested specifically in writing by the competent authority from the Head Office. In case of any cash transactions without the approval of the competent authority from Head Office, the company will not be responsible for any liabilities.” 14. Close scrutiny of the contents of the complaint as extracted above vis-a-vis the terms of contract, would show that considerably material steps in promotion of the agreement of business were to be taken by the petitioners. If they did not take the same since inception of the agreement without any justification and then making an attempt to forfeit the security deposit and taking steps as regards bank guarantee; it would smack of mens rea on the part of the petitioners. 15. No doubt there were exchange of letters / notices between the parties and the complainant – respondent did not allege any criminal intention on the part of the petitioners, earlier, that would not bar the complainant, if element of criminal dishonest intention on the part of the petitioners, is made out in the complaint. Whether the complaint would succeed at the end of trial or not is not consideration at the stage of issue of process. What is required are sufficient grounds to proceed, on the strength of facts mentioned in the complaint. 16. Yet another aspect in the present case which can not be lost sight; is that initially the learned J.M.F.C. had passed following order on 18.7.2006 “Order Perused the complaint and the documents attached therewith. Prima facie it reveals that the complainant entrusted some property to the accused and the accused have used same in violation of legal contract which was made during . . . . . the discharge of such trust. Prima facie it appears that the accused misrepresented the complainant that they will do marketing of their produce and thereby induced the complainant to deliver property to them. Thus, prima facie case u/s 406 and 420 of IPC is made out against both the accused. Hence issue process against the accused u/s 406 & 420 of IPC on P.F. sd/ 18.7.2007 J.M.F.C.” 17. That order was challenged by the petitioners in criminal revision application no.18/2007. That criminal revision application was disposed of by the learned Ad-hoc Additional Sessions Judge – 9 Nagpur by order dated 17.2.2007. Hence issue process against the accused u/s 406 & 420 of IPC on P.F. sd/ 18.7.2007 J.M.F.C.” 17. That order was challenged by the petitioners in criminal revision application no.18/2007. That criminal revision application was disposed of by the learned Ad-hoc Additional Sessions Judge – 9 Nagpur by order dated 17.2.2007. The relevant order reads thus: “ Order 1. Revision is allowed. 2. The order of issue of process dated 19.7.2006 passed by Judicial Magistrate First Class, Court No.6 Nagpur in Criminal Case No.326/2005 is quashed and set aside. 3. The matter is remanded back to the court of Judicial Magistrate First Class, Court No.6, Nagpur with a direction to expedite receipt of report under Sec. 202 of Code of Criminal Procedure and after receiving it to proceed further in accordance with laws. 4. R & P be sent back to lower court immediately. sd/ 17.2.2007 Ad-hoc Addl. Sessions Judge-9, Nagpur 17.2.2007” 18. It is thus clear that the matter was remanded back to the court of J.M.F.C. Court No.6 Nagpur with the direction to expedite the receipt of report under section 202 of Cr.P.C. and after receiving it was to proceed further in accordance with law & the learned JMFC was directed to proceed in accordance with law. 19. Said report was received by learned Magistrate. Concluding part of the said report reads as under: “The agreement has been effected between Shri Inder Dev Singh s/o Jatender Dev Singh Mnusafir aged 38 years Director M & B Foot Ware and Shri Kanhaiyalal Dudani Proprietor R.R. Sales according to which till the time the stock of goods is pending with Dudani. The distributor till then the responsibility of appointing sale officer and sale the goods lies on M & B footwear company. In the same way the deposit of Rs.Two Lacs of Dudani which is lying with the company should be returned to him by the company but the Director of the Company has not done it and stopped the business. It is found in inquiry that the Director of the Company has committed Criminal Breach of trust with Dudani and cheated him.” 20. After considering the contents of the complaint, verification statement of the complainant and this report, the learned Magistrate passed impugned order. It is found in inquiry that the Director of the Company has committed Criminal Breach of trust with Dudani and cheated him.” 20. After considering the contents of the complaint, verification statement of the complainant and this report, the learned Magistrate passed impugned order. It has been held by him that there was sufficient reason to proceed against the petitioners and therefore, keeping into the consideration the aforesaid authorities, it is imperative to say that there was element of dishonest intention on the part of the petitioners. No doubt the agreement is not presently proved to be executed by the Executive Director of the petitioner's company. But accused no.2 i.e. petitioner no.2 being the Executive Director, cannot escape the liability. In fact in the petition itself he is described to be Executive Director of the petitioner no.1 – company. Therefore, unless he makes out a case that he was not responsible for day to day transaction or material business transactions between the respondent – complainant and the petitioners accused, the order of issuing process against him can not be held to be illegal and liable to be quashed. 21. More so, because he does not challenge the order of issuing process against him by making categorical statements in the petition on oath, need less to repeat that the contentions of the petition have been affirmed by one Vimal Verma Manager [Legal] who has no concern with the dishonest intention on the part of the petitioners. 22. In sum, I find that even if respondent – complainant has filed civil suit against petitioners and most of the contents of the suit are similar to some in the complaint, that fact by itself will not bar the complaint, inasmuch the complaint demonstrates allegations of dishonest intention etc constituting offences on the part of the petitioners. 23. In the case in, petitioner no.1 is a company registered under the Companies Act whereas the petitioner no.2 is the Executive Director of the said Company. As such the observations of this court in 2006 Cri.L.J. 3680 Natural Sugar and Allied Industries and Another ..vs.. Razzak Gaffar & others., in paragraph 20, 23, 24, and 26 are attracted. To quote: “20- As already discussed herein above, it is not permissible at this stage to go into the truthfulness or otherwise of the allegations in the complaint. As such the observations of this court in 2006 Cri.L.J. 3680 Natural Sugar and Allied Industries and Another ..vs.. Razzak Gaffar & others., in paragraph 20, 23, 24, and 26 are attracted. To quote: “20- As already discussed herein above, it is not permissible at this stage to go into the truthfulness or otherwise of the allegations in the complaint. The only scrutiny that would be permissible, would be as to whether after reading the complaint as a whole and taking the averments on its face value and accepting them in entirety whether the ingredients to constitute an offence for which the process has been issued are made out or not. I am of the considered view that upon perusal of the complaint as a whole, and taking the allegation at their face value and accepting them in entirety, at least, prima facie, the ingredients to constitute the offence for which the process has been issued are made out. I therefore, do not find that this is a rarest of the rare case, wherein this court should exercise its jurisdiction under Section 482 of the Code for quashing the proceedings. 23- However, in so far as the contention of the applicants that since the applicant No.1 is a juristic person and that since the offence charged with required means rea and as such the complaint cannot proceed against accused No.1 is concerned. I find that the said contention to be well merited. The learned Single Judge of this court in the case of Motorola Incorporated ..V.. Union of India of India (2004 Cri.L.J. 1576)(Supra) has observed thus: “Coming to the first contention, it is the general principle of criminal law that a crime is not committed unless the person committing it has the mens rea viz. guilty mind. The maxim “actus non facit recum, nisi mens sit rea” means that the intent and act must both concur to constitute the crime. Crime is a general term. Offence is that crime which is made punishable by law. For commission of every offence the requisite thing is mens rea unless the statute expressly excludes it, so far as the offence of cheating is concerned it does, require the means rea to deceive. Crime is a general term. Offence is that crime which is made punishable by law. For commission of every offence the requisite thing is mens rea unless the statute expressly excludes it, so far as the offence of cheating is concerned it does, require the means rea to deceive. Section 415 of the I.P. Code defines the offence of cheating as under: 415 Cheating – 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” Explanation – A dishonest concealment of facts is a deception within the meaning of this section. Section 11 of the I.P.Code defines the word 'person' as including any company or Association or body of persons, whether incorporated or not. The definition is not exhaustive but it is inclusive. Therefore, the word 'person' means both a natural person, whether man, woman or child and an artificial or judicial person like a company or corporation. Reading S. 415 in the light of the definition of the word 'person' as given in S. 11, it becomes clear that “any person” can be deceived. it need not be an individual or natural person but it can be a company or Association as well. But the question is whether the deceiver can be any “Person” vis. a natural person and a juridical person. In other words, whether the word “whoever” used in S. 415 means both natural person and juridical person. To put it more directly and specifically, whether a juridical person like a company or corporation can commit the offence of cheating within the meaning of S. 415. There can be no dispute of the fact that the offence of cheating involves mens rea as an essential ingredient. This is obvious from the use of the words “fraudulently” or “dishonestly” or “wilful”. Under S. 25 a person is said to do a thing fraudulently if he does that thing with intent to defraud but not otherwise. There can be no dispute of the fact that the offence of cheating involves mens rea as an essential ingredient. This is obvious from the use of the words “fraudulently” or “dishonestly” or “wilful”. Under S. 25 a person is said to do a thing fraudulently if he does that thing with intent to defraud but not otherwise. Under S. 24 whoever does anything with the intention of causing wrongful gain to one person or wrongful loss to another person, is said to do that thing “dishonestly.” It therefore, follows that “whoever” is alleged to have deceived must be a person capable of having the requisite mens rea of fraudulently or dishonestly inducing the person so deceived. The question posed before me is whether a company can have the mens rea of deceiving others.” 24- The learned Single Judge has cited the judgment of the Apex Court in the case of Kalpanath Rai ..vs.. State (reported in 1997 (8) SCC 732 ):(AIR 1998 SC 201). The following passage from the judgment of the Apex Court has been reproduced in the said judgment. “We are aware that in many recent penal statues, companies or corporations are deemed to be offenders on the strength of the acts committed by persons responsible for th management or affairs of such company or corporations e.g. Essential commodities Act, Prevention of Food Adulteration Act, etc. But there is no such provision in TADA which makes the company liable for the act of its officers. Hence, there is no scope whatsoever to prosecute a company for the offence under S. 3(4) of TADA.” 26- In that view of the matter, I find that the said judgment would not be applicable to the facts of the present case. since the process is issued for an offence of criminal breach of trust and cheating, it is essential to have requisite mens rea. Since the accused No.1 is a juristic person and cannot have necessary mens rea, I find that the complaint against the accused No.1 is not tenable.” 24. As no specific arguments have been advanced on behalf of petitioner no.1 in pursuance of these observations, it would be in the interest of justice to direct the learned Magistrate to consider those observations; while continuing the proceedings against the petitioner no.1. The complainant may be heard on that issue. As no specific arguments have been advanced on behalf of petitioner no.1 in pursuance of these observations, it would be in the interest of justice to direct the learned Magistrate to consider those observations; while continuing the proceedings against the petitioner no.1. The complainant may be heard on that issue. Whether the petitioner no.1 should be continued as accused may be decided by the learned Magistrate to avoid the unwarranted continuing of process of criminal law. 25. In result, the petition is liable to be dismissed. The same is dismissed. Petition dismissed.