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Madhya Pradesh High Court · body

2010 DIGILAW 156 (MP)

Madhumilan Syntex Ltd. v. Syndicate Bank

2010-02-05

S.S.DWIVEDI

body2010
ORDER S.S. Dwivedi, J. 1. The applicants have filed this petition under Section 482 Cr.P.C. aggrieved by the order dated 23.6.2007 passed by Judicial Magistrate First Class Indore in Criminal Case No. 1229/04 whereby ordered for framing of charge under sections 406, 420, 120-B of IPC against the applicants. 2. Brief facts of the case are, the applicants no. 2 to 6 are the office bearers and Director of the registered company Madhumilan Syntex Ltd. (applicant no. 1), having its factory at Dewas and manufacturing the De Oil Cake (in short, 'DOC') for export purpose. The applicant-company for its business was having the loan credit facility from the respondent-bank and with other four banks, the lead bank is State Bank of India and as per the agreement also hypothecated the prepared DOC for its export as per the hypothecation agreement. The concerning articles were transported from Dewas to Kandla Seaport and stored there for export in the Kandla Seaport. It is alleged in the private complaint filed by the bank concerned that without any intimation given to the bank the applicants have misappropriated the articles which were already hypothecated with the bank and sold them in the market at Kandla. On these hypothecated articles the applicant-company had received a sum of Rs. 11, 24, 92, 251/- from the bank as credit facility. When the concerning complainant bank came to know about this misappropriation of the articles which were hypothecated to the bank concerned, thereafter the complainant bank has given a notice to the applicant party and thereafter filed a private complaint in the Court of JMFC at Indore for the alleged misappropriation and cheating punishable under Sections 406 and 420 IPC. The learned Trial Magistrate after taking prima facie statement of the witnesses under Sections 200 and 202 of Cr.P.C. registered the case against the applicants for the offence punishable under sections 420, 406 and 120-B of IPC. Thereafter, the appropriate summons have been issued for the presence of the applicants/accused. After the presence of the accused persons, as per the procedure prescribed under Section 244 Cr.P.C for trial of a private complaint before the charge statement of the complainant and other witnesses has been recorded by the trial Court and an opportunity for cross-examination has also been given to the applicant/accused persons. After the presence of the accused persons, as per the procedure prescribed under Section 244 Cr.P.C for trial of a private complaint before the charge statement of the complainant and other witnesses has been recorded by the trial Court and an opportunity for cross-examination has also been given to the applicant/accused persons. After the close of evidence before charge, after bearing both the parties the learned Trial Magistrate by the impugned order dated 23.6.2007 came to the conclusion that a prima facie case for framing of the charge against the applicant for the offence punishable under sections 420, 406 and 120-B of IPC is made out and ordered for framing of the aforesaid charges. Aggrieved by which the applicants had preferred a criminal revision no. 699/07 before Tenth Additional Sessions Judge, Indore. The learned Revisional Court by order dated 27.10.2007 dismissed the revision petition and affirmed the order of framing of the charge passed by the trial court. Hence, this petition under section 482 Cr.P.C. on behalf of the applicants. 3. Having heard the learned counsel for the applicants as well as learned counsel for the respondent and perused the record. 4. It is submitted on behalf of the applicants that admittedly the transaction in between the parties is commercial transaction. Admittedly, the applicants have hypothecated the prepared goods DOC to the complainant bank and it is admitted position of law that for the hypothecation of goods the title remains with the owner itself and title is not transferred. The applicant-company had transported the prepared goods DOC to the Kandla Seaport for their international export but due to the natural calamity of flood and heavy rains the substantial material had been damaged and due to substantial loss of price of the goods the applicants are forced to sell the aforesaid articles in the market on the minimum rates available to them and this act of the applicants does not come within the purview of 'misappropriation of property' punishable under Section 406 of IPC or any of the ingredients of cheating punishable under Section 420 of IPC. It is further submitted on behalf of the applicants that the hypothecated articles have also been insured with the Export Credit Guarantee Corporation (in short ECGC) and the complainant witness Vinod Kumar (PW1) clearly admitted that the bank has recovered the price of the hypothecated articles from the aforesaid corporation to the tune of Rs. 2,89,00,000/- and by this recovery no actual substantial loss occurred to the bank concerned and in such circumstances also the applicants, cannot be held liable for the prosecution under Sections 420 and 406 IPC. It is also further submitted by the counsel for the applicant that whatever amount due by this commercial transaction on the applicants, the complainant bank has also filed recovery proceedings before the Debt Relief Court Bombay and that matter is still pending against the applicants. This itself shows that the dispute in between the parties is of civil nature and the complainant bank has already applied for the recovery of the loan amount due on the applicants and in such circumstances also the criminal prosecution against the applicants is merely an abuse of process of law. It is also further submitted on behalf of the applicant that the concerning hypothecated goods were sold at Kandla Seaport, the office of the applicant-company is also situated at Bombay, on which basis the complainant bank has filed the recovery proceedings before the Debt Relief Court at Bombay and by no stretch of imagination this can be presumed that how the Court at Indore has got territorial jurisdiction for the alleged misappropriation of the property alleged to be done by the applicants at Kandla Seaport. On this ground also, challenged the territorial jurisdiction of the JMFC at Indore and thus prayed for setting aside of the impugned order passed by the Courts below for framing of the charge against the applicants. 5. Learned counsel for the respondent bank supported the impugned order and submits that at the stage of framing of charge the trial Court is not bound to scan the entire evidence on record. The court is only bound to form an opinion as to whether a prima facie case is made out or not and if the court is of the opinion that prima facie sufficient material is on record for framing of the charge then the trial Court has rightly ordered for framing of the charge against the applicants. The court is only bound to form an opinion as to whether a prima facie case is made out or not and if the court is of the opinion that prima facie sufficient material is on record for framing of the charge then the trial Court has rightly ordered for framing of the charge against the applicants. It is also submitted on behalf of the respondent that by way of this petition the applicants have filed this second revision against the impugned order passed by the Trial Magistrate. First Revision has been dismissed by the Additional Sessions Judge Indore and under Section 397(3) Cr.P.C no second revision will lie against the same impugned order. Therefore, on this ground also challenged the maintainability of this petition filed on behalf of the applicants and for this submission placed reliance on the decision of the Hon'ble Apex Court in Hemchand vs. State of Jharkhand, reported in (2008) 2 SCC (Cri.) 537; Sanghi Brothers (Indore) Private Limited vs. Sanjay Choudhary and others, reported in (2008) 10 SCC 681 ; and State of Orissa v. Debendra Nath, reported in AIR 2005 SC 759; and on the basis of the aforesaid decisions of the Hon'ble Apex Court, prayed for dismissal of the petition. 6. After consideration of the rival contentions of both the counsel it is apparent that the trial Court has ordered for framing of charge against the applicant. The applicants have preferred first revision before the Additional Sessions Judge, Indore, which has been dismissed by the Revisional Court by the impugned order and now the applicants have challenged the impugned order under Section 482 Cr.P.C. under inherent power of this Court whereas the respondent has challenged that by way of this petition the applicants have intended to file the second revision. 7. Section 482 Cr.P.C. confers the inherent power to this court to see and to prevent the abuse of process of law in the case concerned. For this purpose reliance can be placed on the decision of the Hon'ble Apex Court in Dharimal Tobacco Products Ltd. & Ors. 7. Section 482 Cr.P.C. confers the inherent power to this court to see and to prevent the abuse of process of law in the case concerned. For this purpose reliance can be placed on the decision of the Hon'ble Apex Court in Dharimal Tobacco Products Ltd. & Ors. v. State of Maharashtra & Ors., reported in 2009 Cri.L.J. 974, wherein the Hon'ble Apex Court while referring the previous judgments held here as under: - Even where a revision application is barred, as for example the remedy by way of Section 115 of the Code of Civil Procedure, 1908 this court has held that the remedies under Articles 226/227 of the Constitution of India would be available. Even in cases where a second revision before the High Court after dismissal of the first one by the Court of Session is barred under Section 397 (2) of the Code, the inherent power of the Court has been held to be available. The power of the High Court can be exercised not only in terms of Section 482 of the Code but also in terms of Section 483 thereof. The said provision read thus:- 483. Duty of High Court to exercise continuous superintendence over Courts of Judicial Magistrates :- Every High Court shall so exercise its superintendence over the Courts of Judicial Magistrate subordinate to it as to ensure that there is an expeditious and proper disposal of cases by such Magistrates. Inherent power of the High Court is not conferred by statutes but has merely been saved thereunder. It is, thus difficult to conceive that the jurisdiction of the High Court would be held to be barred only because the revisional jurisdiction could also be availed of. 8. In view of the aforesaid latest decision of the Hon'ble Apex Court it is apparent that under the inherent power of this Court if any mistake has been committed by the court below, that can be cured by a petition under Section 482 Cr.P.C. 9. Learned counsel for the respondent strongly submitted that at the time of framing of charge only prima facie evidence available on record should be looked into and the proposed defense of the accused persons cannot be the basis for consideration. Learned counsel for the respondent strongly submitted that at the time of framing of charge only prima facie evidence available on record should be looked into and the proposed defense of the accused persons cannot be the basis for consideration. For this reliance has been placed by the counsel for the respondent in Hemchand's case (supra) wherein the Hon'ble Apex Court held here as under: - The court at the stage of framing charge exercises a limited jurisdiction. It would only have to see as to whether a prima facie case has been made out. Whether a case of probable conviction for commission of an offence has been made out on the basis of the materials found during investigation should be the concern of the court. It, at that stage, would not delve deep into the matter for the purpose of appreciation of evidence. It would ordinarily not consider as to whether the accused would be able to establish his defense, if any. 10. The aforesaid decision of the Hon'ble Apex Court is on the basis of the charge sheet filed by the CBI Police against the accused and on basis of the documents submitted with the charge sheet the Hon'ble Apex Court held that "only a prima facie case ought to be made out against the applicant could be seen." 11. The present case is having a peculiar circumstance that the respondent/complainant has filed a private complaint against the applicants. Therefore the procedure for trial is applicable as provided under Section 244 Cr.P.C, wherein it is incumbent upon the trial Court to record the before charge evidence and an opportunity for cross-examination ought to be given to the opposite party, i.e., the accused and after the before charge evidence the trial Court should have form an opinion as to whether the prima facie charge is made out or not and at that stage the trial Court cannot ignore whatever facts came in the cross-examination on the prosecution witnesses before the charge stage. The purpose of the procedure prescribed under Sections 244 and 245 of Cr.P.C. for ready reference it will be useful to quote here the relevant provisions which reads as under :- B.--Cases instituted otherwise than on police report. 244. The purpose of the procedure prescribed under Sections 244 and 245 of Cr.P.C. for ready reference it will be useful to quote here the relevant provisions which reads as under :- B.--Cases instituted otherwise than on police report. 244. Evidence for prosecution -- (1) When, in any warrant-case instituted otherwise than on a police report the accused appears or is brought before a Magistrate, the Magistrate shall proceed to hear the prosecution and take all such evidence as may be produced in support of the prosecution. (2) The Magistrate may, on the application of the prosecution, issue summons to any of its witnesses directing him to attend or produce any document or other thing. 245. When accused shall be discharged - (1) If, upon taking all the evidence referred to in section 244 the Magistrate considers, for reasons to be recorded, that no case against the accused has been made out, which if unrebutted, would warrant his conviction, the Magistrate shall discharge him. (2) Nothing in this section shall be deemed to prevent a Magistrate from discharging the accused at any previous stage of the case if, for reasons to be recorded by such Magistrate, he considers the charge to be groundless. 12. On perusal of the aforesaid provisions of Sections 244 and 245 of Cr.P.C. it is apparent that at the time of framing of charge the trial Court should consider the examination-in-chief of the witnesses as well as whatever facts came in the cross- examination of the witnesses concerned, then only an opinion can be formed as to whether prima facie case is made out for framing of charge or not whereas in the procedure of police challan case there is no necessity for examination-in-chief or cross-examination before framing of charge. For that trial only charge sheet papers ought to be considered by the trial Court. 13. In such circumstances, on perusal of the statement of complainant's witness Vinod Kumar (PW1), wherein the detailed cross-examination has been done by the accused persons and in that statement this witness Vinod Kumar clearly admitted that whatever amount due on the applicants, the complainant bank has received an amount of Rs. 2.89 crores from the concerning insurance company. 13. In such circumstances, on perusal of the statement of complainant's witness Vinod Kumar (PW1), wherein the detailed cross-examination has been done by the accused persons and in that statement this witness Vinod Kumar clearly admitted that whatever amount due on the applicants, the complainant bank has received an amount of Rs. 2.89 crores from the concerning insurance company. He also admitted the fact that whatever amount is due on the applicant, a separate civil litigation for the recovery of the loan amount has also been filed against the applicant before the Debt Relief Court at Bombay, which is still pending against the applicants. He also admitted that for the alleged misappropriation of the hypothecated articles no FIR had been lodged by the bank in the police concerned so that an independent agency can investigate the allegation made by the complainant, Similarly, he also admitted that five banks had advanced the loan to the applicant-company out of which only the complainant bank has filed this complaint against the applicants. Considering the aforesaid admissions of the complainant witness Vinod Kumar it is proved that the dispute in between the parties is because of commercial transaction and for the due loan amount the bank has already filed a civil litigation in the Competent Court. Therefore, it is apparent that the filing of the criminal complaint against the applicants is only to pressurize them for the payment of the due amount of the bank and this clearly indicates the misuse of the process of law by filing of this private complaint. 14. On perusal of the complaint filed by the respondent-complainant it is nowhere stated that at the time of execution of the hypothecation agreement at very inception of the contract between the parties the applicants were having any intention to cheat the complainant and in such circumstances, no case of cheating can be made out against the applicants for cognizance under Section 420 of IPC. For this reliance can be placed on the decision of the Hon'ble Apex Court in Hotline Teletubes and Components Ltd. and others vs. State of Bihar and another, reported in (2005) 10 SCC 261 , wherein the Hon'ble Apex Court held here as under:- This appeal by special leave has been filed by the appellants against the order passed by the Patna High Court, refusing to quash their prosecution under Sections 406 and 420 of the Indian Penal Code (for short "IPC"). In the complaint petition, it has been alleged that the complainant supplied goods to the accused persons, but they failed to pay the price therefore. There is no whisper in the complaint that at the very inception of the contract between the parties, there was any intention to cheat. It appears from a bare perusal of the complaint that it is a case of purely civil liability and no criminal offence is disclosed, much less offences either under section 406 or 420 IPC. So far as the High Court is concerned, it has not considered this aspect of the matter, but has refused to quash the prosecution observing that it was a fit case where parties should take steps for settlement. In our view, allowing such prosecution to continue would amount to an abuse of the process of court and to prevent the same, it would be just and expedient to quash the same. 15. The same view has again been reiterated in another decision of the Hon'ble Apex Court in Anil Mahajan vs. Bhor Industries Ltd. and another, reported in (2005) 10 SCC 228 , wherein the Hon'ble Apex Court held here as under: - 8. The substance of the complaint is to be seen. Mere use of the expression "cheating" in the complaint is of no consequence. Except 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. According to the complainant, a sum of Rs. 3,05,39,086 out of the total amount of Rs. 3,38,62,860 was paid leaving balance of Rs. 33,23,774. According to the complainant, a sum of Rs. 3,05,39,086 out of the total amount of Rs. 3,38,62,860 was paid leaving balance of Rs. 33,23,774. We need not go into the question of the difference of the amounts mentioned in the complaint which is much more than what is mentioned in the notice and also the defense of the accused and that stand taken in reply to notice because the complainant's own case is that over rupees three crores was paid and for balance, the accused was giving reasons as above-noticed, the additional reason for not going into these aspects is that a civil suit is pending inter se the parties for the amounts in question. 16. The same view has again been reiterated in another decision of the Hon'ble Apex Court in Uma Shankar Gopalika vs. State of Bihar and another, reported in (2005) 10 SCC 336 , wherein also Hon'ble Apex Court held here as under: - 6. Now the question to be examined by us is as to whether on the facts disclosed in the petition of complaint any criminal offence whatsoever is made out much less offences under Sections 420/ 120-B IPC. The only allegation in the complaint petition against the accused persons is that they assured the complainant that when they receive the insurance claim amounting to Rs. 4,20,000, they would pay a sum of Rs. 2,60,000 to the complainant out of that but the same has never been paid. Apart from that there is no other allegation in the petition of complaint. It was pointed out on behalf of the complainant that the accused fraudulently persuaded the complainant to agree so that the accused persons may take steps for moving the Consumer Forum in relation to the claim of Rs. 4,20,000. It is well settled that every breach of contract would not give rise to an offence of cheating and only in those cases breach of contract would amount to cheating where there was any deception played at the very inception. If the intention to cheat has developed later on, the same cannot amount to cheating. In the present case it has nowhere been stated that at the very inception there was any intention on behalf of the accused persons to cheat which is a condition precedent for an offence under section 420 IPC. 17. If the intention to cheat has developed later on, the same cannot amount to cheating. In the present case it has nowhere been stated that at the very inception there was any intention on behalf of the accused persons to cheat which is a condition precedent for an offence under section 420 IPC. 17. In view of the aforesaid decisions of the Hon'ble Apex Court and on perusal of the factual scenario of the present case it is apparent that the dispute in between the parties is due to commercial transaction. Whatever amount due on the applicants the bank has already filed the recovery proceedings before the Civil Court as stated herein above. Similarly the bank has also received the substantial amount of loss of hypothecated goods from the Insurance Company (ECGC) having value of Rs. 2.89 crores. 18. Considering the aforesaid peculiar facts of the case the criminal prosecution of the applicants appears to be the abuse of process of law, which can be prevented by this Court under the inherent powers conferred under Section 482 Cr.P.C. 19. Learned counsel for the respondent strongly placed reliance on the decision of the Apex Court in Debendra Nath's case (supra), wherein the Hon'ble Apex Court held here as under:- It is well settled that at the stage of framing of the charges the defense of the accused cannot be put forth. The acceptance of the contention of the accused would mean permitting the accused to adduce his defense at the stage of framing of charge and for examination thereof. At that stage which is against the criminal jurisprudence. That has never been the intention of the law well settled for over one hundred years now. It is in this light that the provision about hearing the submissions of the accused as postulated by S. 227 is to be understood. It only means hearing the submission of the accused on the record of the case as filed by the prosecution and documents submitted therewith and nothing more. 20. It is in this light that the provision about hearing the submissions of the accused as postulated by S. 227 is to be understood. It only means hearing the submission of the accused on the record of the case as filed by the prosecution and documents submitted therewith and nothing more. 20. The aforesaid case law also relates to the charge sheet filed by the State wherein only the charge sheet papers ought to be seen by the court at the time of framing of the charge but as stated herein above, in the present case the trial is governed with the provisions of Section 244 and 245 of Cr.P.C. wherein the right of cross-examination on the prosecution witness is also accrued to the accused and if some cross-examination has been done on the complainant witnesses then certainly at the time of framing of charge whatever facts came in the cross-examination ought to be considered by the trial Court at the time of framing of the charge. Therefore, if the prosecution witness himself admitted the facts in favour of the applicants/accused that the dispute in between the parties relates to commercial transaction and they had also recovered the substantial amount of Rs. 2.89 crores from the insurance company concerned, for the remaining amount they had also filed the recovery proceedings before the Competent Court then certainly the prosecution of the applicants for the alleged misappropriation of properties and for the alleged cheating is not prima facie maintainable. 21. Thus, considering the totality of the facts of the present case and on the basis of the aforesaid case law on the point this Court is of the opinion that the dispute in between the parties relates to the commercial transaction in between the parties, for which the necessary claim has been filed by the complainant bank to the Competent Court at Bombay. Moreover, the bank has already received substantial amount of Rs. 2.89 crores from the Insurance Company (ECGC) and, in such circumstances, this cannot be inferred that the applicants are having any means rea or criminal intention to cheat the interest of the bank or having any criminal intention for misappropriation of any property for which they can be held liable for the offence punishable under Sections 406 and 420 of IPC. 22. 22. Considering the aforesaid total facts of the case and on consideration of the admission of the complainants witness Vinod Kumar (PW1) in the detailed cross-examination by the applicants it is apparent that no case of criminal misappropriation of property as well as cheating to the bank is prima facie made out against the applicants and continuation of criminal proceedings apparently appears to be the abuse of process of law, hence the order of framing of charge can be set aside under the inherent power of the Court. 23. Resultantly, the petition filed on behalf of the applicants allowed. The impugned order passed by the trial Court for framing of the charge is set aside and the applicants are discharged from the offence punishable under Sections 406, 420 and 120-B of the IPC.