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2011 DIGILAW 646 (CAL)

Messers Nairn Tobaco Private Ltd. v. Evergreen Drums Cans Private Ltd.

2011-05-10

ASIM KUMAR RAY

body2011
JUDGMENT 1. THIS revisional application is for quashing of a proceeding being Case No. C/552 of 2008 pending before the learned Additional Chief Metropolitan Magistrate, Calcutta in respect of commission of alleged offence under Sections 420/406/120B/34 of Indian Penal Code and all orders passed therein. 2. THE petitioner is a private limited company and engaged in manufacturing and exporting of Hooka Tobacco Paste having valid license for exporting such article. The petitioner-company exports such articles in a sealed tin containers which are purchased as per recommendation of the intending importer-purchaser and mainly exports the same to Middle East Countries. The petitioner-company has placed several order to supply tin containers with lid for exporting Hooka Tobacco Paste to the opposite party No. 1 in between 2005 to 2006 as. per specification given by the importer-purchaser. The O.P. No. 1 has raised tax invoices as against the supplied tin containers with lid. The petitioner-company paid through several cheques on number of occasions and cleared the amount placed by the O.P. No. 1 against the said tax invoices in between 2005-2006 and 2006-2007 and those cheques have been encashed by the O.P. No. 1. The petitioner has paid during 2005-2006 and 2006-2007 total sum of Rs.67,90,137/- (Rupees Sixty seven lacs ninety thousand one hundred thirty seven) only through several cheques which have been duly encashed from time to time by the O.P. No. 1. The petitioner-company on receipt of several complaints through e-mail from foreign buyer regarding poor quality of tin containers made communication to the O.P. No. 1 several times to bring about necessary changes in the quality of tin containers so that it may be rust free and leak proof. The foreign buyers had deducted heavy amount from the bill due to rust and leakage in containers and further instructed to the petitioner-company not to use tin containers of the O.P. No. 1 and accordingly the petitioner has stopped purchasing tin containers from O.P. No. 1. It is alleged that the O.P. No. 1 in retaliation and counter-blast filed a petition of complaint being No. C/552 of 2008 before the learned Additional Chief Metropolitan Magistrate, Calcutta against the petitioner alleging commission of offence punishable under Sections 420/406/ 120B/34 of Indian Penal Code. The Managing Director of the petitioner- company on receipt of summons surrendered before the learned Court of Additional Chief Metropolitan Magistrate, Calcutta on 26.11.2009 and released on bail. The Managing Director of the petitioner- company on receipt of summons surrendered before the learned Court of Additional Chief Metropolitan Magistrate, Calcutta on 26.11.2009 and released on bail. The matter has been fixed for evidence before charge. In that backdrop the petitioner filed this revisional application with a prayer for quashing of the proceeding. 3. MR. Shiladitya Sanyal, learned Counsel appearing for the petitioner has contended that in the petition of complaint the O.P. No. 1 has admitted continuous commercial transaction with the petitioner and an atmosphere of mutual understanding and belief. The dispute raised by the O.P. No. 1 as complainant is purely civil in nature. The same is under no stretch of imagination can give rise to a case of cheating as defined under Section 415 of the Cr. PC. He has further contended that the value added tax is not applicable upon any business transaction between the parties during the period from 1st April, 2005 to 31st March, 2006. He has referred Section 5 of the Central Sales Tax Act, 1995 and Trade Circular No. 1/2007 dated 9.1.2007. 4. MR. Sanyal has taken me to the petition of complaint and the documents annexed with the revisional application. He has relied upon the decisions reported in 2009 (1) C Cr LR (SC) 604 (Y.Jose and Another v. State of Gujarat and Another), 2008 (1) C Cr LR (SC) 28 (Vir Prakash Sharma v. Anil Kumar Agarwal and Another) and 2008 (1) C Cr LR (Cal) 789 (Kingshuk Neogi v. The State of West Bengal and Another). He, according, concluded that the proceeding pending before the learned Additional Chief Metropolitan Magistrate, Calcutta if allowed to be continued then the same would be a gross abuse of the process of the law. It may be quashed. Mr. Tapan Dutta Gupta, learned Counsel appearing for the opposite party No. 1 has contended that the petitioner/accused being the Director of the company has surrendered himself to the jurisdiction of the learned ACMM, Calcutta and got bail. The learned Magistrate may be given opportunity to dispose of the matter after recording evidence. The disputed fact raised by the parties are required to be adjudicated on proper evidence, the evidence may be allowed to be recorded. The learned Magistrate may be given opportunity to dispose of the matter after recording evidence. The disputed fact raised by the parties are required to be adjudicated on proper evidence, the evidence may be allowed to be recorded. The learned Magistrate after recording the evidence before charge under Section 244 of Cr P.C. has the option to pass an order under Section 245 of Cr.P.C. This Court shall not stand in the way to such procedure of law at this stage. It is his further contention that there is no bar to initiate a criminal proceeding when the matters have civil touch. He has cited the decisions reported in 2010(2) AICLR 606 (K. Neelaveni v. State Rep. By Inspector of Police and Others) and 1999 C Cr LR (SC) 364) (Trisuns Chemical Industry v. Rajesh Agarwal and Others) in support of his contention. 5. ON perusal of the petition of complaint of Case No. C-552/2008 filed before the Court of learned Additional Chief Metropolitan Magistrate, Calcutta by O.P. No. 1, it appears that it is an admitted fact that parties had continuous business-relation/commercial transaction. The hooka tobacco paste used to be manufactured by the petitioner- company. The company packed/canned the said paste in tin container used to be manufactured by the O.P. No. 1. The hooka tobacco paste is exported to Middle East Countries by the petitioner-company. The complainant/O.P. No. 1 alleged that the petitioner/accused through their letter and declaration both dated 14.7.2005 informed the complainant/ O.P. No. 1 that value added tax is not applicable upon any business transaction of the petitioner during the period from 1st April, 2005 to 31st March, 2006 and accordingly the complainant totally depending upon the mutual commercial relation believe the same and did not make any further enquiry. They did not collect value added tax believing the dishonest representation by the petitioner/accused. It has been further alleged in the petition of complaint that the petitioner/accused person in collusion and in conspiracy with each other dishonestly cheated the complainant/O.P. No. 1 by not paying the legal liabilities towards the dues as also by making dishonest mis-representation in respect of value added tax and their criminal intention to make fraud was from the very inception of the business. The learned Additional Chief Metropolitan Magistrate, Calcutta on perusal of the petition of complaint and evidence on solemn affirmation issued summons upon the petitioner. The learned Additional Chief Metropolitan Magistrate, Calcutta on perusal of the petition of complaint and evidence on solemn affirmation issued summons upon the petitioner. The Director of the petitioner-company entered appearance and got bail. The matter has been fixed for evidence before charge. At that stage the petitioner has come before this Court with this revisional applications praying for quashing of the proceeding pending before the learned Court below. 6. THE moot point to be dealt with whether the allegations set out in the complaint, even if they are taken at their face value and accepted in their entirety do prima facie constitute any offence or make out a case against the petitioner/accused punishable under Sections 420/406/120B/ 34 of the Indian Penal Code. Section 415 of the Penal Code defines cheating as under:- "415. Cheating-Whoever, by deceiving any person, fraudulently or dishonestly induced 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." "An offence of cheating cannot be said to have been made out unless the following ingredients are satisfied: (i) deception of a person either by making a false or misleading representation or by other action or omission; (ii) fraudulently or dishonestly inducing any person to deliver any property; or to consent that any person shall retain any property and finally intentionally inducing that person to do or omit to do anything which we would not do or omit." 7. RELIANCE has been placed by Mr. Sanyal on V.Y. Jose and Another v. State of Gujarat and Another, 2009 (1) C Cr LR (SC) 604, wherein the Hon'ble Apex Court has observed:- "For the purpose of constituting an 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. Sanyal on V.Y. Jose and Another v. State of Gujarat and Another, 2009 (1) C Cr LR (SC) 604, wherein the Hon'ble Apex Court has observed:- "For the purpose of constituting an 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. Even in a case where allegations are made in regard to failure on the part of the accused to keep his promise; in the absence of a culpable intention at the time of making initial promise being absent, no offence under Section 420 of the Penal Code can be said to have been made out." "A matter which essentially involves dispute of a civil nature should not be allowed to be the subject-matter of a criminal offence, the latter being not a short cut of executing a decree which is nonexistent. The superior Courts, with a view to maintain purity in the administration of justice, should not allow abuse of the process of Court. It has a duty in terms of Section 483 of the Code of Criminal Procedure to supervise the functionings of the trial Courts." 8. RELIANCE has also been placed by Mr. Sanyal on Vir Prakash Sharma v. Anil Kumar Agarwal and Another, 2008 (1) C Cr LR (SC) 28, wherein the Hon'ble Supreme Court has observed:- "The principle underlying exercise of jurisdiction by the High Court under Section 482 of the Code of Criminal Procedure is now well settled viz. that the allegations contained in the complaint petition even if given face value and taken to be correct in its entirety do not disclose an offence or not is the question. 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. No act of inducement on the part of the appellant has been alleged by the respondent. No allegation has been made that he had an intention to cheat the respondent from the very inception. No act of inducement on the part of the appellant has been alleged by the respondent. No allegation has been made that he had an intention to cheat the respondent from the very inception. In law, only because he had issued cheques which were dishonoured, the same by itself would not mean that he had cheated the complainant. Assuming that such a statement had been made, the same, in our opinion, does not exhibit that there has been any intention on the part of the appellant herein to commit an offence under Section 417 of the Penal Code." Reliance has also been placed by Mr. Sanyal on Dalip Kaur and Others v. Jagnar Singh and Another, 2010 (2) SCC (Cri) 223, wherein it has been observed that where allegations contained in the FIR, even if given face value and taken to be correct did not disclose the commission of the offence alleged and discloses only a civil dispute FIR should be quashed. 9. ON the contrary, reliance has been placed by Mr. Dutta Gupta, learned Advocate for the OP. No. 1 on K. Neelaveni v. State Rep. By Inspector of Police and Others, 2010 (2) AICLR 606, wherein the Hon'ble Apex Court has observed:- "It has to be borne in mind that while considering the application for quashing of the charge-sheet, the allegations made in the First Information Report and the material collected during the course of the investigation are required to be considered. Truthfulness or otherwise of the allegation is not fit to be gone into at this stage as it is always a matter of trial." 10. IT is relevant here to state that offences under Sections 406, 494 and 498A are triable by a Magistrate, First Class and as all these offences are punishable with imprisonment for a term exceeding two years, the case has to be tried as a warrant case. The procedure for trial of warrant case by a Magistrate instituted on a police report is provided under Chapter XIX Part-A of the Code of Criminal Procedure, 1973. The procedure for trial of warrant case by a Magistrate instituted on a police report is provided under Chapter XIX Part-A of the Code of Criminal Procedure, 1973. Section 239 inter alia provides that if upon considering the police report and the document went with it under Section 173 and making such examination, if any, of the accused of the accused and after giving the prosecution and the accused an opportunity of being heard, the Magistrate considers the charge against the accused to be groundless, he shall discharge the accused and record his reasons for so doing. IT seems that the accused persons even before the case had reached that stage filed an application for quashing of the charge-sheet under Sections 406 and 494 of the Indian Penal Code. In our opinion, the High Court ought not to have interfered after the submission of the charge- sheet and even before the Magistrate examining as to whether the accused persons deserved to be discharged in terms of Section 239 of the Code of Criminal Procedure." Mr. Dutta Gupta has also relied on Trisuns Chemical Industry v. Rajesh Agarwal and Others, 1999 C Cr LR (SC) 364, wherein the Hon'ble Supreme Court has observed:- "Time and again this Court has been pointing out that quashment of FIR or a complaint in exercise of inherent powers of the High Court should be limited to very extreme exceptions [vide State of Haryana v. Bhajan Lal, 1992 Supp. (1) SCC 335 and Rajesh Bajaj v. State NCT of Delhi, 1993 (3) SCC 259 : 1999 C Cr LR (SC) 234]. 11. IN the last referred case this Court also pointed out that merely because an act has a civil profile is not sufficient to denude it of its criminal outfit. We quote the following observations:- "It may be that the facts narrated in the present complaint would as well reveal a commercial transaction or money transaction. But that is hardly a reason for holding that the offence of cheating would elude from such a transaction. IN fact, many a cheating were committed in the course of commercial and also money transactions. We are unable to appreciate the reasoning that the provision incorporated in the agreement for referring the disputes to arbitration is an effective substitute for a criminal prosecution when the disputed act is an offence. IN fact, many a cheating were committed in the course of commercial and also money transactions. We are unable to appreciate the reasoning that the provision incorporated in the agreement for referring the disputes to arbitration is an effective substitute for a criminal prosecution when the disputed act is an offence. Arbitration is a remedy for affording reliefs to the party affected by breach of the agreement but the arbitrator cannot conduct a trial of any act which amounted to an offence albeit the same act may be connected with the discharge of any function under the agreement. Hence, those are not good reasons for the High Court to axe down the complaint at the threshold itself. The investigating agency should have had the freedom to go into the whole gamut of the allegations and to reach a conclusion of its own. Pre-emption of such investigation would be justified only in very extreme cases as indicated in State of Haryana v. Bhajan Lal (supra)." 12. RECORD speaks specifically that business relation was prevailing between the parties and there was payment to the tune of Rs.67,90,137/- during the period 2005-2006 and 2006-2007 by the petitioner to the O.P. No. 1. It is alleged in the petition of complaint that petitioner/accused through their letter and declaration both dated 14.7.2005 informed the petitioner that value added tax is not applicable upon any business transaction of the petitioner/accused during the period from 1st April, 2005 to 31st March, 2006 and accordingly the complainant/O.P. No. 1 did not make any further enquiry. The complainant/O.P. No. 1 believed the said representation depending upon the mutual commercial relation. It has been further alleged that the petitioner/accused after receiving goods did not make full payment as per the instruction of the business and assured the O.P. No. 1/ complainant that they would pay the dues as early as possible. The petitioner/accused issued cheque bearing No. 199599 dated 2.4.2006 drawn on HSBC of Rs.268000/- as per part payment knowing fully well from the beginning that the cheque was issued not for payment but to cover up dishonesty and deception. The payment of the said cheque was stopped by giving instruction to the bank. The cheque was subsequently dishonoured. The accused/petitioner dishonestly induced the complainant/O.P. No. 1 to believe that they would immediately pay the entire due though they had no intention to live their promise. The payment of the said cheque was stopped by giving instruction to the bank. The cheque was subsequently dishonoured. The accused/petitioner dishonestly induced the complainant/O.P. No. 1 to believe that they would immediately pay the entire due though they had no intention to live their promise. The complainant/O.P. No. 1 has not been paid farthing at all in spite of such assurance. The petition of complaint give rise an indication that at the beginning the parties had good business relation but by the passage of time that relation turned bitter. It is the petitioner/accused's case that complainant/O.P. No. 1 used to supply poor quality tin container. It has been specifically stated in the revisional application that the petitioner had to incur a huge loss by using the poor quality of tin container supplied by the O.P. No. 1/complainant. The poor quality tin container was affected with rust and as a result there was leakage. The petitioner has claimed that they have informed the complainant /O.P. No. 1 so that the quality of the tin container may be improved and might not be affected with rust and resultant leakage but in vain. It is alleged that the complaint case has been filed in retaliation and counter-blast as the petitioner stopped purchasing tin container from O.P. No. 1/complainant. If the whole matter is looked closely then it appears that the act has a pure civil profile. It may be a fact that there might have some dispute between the parties regarding the payment of dues. There might have incident of dishonour of cheque. But all those facts if taken together cannot satisfy the ingredients of cheating. The case is squarely covered by decisions referred by Mr. Sanyal. 13. THE complaint case does not satisfy prima facie the ingredients of cheating. Rather it may be said that if the complaint petition is given a face value and taken to be correct in its entirety even then the same does not disclose an offence under Sections 420/406/120B/34 of the Indian Penal Code. The decision cited by Mr. Dutta Gupta is distinguishable taking the background of the instant case in judicious mind. In my humble view, the same are not helpful to this matter. 14. THE proceeding being Case No. C-552/2008 pending before the learned Additional Chief Metropolitan Magistrate at Calcutta under Sections 420/406/120B/34 of IPC be quashed. The revisional application stands allowed. The decision cited by Mr. Dutta Gupta is distinguishable taking the background of the instant case in judicious mind. In my humble view, the same are not helpful to this matter. 14. THE proceeding being Case No. C-552/2008 pending before the learned Additional Chief Metropolitan Magistrate at Calcutta under Sections 420/406/120B/34 of IPC be quashed. The revisional application stands allowed. Connected application, if any, stand disposed of. Urgent xerox certified copies of this order, if applied for, by the parties be given to the parties as expeditiously as possible. S. K. G.