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2013 DIGILAW 640 (JK)

Suresh Chand v. Ishan Industries

2013-11-06

TASHI RABSTAN

body2013
1. Petitioner is a Proprietor of M/s. Suresh Chand Subash Chand and deals in the business of sale and purchase of food grains from New Anaj Mandi, Ateli, District Narnual, Haryana. The respondent is a Proprietorship Concern and has installed a Mill in the name of M/s. Ishan Industries situated at Lane No. 6 SIDCO Industrial Complex, Bari Brahamana, Jammu for extracting the mustard oil. The raw-material for mustard oil is procured by the respondent from various places. The respondent has been dealing with the petitioner for purchasing mustard seeds since 2nd June, 2010 and has transacted business with him till 17.07.2011. 2. It is contended by the petitioner that he sold mustard seeds to respondent and part payment of the amount of sale consideration was made, but, an amount of Rs. 1,54,03,939.00 remained unpaid. The total amount payable as on 17.07.2011 inclusive of interest came to Rs. 1,56,74,270.00. Out of this, the respondent had paid an amount of Rs. 1,56,25,208.00 and remaining amount of Rs. 49,062/- was not paid. Hence, for non-payment of balance amount, petitioner issued legal notice dated 30.07.2011 through his counsel in which it was specifically stated to make the payment by depositing the same in his account or through Bank Draft within a period of 15 days, failing which suit for recovery would be filed against him. 3. On receipt of notice on 05.08.2011, the Manager of the respondent, namely Sh. Ashwani Kumar Sharma rang up on telephone No. 094191-99353, authorizing its Purchase Manager, Sh. Sumer Singh S/o: Sh. Bansi Lal Rajput R/o Nimrana to settle the accounts with the petitioner on behalf of the respondent and ensure the dispatch of Mustard Seeds to the respondent. Accordingly, under the instructions of Manager of the respondent-Firm, Sh. Sumer Singh, Purchase Manager had acknowledged the balance payment of Rs. 49,062/- due to the petitioner and also agreed to dispatch this amount in the account of petitioner. In this respect, an agreement was executed to this extent between Sumer Singh, Purchase Manager for and on behalf of the respondent and the petitioner, in presence of five other persons namely (1) Arvind S/o Sh. Babu Lal, (2) Giriraj S/o Sh. Nityanand, (3) Mangtu Singh S/o Sumer Singh, (4) Prem Singh S/o Sh. Shambudayal Yadav and (5) Ramanand S/o Sh. Ramchander Yadav, all residents of Ateli Mandi. 4. Babu Lal, (2) Giriraj S/o Sh. Nityanand, (3) Mangtu Singh S/o Sumer Singh, (4) Prem Singh S/o Sh. Shambudayal Yadav and (5) Ramanand S/o Sh. Ramchander Yadav, all residents of Ateli Mandi. 4. It is further contended on behalf of the petitioner that despite said agreement, balance payment of Rs. 49062/- was not made to the petitioner. Thus, the petitioner had issued another notice dated 09.09.2011 to Sh. Ishan Dhar S/o Sh. Mahesh Dhar, Sole Proprietor of M/s. Ishan Industries, SIDCO Complex Phase No. 2, Lane No. 6, Industrial Area Bari Brahamana, Jammu and Sh. Ashwani Kumar, Manager of the respondent-M/s. Ishan Industries, wherein further 15 days' time was granted to make payment of the balance amount, failing which same would be claimed along with interest @ 18% per annum. Despite said notice, the respondent has failed to make the balance payment, thus compelled the petitioner to approach the Court of learned Additional Civil Judge (Sr. Division) Narnaul by filing suit on 08.03.2012 for recovery of Rs. 49,062/- as Principal amount along with interest of Rs. 9125/-. Learned Additional Civil Judge, Narnual issued notice to the defendant/respondent herein, who, instead of contesting the said suit, filed complaint against the petitioner under Sections 406/409/420 RPC before the learned Chief Judicial Magistrate, Jammu, which came to be committed to the Court of Special Municipal Magistrate, Jammu. The trial Court vide order dated 03.07.2012 issued process against the petitioner. Aggrieved by order dated 03.07.2012 issued by the learned Special Municipal Magistrate, Jammu, the petitioner has filed writ petition on hand, seeking following relief: "Petition under Article 226 of the Constitution of India read with Section 103 of the Constitution of State of Jammu and Kashmir further read with section 561-A of Cr.P.C for quashing the complaint filed by the respondent against the petitioner under section 406/409/420 of RPC and the order of cognizance dated 3.7.2012 taken by the learned Special Municipal Magistrate, Jammu against the petitioner in the complaint. AND For issuance of further appropriate writ, direction or order in the nature of writ of prohibition commanding the trial court not to proceed against the petitioner in the afore-stated complaint. WITH Such other appropriate writ, direction or order as this Hon'ble Court deems fit and proper in the facts and circumstances of the case." 5. Heard learned counsel for the parties and perused the record. 6. WITH Such other appropriate writ, direction or order as this Hon'ble Court deems fit and proper in the facts and circumstances of the case." 5. Heard learned counsel for the parties and perused the record. 6. It is contended in the complaint that initially respondent used to pay the price of mustard seeds purchased from the petitioner after the Truck would reach the Unit. 70-80% of the payment used to be made on account and remaining after getting the Laboratory reports from certified Laboratories the money was usually paid to the petitioner through bank transaction. However, with the passage of time, the petitioner started making the respondent to pay the price of consignment of mustard seeds in advance. 7. Respondent contended that in the month of July, 2011, the petitioner with an intention to cheat and commit breach of trust, asked the respondent to entrust him Rs. 20.00 lac against six Trucks of mustard seeds so that the petitioner is able to supply mustard seeds to the respondent. Respondent did not doubt the integrity and intention of the petitioner, and had paid Rs. 10.00 lac on 19th July, 2011 with the assurance that three Trucks would be dispatched on 20.07.2011. It is further contended that the respondent transferred Rs. 10.00 Lac more to the petitioner for next three Trucks, but, as soon as total amount of Rs.20.00 lac is credited in the account of the petitioner, he informed the respondent that first three Trucks had not been sent, thus, committed the offence of cheating and breach of criminal trust. The respondent has also given the details of the cheques of total amount of Rs. 20.00 lac paid to the petitioner on two occasions, i.e., on 19.7.2011 and 20.07.2011. The respondent, therefore, filed the complaint against the petitioner before the learned Chief Judicial Magistrate, Jammu under Sections 406/409 and 420 RPC. 8. The case projected by the petitioner in the writ petition in hand is that the complaint lodged against the petitioner by the respondent is nothing but just to revenge, harass or for seeking private vendetta or with ulterior motive to pressurize the petitioner to withdraw the suit for recovery pending before the learned Additional Civil Judge (Sr. Division), Narnaul. The petitioner contended that though the civil suit has been filed before the learned Additional Civil Judge (Sr. Division), Narnaul. The petitioner contended that though the civil suit has been filed before the learned Additional Civil Judge (Sr. Division), Narnaul against the respondent in the month of March, 2012, yet the respondent deliberately and intentionally has not disclosed this fact in his complaint filed before the Chief Judicial Magistrate, Jammu. The petitioner also contended that the complaint filed against him is not maintainable, being without jurisdiction, as per Section 181 of the Code of Criminal Procedure. In addition, the present petition has been filed on other grounds that the dispute is purely of civil in nature and the civil transactions between the parties had been continuing for the last more than two years because there was no element of deception in the whole transaction whereas it is palpably evident that the respondent has an oblique motive of harassing the petitioner by approaching the learned Magistrate by invoking the criminal jurisdiction. Therefore, the learned Trial Court has erred in issuing impugned summoning order to the petitioner. The petitioner has also contended that the words `dishonestly' and `misappropriation' used in Section 403 Cr. P. C are missing not only in the compliant, but also in the order passed by the learned Trial Court. 9. Mr. K.S. Johal, learned Senior counsel argued that Trial Court has not appreciated the essential ingredients of the alleged offence before taking cognizance. Therefore, cognizance taken by the learned Trial Court under Sections 406/409 and 420 RPC is not proper. It is also contended that the allegations leveled in the Criminal Complaint filed against the petitioner are factually incorrect and the proceedings are maliciously instituted with an ulterior motive for taking vengeance on the petitioner with a view to harass the petitioner amongst other reasons. 10. The Court vide order dated 16.01.2013 issued notice to the respondent and passed interim order whereby proceedings before the trial Court have been stayed. 11. Upon receipt of notice, Sh. Ravi Abrol, Advocate appeared on behalf of respondent and time was granted to respond to the petition. Despite several opportunities, response was not filed. 12. 10. The Court vide order dated 16.01.2013 issued notice to the respondent and passed interim order whereby proceedings before the trial Court have been stayed. 11. Upon receipt of notice, Sh. Ravi Abrol, Advocate appeared on behalf of respondent and time was granted to respond to the petition. Despite several opportunities, response was not filed. 12. Learned Senior counsel for the respondent argued that the this Court cannot rely upon, on the basis of documents which are yet to be proved by the trial Court, he also disputed about the proof of receiving of the legal notice served by the petitioner and also contended that the agreement, i.e., Annexure-B to the writ petition is hot signed by the authorized person of the respondent-Firm. 13. The Apex Court in case of Smt. Nagawwa v. Veeranna Sivalingappa Konjalgi, reported as 1976 (3) SCC 736 , laid down the circumstances warranting interference of the High Court for quashment of the criminal proceedings. The circumstances are noticed as under: 1. Where the allegations made in the complaint or the statements of the witnesses recorded in support of the same taken at their face value make out absolutely no case against the accused or the complaint does not disclose the essential ingredients of an offence which is alleged against the accused; 2. Where the allegations made in the complaint are patently absurd and inherently improbable so that no prudent person can ever reach a conclusion that there is sufficient ground for proceeding against the accused; 3. Where the discretion exercised by the Magistrate in issuing process is capricious and arbitrary having been either or no evidence or on material which are wholly irrelevant or inadmissible; and 4. Where the complaint suffers from fundamental legal defects, such as, want of sanction, or absence of complaint by legally competent authority and the like." 14. These tests were further examined in case of State of Haryana v. Bhajan Lal, reported as 1992 Supp (1) SCC 335. wherein the following tests were laid down:- 1. Where the allegations made in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused. 2. wherein the following tests were laid down:- 1. Where the allegations made in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused. 2. Where the allegations in the first information report and other materials, if any, accompanying the FIR do not disclose a cognizable offence, justifying an investigation by police officers under section 156 (1) of the code except under an order of a Magistrate with the purview of Section 155(2) of the Code. 3. Where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and made out a case against the accused. 4. Where, the allegations in the FIR do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigation is permitted by a police office without an order of Magistrate as contemplated under section 155 (2) of the Code. 5. Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused. 6. Where there is an express legal bar engrafted in any of the provisions of the code or the concerned Act (under which a criminal proceedings is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or concerned Act, providing efficacious redress for the grievance of the aggrieved party. 7. Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge." 15. The Court must ensure that criminal prosecution is not used an instrument of harassment or for seeking private vendetta or with an ulterior motive to pressurize the accused. Contours of the powers under Section 482 Cr. P. C have been explained in a series of decisions by the Apex Court. 16. The Court must ensure that criminal prosecution is not used an instrument of harassment or for seeking private vendetta or with an ulterior motive to pressurize the accused. Contours of the powers under Section 482 Cr. P. C have been explained in a series of decisions by the Apex Court. 16. The Apex Court in a case reported in AIR 2000 SC 2341 while considering the criminality of a person in civil transaction, observed as under:- "In determining the question it has to be kept in mind that the distinction between mere breach of contract and the offence of cheating is a fine one. It depends upon the intention of the accused at the time of inducement which may be judged by his subsequent conduct but for this subsequent conduct is not the sole test. Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction that is the time when the offence is said to have been committed. Therefore, it is the intention which is the gist of the offence. To hold a person guilty of cheating it is necessary to show that he had fraudulent or dishonest intention at the time of make the promise. From this mere failure to keep up promise subsequently such a culpable intention right at the beginning, that is, when he made the promise cannot be presumed." 17. This Court while relying on the aforesaid judgment of the Apex Court has also taken the same view in case titled as Sirohiya Synthetics Pvt. Ltd. V. Chenab Textile Mills, report as 2006 (2) JKJ 596 (HC). 18. It is trite law and the common sense that a honest man enters into a contract is deemed to represent that he has intention to carrying it out but if, having expected the pecuniary advantage involved in the transaction, he fails to pay his debt, he does not necessarily denying the debt by deception. 19. Hon'ble Supreme Court in case Inder Mohan Goswami and Anr v. State of Uttaranchal and ors, reported as (2007) 12 SCC 1 , observed as under: 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. 19. Hon'ble Supreme Court in case Inder Mohan Goswami and Anr v. State of Uttaranchal and ors, reported as (2007) 12 SCC 1 , observed as under: 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 the Civil Judge. In the facts and circumstances of the case, initiation of criminal proceedings by the respondents against the appellants is clearly an abuse of the process of the court". 20. In case Jitendra Reghuvanshi and ors v. Babita Reghuvanshi and anr, report as (2013) 4 SCC 58 , three Judges of Hon'ble Supreme Court observed, as under:- "The inherent powers of the High Court under Section 482 Cr.P.C are wide and unfettered. It is trite to state that the power under Section 482 should be exercised sparingly and with circumspection only when the Court is convinced, on the basis of material on record, that allowing the proceedings to continue would be an abuse of process of court or that the ends of justice require that the proceedings ought to be quashed. Exercise of such power would depend upon the facts and circumstances of each case and it has to be exercised in appropriate cases in order to do real and substantial justice for the administration of which alone the courts exist. Thus, the High Court in exercise of its inherent powers can quash the criminal proceedings or FIR or complaint in appropriate cases in order to meet the ends of justice and Section 320 CrPC does not limit or affect the powers of the High Court under Section 482 CrPC." 21. In the present case, the petitioner has already filed a suit of recovery before the learned Additional Civil Judge (Sr. Division), Narnaul in which notice has already been issued, that is, prior to the lodging of the complaint against the petitioner. 22. In order to appreciate the matter in controversy, it would be appropriate to reproduce Sections 406/409 and 420 RPC as under:- "406. Division), Narnaul in which notice has already been issued, that is, prior to the lodging of the complaint against the petitioner. 22. In order to appreciate the matter in controversy, it would be appropriate to reproduce Sections 406/409 and 420 RPC as under:- "406. Punishment for criminal breach of trust Whoever commits criminal breach of trust shall be punished with imprisonment of either description for a term which may extend to three years, or with fine, or with both. 409. Criminal breach of trust by public servant, or by banker, merchant or agent Whoever, being in any manner entrusted with property, or with any dominion over property in his capacity of a public servant or in the way of his business as a banker, merchant, factor, broker, attorney, or agent, commits criminal breach of trust in respect of that property, shall be punished with imprisonment for life, or with imprisonment of either description for a term which may extend to (ten years) and shall also be liable to fine. 23. In the light of definition of Sections 406 and 409, if text of the complaint is tested firstly the respondent had to show that the act allegedly committed by the petitioner amounts to criminal breach of trust and criminal breach of trust by public servant, or by banker, merchant or agent. 420. Cheating and dishonestly inducing delivery of property Whoever cheats and thereby dishonestly induces the person deceives to deliver any property to any person or to make, alter or destroy the whole or any part of valuable security, or anything which is signed or sealed, and which is capable of being converted into a valuable security, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine." 24. A bare reading of this Section would reveal that essential ingredients of offence of cheating are (1) deception of a person either by making a false or misleading representation or by other action or omission (2) fraudulent or dishonest inducement of that person to either deliver any property or to consent to the retention there of by any person or to intentionally induce that person 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. 25. In the present case, there is nothing on record to suggest so. Therefore, it is the intention which is the gist of offence of cheating. To hold a person guilty of cheating, it is necessary to show that he had fraudulent or dishonest intention at the time of making the promise. Nothing is gatherable from the record about fraudulent or dishonest intention of the petitioner. The respondent has nowhere stated in the complaint that he was induced by the petitioner to believe that the amount of 10.00 lac which he paid as advance money for three truck of mustard oil seed to be supplied by the petitioner and thus, made the respondent to part with the amount, by trading deception. 26. Learned senior counsel appearing for respondent vehemently argued that the present petition is not maintainable in light of the judgments reported in 2008 AIR SCW 1649 and 2006 (3) SCC (Cr) 245. Facts of the case referred to by learned Senior counsel appearing for the respondent hereinabove are different to that of the present case; therefore, the said judgment is not attracted to the case in hand. 27. It is not disputed that the suit for recovery has been filed by the petitioner for non-payment of his balance amount for the goods supplied by him, which is pending before the Court of learned Additional Civil Judge (Sr. Division), Narnaul in which notice has been issued to the respondent and the complaint filed by the respondent against the petitioner is much later than the suit filed by the petitioner. It is also clearly evident from the averments made in the complaint that there is no whisper about the pendency of the suit or about the receipt of the legal notice. 28. It is also clearly evident from the averments made in the complaint that there is no whisper about the pendency of the suit or about the receipt of the legal notice. 28. The facts alleged in the complaint disclosed purely a commercial business transaction amongst the parties. Even if there is any breach, no criminal offence is constituted. 29. In this view of the matter, this Court, in case Lal Singh and ors v. Khem Chand, reported as 1993 KLJ 158 , JKJ Soft JKJ/11986 observed as under:- "16. It is a well settled principle of law that were the same issue arise for decision in the civil suit and in the criminal proceeding between the same parties, and there is involvement of some complicated question of fact and mixed questions of fact and law, the proper forum will be the civil court. In the matter in question, the civil suit already filed before the High Court has come to close and a writ petition filed in that regard has been dismissed. It shows that the matter has been disposed of by a competent court of law finally, and in these circumstances of the case as well, I feel that these proceedings did not require any cognizance by a criminal court of law, as from a perusal of the complaint, the ingredients of the offence are not apparent. In absence of the ingredients of the offence appearing from the complaint, the criminal proceedings is liable to be quashed. 18. In the case on hand, the matter is not of such a consequence, but I simply relates to some khokhas illegally constructed by the accused No. 1 in promptness, without having followed the procedure as laid down under the J&K Municipal Act, and he has not in-any way caused any bodily injury to the complainant, and, thereby, in the discharge of his official duties, has exceeded his powers as a public servant. He has, no doubt, by the discharge of his official duties, caused loss to the complainant, which is compensable in terms of money, and such a matter can only be decided by a civil court of law." 30. The transaction is purely a commercial and civil in nature and even if there is a breach at the later stage, no criminal liability can be fastened. The transaction is purely a commercial and civil in nature and even if there is a breach at the later stage, no criminal liability can be fastened. My view is also fortified by the law laid down by the Apex Court in case Velji Raghavji Patel v. The State of Maharashtra, reported as AIR 1965 SC 1433 , Inder Mohan Goswami and anr v. State of Uttaranchal and ors, reported as (2007) 12 SCC 1 and in case U. Dhar and anr v. State of Jharkhand and anr, reported as (2003) 2 SCC 219 . Para 6 of the judgment rendered in U.Dhar's case is reproduced as under:- "6. The Courts below have overlooked the fact that the contract between Bokaro Steel (a unit of SAIL) and TCPL is a separate and independent contract. The contract between the complainant and TCPL altogether a different contract. The contractual obligations under both the contracts are separate and independent of each other. The rights and obligations of the parties i.e. complainant and TCPL are to be governed by the contract between TCPL and Bokaro Steel (SAIL) has no relevance. Therefore, even if Bokaro Steel has made the payment to TCPL under its contract with the latter, it will not give rise to plea of misappropriation of money because that money is not money or movable property of the complainant." 31. The Apex Court in case M/s. Indian Oil Corporation v. NEPC India Ltd. & ors, reported as AIR 2006 SC 2780 held as under: "10. While on this issue it is necessary to take notice of a growing tendency in business circles to convert purely civil disputes into criminal cases. This is obviously on account of a prevalent impression that civil law remedies are time consuming and do not adequately protect the interests of lenders/creditors. Such a tendency is seen in several family disputes also, leading to irretrievable break down of marriages/families. There is also an impression that if a person could somehow be entangled in a criminal prosecution, there is a likelihood of imminent settlement. Any effort to settle civil disputes and claims, which do not involve any criminal offence, by applying pressure though criminal prosecution should be deprecated and discouraged. There is also an impression that if a person could somehow be entangled in a criminal prosecution, there is a likelihood of imminent settlement. Any effort to settle civil disputes and claims, which do not involve any criminal offence, by applying pressure though criminal prosecution should be deprecated and discouraged. In G. Sagar Suri v. State of U.P. ( 2000 (2) SCC 636 ), this Court observed: "It is to be seen if a matter, which is essentially of civil nature, has been given a cloak of criminal offence. Criminal proceedings are not a short cut of other remedies available in law. Before issuing process a criminal court has to exercise a great deal of caution. For the accused it is a serious matter. This Court has laid certain principles on the basis of which High Court is to exercise its jurisdiction under Section 482 of the Code. Jurisdiction under this Section has to be exercised to prevent abuse of the process of any court or otherwise to secure the ends of justice." While no one with a legitimate cause or grievance should be prevented from seeking remedies available in criminal law, a complainant who initiates or persists with a prosecution, being fully aware that the criminal proceedings are unwarranted and his remedy lies only in civil law, should himself be made accountable, at the end of such misconceived criminal proceedings, in accordance with law. One positive step that can be taken by the courts to curb unnecessary prosecutions and harassment of innocent parties, is to exercise their power under section 250 Cr. P. C more frequently, where they discern malice or frivolousness or ulterior motives on the part of the complainant. Be that as it may." 32. In view of the law laid down by the Apex Court referred to hereinabove, a case for quashment the proceedings against the petitioner pending before the trial Court is made out. P. C more frequently, where they discern malice or frivolousness or ulterior motives on the part of the complainant. Be that as it may." 32. In view of the law laid down by the Apex Court referred to hereinabove, a case for quashment the proceedings against the petitioner pending before the trial Court is made out. And for what has been stated hereinabove, the complaint filed by the respondent does not disclose any criminal offence muchless the offence of cheating, and the process initiated against the petitioner is an abuse of the process of Court warranting interference by this Court in exercise of its inherent powers under Section 561-A Cr.P. C. The writ petition is allowed and the complaint and the criminal proceedings initiated against the petitioner including the impugned summoning order dated 03.07.2012 issued by the learned Special Municipal Magistrate, Jammu are hereby quashed. 33. Disposed of along with connected CMA(s). 34. Registry is directed to send down the record of trial Court forthwith.