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Jharkhand High Court · body

2016 DIGILAW 428 (JHR)

N. Srinivas v. State of Jharkhand

2016-03-08

RONGON MUKHOPADHYAY

body2016
JUDGMENT : In this application, the petitioner has prayed for quashing the entire criminal proceeding in connection with Dhanbad (Bank More) P. S. Cas e No. 1244 of 2014 which has been registered for the offences punishable under Section 420 of I.P.C. 2. A written report was submitted by the opposite party no. 2 in which it was alleged that for the purposes of production of solar energy, machines were purchased from the firm of the petitioner for which the necessary amount was paid. The machines/instruments were installed by the petitioner in the business premises of the opposite party no. 2. Subsequently, it was detected that the machines so supplied were of inferior quality and although request was made to the petitioner to take back the machines, no response was given from the side of the petitioner. It has therefore been alleged that an amount of Rs. 27,90,000/-was received by the petitioner, but the machines supplied were of inferior quality which resulted in an offence of cheating committed by the petitioner. Based on the aforesaid allegations, Dhanbad (Bank More) P. S. Case No. 1244 of 2014 was instituted. 3. Heard Mr. A. K. Sahni, learned counsel for the petitioner and Mr. Arun Kumar, learned counsel appearing for the opposite party no. 2. 4. Learned counsel for the petitioner has submitted that from the FIR it is evident that the only dispute is with respect to supply of machines which according to the informant was of inferior quality. It has been submitted that such allegations cannot be construed to come within the definition of cheating as per Section 415 of the I.P.C. and at best, the case can be of deficiency of service for which the opposite party no. 2 has an appropriate forum under the law for redressal of his grievance. It has further been submitted that the dispute is purely civil in nature and only to pressurise the petitioner, the FIR has been instituted. In support of his contention, learned counsel for the petitioner has referred to the case of “International Advanced Research Centre for Powder Metallurgy and New Materials (ARCI) and others Vs. Nimra Cerglass Technics Private Limited and another” reported in (2016) 1 SCC 348 , and “Vesa Holdings P. Ltd & anr. Vs. State of Kerala & ors.” reported in (2015) 2 Eastern Criminal Cases 226 (SC). 5. Mr. Nimra Cerglass Technics Private Limited and another” reported in (2016) 1 SCC 348 , and “Vesa Holdings P. Ltd & anr. Vs. State of Kerala & ors.” reported in (2015) 2 Eastern Criminal Cases 226 (SC). 5. Mr. Arun Kumar, learned counsel for the opposite party no. 2 has submitted that the petitioner had with a deliberate intention supplied low quality machines to the opposite party no. 2 although, the entire amount was paid by the opposite party no. 2 to the petitioner. It has been submitted that the investigation is at the threshold and the investigation cannot be stifled at this stage. It has been submitted that only upon a proper investigation, the materials with respect to the dishonest intention of the petitioner would come to light as the FIR is merely an initiation of a criminal proceeding. While referring to the judgment in the case of “Mosiruddin Munshi Vs. Mohd. Siraj & another” reported in (2014 ) 14 SCC 29, it was contended that the investigation into the allegations should be allowed to proceed. 6. The FIR also contains the agreement and the proforma invoice which are related to the transaction and since the same have been filed along with the written report, this Court can take cognizance of such documents as the same can be construed to be unimpeachable evidence. 7. The agreement between the petitioner and the opposite party no. 2 was entered into on 12.03.2014 in which as per Article 4, the supplier (petitioner) was required to provide a warranty for quality and performance of the goods supplied not less than 12 months as per the date of provisional acceptance. Article 6 of the contract deals with the settlement of disputes. The communication which was made by the informant with respect to the inferior quality of machines supplied by the petitioner is more or less confined to recovery of losses which has allegedly been sustained by the informant. The documents which have been filed with the FIR therefore suggest that the entire dispute is with respect to a business transaction and it cannot be inferred that there was a dishonest intention on the part of the petitioner from the very inception to cheat the informant. The documents which have been filed with the FIR therefore suggest that the entire dispute is with respect to a business transaction and it cannot be inferred that there was a dishonest intention on the part of the petitioner from the very inception to cheat the informant. If at all, the informant is aggrieved with the actions/inactions of the petitioner with respect to the supply of the machines, the same would amount to deficiency of services for which the informant has an appropriate civil remedy before the proper forum. The criminal courts are not meant to settle inter-se dispute between the parties with respect to business transactions by resorting to institution of a criminal case. In the case of “International Advanced Research Centre for Powder Metallurgy and New Materials (ARCI) and others” (supra), while considering the distinction between mere breach of contract and cheating, it was held as follows: 16. “The distinction between mere breach of contract and the cheating would depend upon the intention of the accused at the time of alleged inducement. If it is established that the intention of the accused was dishonest at the very time when he made a promise and entered into a transaction with the complainant to part with his property or money, then the liability is criminal and the accused is guilty of the offence of cheating. On the other hand, if all that is established is that a representation made by the accused has subsequently not been kept, criminal liability cannot be foisted on the accused and the only right which the complainant acquires is the remedy for breach of contract in a civil court. Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown at the beginning of the transaction. In S.W. Palanitkar Vs. State of Bihar, this Court held as under: “21. ........In order to constitute an offence of cheating, the intention to deceive should be in existence at the time when the inducement was made. It is necessary to show that a person had fraudulent or dishonest intention at the time of making the promise, to say that he committed an act of cheating. A mere failure to keep up promise subsequently cannot be presumed as an act leading to cheating.” 8. It is necessary to show that a person had fraudulent or dishonest intention at the time of making the promise, to say that he committed an act of cheating. A mere failure to keep up promise subsequently cannot be presumed as an act leading to cheating.” 8. In the case of “Vesa Holdings P. Ltd & anr.” (supra), it was held as follows: -4 8. “From the decisions cited by the appellant, the settled proposition of law is 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 other words 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 Indian Penal Code can be said to have been made out. 9. It is true that a given set of facts may make out a civil wrong as also a criminal offence and only because a civil remedy may be available to the complainant that itself cannot be a ground to quash a criminal proceeding. The real test is whether the allegations in the complaint disclose the criminal offence of cheating or not. In the present case there is nothing to show that at the very inception there was any intention on behalf of the accused persons to cheat which is condition precedent for an offence under Section 420 IPC. In our view the complaint does not disclose any criminal offence at all. Criminal proceedings should not be encouraged when it is found to be malafide or otherwise an abuse of the process of the court. Superior courts while exercising this power should also strive to serve the ends of justice. In our view the complaint does not disclose any criminal offence at all. Criminal proceedings should not be encouraged when it is found to be malafide or otherwise an abuse of the process of the court. Superior courts while exercising this power should also strive to serve the ends of justice. In our opinion, in view of these facts allowing the police investigation to continue would amount to an abuse of the process of court and the High Court committed an error in refusing to exercise the power under Section 482 Criminal Procedure Code to quash the proceedings.” 9. Learned counsel for the opposite party no. 2 has referred to the case of “Mosiruddin Munshi” (supra) with respect to a premature stalling of the investigation wherein it was held as follows: 6. “The legal position with regard to exercise of jurisdiction by the High Court for quashing the first information report is now well settled. It is not necessary for us to delve deep thereinto as the propositions of law have been stated by this Court in R.Kalyani Vs. Janak C. Mehta in the following terms: “15. Propositions of law which emerge from the said decisions are: (1) The High Court ordinarily would not exercise its inherent jurisdiction to quash a criminal proceeding and, in particular, a first information report unless the allegations contained therein, even if given face value and taken to be correct in their entirety, disclosed no cognizable offence. (2) For the said purpose the Court, save and except in very exceptional circumstances, would not look to any document relied upon by the defence. (3) Such a power should be exercised very sparingly. If the allegations made in the FIR disclose commission of an offence, the Court shall not go beyond the same and pass an order in favour of the accused to hold absence of any mens rea or actus reus. (4) If the allegation discloses a civil dispute, the same by itself may not be a ground to hold that the criminal proceedings should not be allowed to continue.” 10. The High Court has adopted a strictly hypertechnical approach and such an endeavour may be justified during a trial, but certainly not during the stage of investigation. (4) If the allegation discloses a civil dispute, the same by itself may not be a ground to hold that the criminal proceedings should not be allowed to continue.” 10. The High Court has adopted a strictly hypertechnical approach and such an endeavour may be justified during a trial, but certainly not during the stage of investigation. At any rate it is too premature a stage for the High Court to step in and stall the investigation by declaring that it is a civil transaction wherein no semblance of criminal offence is involved.” 10. It is no doubt true that the High Court would be circumspect in quashing a criminal proceeding which has merely been initiated without the investigation having been completed, but at the same time, if the Court finds that the dispute is purely civil in nature arising out of a breach of contract, it cannot permit continuation of a criminal proceeding which has been foisted upon on an accused and it would be within its jurisdiction to bring such criminal proceedings to an end. The Hon'ble Supreme Court in various judgments had put in a note of caution with respect to considering the documents submitted by the defence. In the present case, the documents which are under consideration are part of the FIR and those documents being untainted and unimpeachable can be considered while deciding an issue like the present. Adverting back to the judgment in the case of “International Advanced Research Centre for Powder Metallurgy and New Materials (ARCI) and others” (supra), the Hon'ble Supreme Court had once again reiterated the powers to be exercised by the High Court in a proceeding under Section 482 of the Cr.P.C. and the same is extracted hereinabelow: 13. “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 uncontroverted allegations as made in the complaint establish the offence. The High Court being superior court of the State should refrain from analysing the materials which are yet to be adduced and seen in their true perspective. The inherent jurisdiction of the High Court under Section 482 Cr.P.C. should not be exercised to stifle a legitimate prosecution. The power under Section 482 Cr.P.C. is to be used sparingly only in rare cases. The inherent jurisdiction of the High Court under Section 482 Cr.P.C. should not be exercised to stifle a legitimate prosecution. The power under Section 482 Cr.P.C. is to be used sparingly only in rare cases. In a catena of cases, this Court reiterated that the powers of quashing criminal proceedings should be exercised very sparingly and quashing a complaint in criminal proceedings would depend upon the facts and circumstances of each case. (Vide State of Haryana V. Bhajan Lal, State of T.N. V. Thirukkural Perumal and CBI V. Ravi Shankar Srivastava). 25. The above decisions reiterated the well-settled principles that while exercising inherent jurisdiction under Section 482 Cr.P.C., it is not for the High Court to appreciate the evidence and its truthfulness or sufficiency inasmuch as it is the function of the trial court. The High Court's inherent powers, be it, civil or criminal matters, is designed to achieve a salutary public purpose and that a court proceeding ought not to be permitted to degenerate into a weapon of harassment or persecution. If the averments in the complaint do not constitute an offence, the Court would be justified in quashing the proceedings in the interest of justice.” 11. As has been focused above, the entire dispute seems to be with respect to supply of machines allegedly of an inferior quality and if at all the opposite party no. 2 has any grievance, the same can be redressed in an appropriate civil proceeding and not by instituting a criminal case. The criminal proceedings against the petitioner if allowed to continue shall result in miscarriage of justice and would be an abuse of the process of Court. 12. Accordingly, there being merit in this application, the same is allowed and the entire criminal proceedings in connection with Dhanbad (Bank More) P. S. Case No. 1244 of 2014 which has been registered for the offences punishable under Section 420 of I.P.C is hereby quashed.