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Allahabad High Court · body

2017 DIGILAW 1778 (ALL)

VIKRAM A. DOSHI v. STATE OF U. P.

2017-08-01

ABHAI KUMAR

body2017
JUDGMENT : Abhai Kumar, J. 1. Learned counsel for the applicant and the learned A.G.A. is present. None present on behalf of opposite party no.2. 2. Heard the learned counsel for the parties. 3. This petition under section 482 Cr.P.C. has been filed with a prayer that further proceedings of complaint case no. 729 of 2007 (Saurav Gupta Versus Vikram Doshi and others) under sections 420,406,120-B I.P.C. P.S. Prem Nagar, Bareilly pending in the court of Judicial Magistrate Ist Class Court No.3 District Bareilly may be quashed. 4. Brief facts of the case are as follows:- Opposite Party No. 2 is the proprietor M/S Savrav Enterprises, 62 Mandal Vihar Prem Nagar, Bareilly. On persuasion, opposite party no.2 entered into an agreement with Atco Weighing Solutions Company Ltd. Mumbai and in the process given Rs. 16 lacs to the company. After agreement Company supplied the goods worth Rs.8,50,696/- between 7.4.2004 to 10.6.2004 but did not supply the material for rest of the amount and in spite of request the Company did not show interest in further business with opposite party no. 2 and thereby applicant committed cheating. On 5th July, 2004, Opposite Party No. 2 surrendered the agreement and demanded for the balance amount. Out of the balance amount Rs.7,49,304/- only Rs. 6,10,300/-was given to opposite party no.2 but rest of the amount Rs. 1,39,304/- and Rs.32,000/- for credit note are not paid and thereby causing huge loss to opposite party as the company also did not take back left material with opposite party no. 2 whereas it was incumbent upon him to take back unsold material. 5. A cheque of Rs.1,43,000/- was issued by the Company after great persuasion as guarantee for the re-payment of the balance amount but the balance amount is not being paid. 6. On the basis of the complaint filed by O.P. No. 2 narrating the above referred incident, trial court summoned the applicants for facing the trial under sections 420 and 406 I.P.C. Aggrieved by that this petition has been filed. 7. The following are the submissions of the learned counsel for the applicant. 8. Nothing is due upon the company towards the complainant/opposite party no. 2. The amount of Rs.1,39,304/- shown as balance to be paid by the company to the complainant and for the same a cheque of Rs. 7. The following are the submissions of the learned counsel for the applicant. 8. Nothing is due upon the company towards the complainant/opposite party no. 2. The amount of Rs.1,39,304/- shown as balance to be paid by the company to the complainant and for the same a cheque of Rs. 1,43,000/- was issued to the complainant as per own admission of the complainant in the complaint itself. 9. The cheque was not returned back in spite of the notice to the complainant and encashed by opposite party no.2. The notice is annexed as Annexure No. 5. Certain amount is now due against the complainant to the Company. The matter between the parties is essentially of a civil in nature and the complainant has already filed a civil suit in the court of Civil Judge (S.D.) Bareilly. 10. In the agreement between the parties there is a clause of termination of the agreement and if agreement is terminated validly, then it cannot be said that a criminal breach is being done. If there was any stock remaining unsold with the complainant at the end of notice period of three months for termination of the agreement, the complainant could have continued selling this stock to the authorised dealers till the stock depleted fully or the Company undertakes to take back it unsold. 11. The learned counsel fortified his argument and placed reliance on a decision of the Apex Court in the case of S.W. Palanitlar and others Versus State of Bihar (2002) 1 S.C.C. 241 . 12. It is an admitted fact that the agreement took place between the company/applicant and the opposite party no.2. The agreement was signed by both the parties and after signing the agreement opposite party no.2 started business with the company of the applicants. From the fact, it cannot be inferred that there was any mal-intention of the applicants to dupe the money deposited by opposite party no.2. 13. The Hon'ble Supreme Court in the case of S.W. Palanitlar and others Versus State of Bihar(Supra) clearly stated that cheating or criminal breach of trust can be inferred by initial act as well as subsequent conduct. In the present matter, it is clear that there was no intention of the applicants to defraud the opposite party no.2. The subsequent conduct of the company does not show any intention to commit fraud or cheating. In the present matter, it is clear that there was no intention of the applicants to defraud the opposite party no.2. The subsequent conduct of the company does not show any intention to commit fraud or cheating. After the agreement failed the company did return more than Rs. 6,00,000/- to the complainant and also gave cheque of Rs.1,43,000/- as security for payment of the rest of the amount, which was finally encashed by the complainant. A recovery suit by the opposite party no.2 was filed in the year 2006 whereas a complaint case was filed subsequently in the year 2007. From the conduct of opposite party no. 2, it can be inferred that the complainant/opposite party no. 2 himself knew that the dispute between the parties is essentially of a civil nature but with ulterior motive he initiated a criminal proceeding. The Hon'ble Supreme Court in the case of V.Y. Jose and another Vs. State of Gujarat and another, 2009 (65) ACC 572 stated that in case the dispute is essentially of a civil nature then criminal proceedings cannot be initiated. The Supreme Court observed as follows: "12. 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 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. 15. There exists a distinction between pure contractual dispute of civil nature and an offence of cheating. Although breach of contract per se would not come in the way of initiation of a criminal proceeding, there cannot be any doubt whatsoever that in absence of the averments made in the complaint petition wherefrom the ingredients of an offence can be found out, the court should not hesitate to exercise its jurisdiction under Section 482 of the Code of Criminal Procedure. We may reiterate that one of the ingredients of cheating as defined in Section 415 of the Indian Penal Code is existence of an intention of making initial promise or existence thereof from the very beginning of formation of contract. We may reiterate that one of the ingredients of cheating as defined in Section 415 of the Indian Penal Code is existence of an intention of making initial promise or existence thereof from the very beginning of formation of contract. Section 482 of the Code of Criminal Procedure, saves the inherent power of the court. It serves a salutary purpose viz. a person should not undergo harassment of litigation for a number of years although no case has been made out against him. It is one thing to say that a case has been made out for trial and as such the criminal proceedings should not be quashed but it is another thing to say that a person should undergo a criminal trial despite the fact that no case has been made out at all." 14. It is also pertinent to mention here that the company is not made a party in the complaint and except for specific case of vicarious liability is mentioned in the criminal proceeding and without making the company as party, the complaint is defective. The Supreme Court in the case of S.K. Alagh Vs. State of U.P. and others, Criminal Appeal No. 317 of 2008 decided on 15 February, 2008 found that Rs.1,68,000/- were taken by the company and same was returned bonafidely. If any delay in returning the amount was caused was due to process that took place in the bank. Hon'ble Apex Court in paragraph 20 observed as follows: "20. As, admittedly, drafts were drawn in the name of the company, even if appellant was its Managing Director, he cannot be said to have committed an offence under Section 406 of the Indian Penal Code. If and when a statute contemplates creation of such a legal fiction, it provides specifically therefor. In absence of any provision laid down under the statute, a Director of a company or an employee cannot be held to be vicariously liable for any offence committed by the company itself. {See Sabitha Ramamurthy and Anr. v. R.B.S. Channabasavaradhya [ (2006) 10 SCC 581 ]}." 15. Hon'ble Apex Court further elaborated the matter and gave the instances where vicarious liability can be imposed but not in all the cases. In this connection Paragraph 21 is relevant, which is as follows: "21. {See Sabitha Ramamurthy and Anr. v. R.B.S. Channabasavaradhya [ (2006) 10 SCC 581 ]}." 15. Hon'ble Apex Court further elaborated the matter and gave the instances where vicarious liability can be imposed but not in all the cases. In this connection Paragraph 21 is relevant, which is as follows: "21. We may, in this regard, notice that the provisions of the Essential Commodities Act, Negotiable Instruments Act, Employees' Provident Fund (Miscellaneous Provision) Act, 1952 etc. have created such vicarious liability. It is interesting to note that Section 14A of the 1952 Act specifically creates an offence of criminal breach of trust in respect of the amount deducted from the employees by the company. In terms of the explanations appended to Section 405 of the Indian Penal Code, a legal fiction has been created to the effect that the employer shall be deemed to have committed an offence of criminal breach of trust. Whereas a person in charge of the affairs of the company and in control thereof has been made vicariously liable for the offence committed by the company along with the company but even in a case falling under Section 406 of the Indian Penal Code vicarious liability has been held to be not extendable to the Directors or officers of the company. {See Maksud Saiyed v. State of Gujarat and Ors. [2007 (11) SCALE 318]}." 16. In the present matter also agreement took place between the parties and after the representation of agreement, Rs.6,10,300/- were given by the Company out of balance Rs.7,49,304/- as per own admission of the complainant. For the rest amount, the Company did issue a cheque of Rs.1,43,000/- which was also finally encahsed by the Company. Civil Suit was also pending prior to the institution of complaint case and in view of the above, it is clear that dispute between the parties is essentially of a civil nature and a criminal proceedings is being initiated just to pressurize the company. Moreover, without making the company a party the complaint is also bad and not maintainable as such. Consequently, the petition filed under Section 482 Cr.P.C. succeeds and the proceedings of Complaint Case No.729 of 2007 (Saurav Gupta Versus Vikram Doshi and others) under Section 420, 406 and 120-B I.P.C., P.S. Prem Nagar, Bareily pending in the Court of Judicial Magistrate Ist Class, Court No.3, District Bareilly, is quashed.