Research › Search › Judgment

Gauhati High Court · body

2020 DIGILAW 479 (GAU)

Citylife Retail Pvt. Ltd. v. State Of Assam

2020-05-12

MANISH CHOUDHURY

body2020
JUDGMENT Manish Choudhury, J. - Heard Ms. S. Kejriwal, learned counsel for the petitioner; Mr. B.B. Gogoi, learned Additional Public Prosecutor for respondent no. 1, State of Assam and Mr. P. Das, learned counsel appearing for respondent no. 2. 2. The petitioners, 7 (seven) in nos., have preferred this criminal petition seeking invocation of the inherent powers under Section 482, Code of Criminal Procedure, 1973 ("the Code" and/or "the CrPC", for short) for quashing of the First Information Report (FIR) dated 07.01.2019 registered as Jorhat Police Station Case No. 48/2019 (corresponding G.R. Case No. 65/2019) under Sections 406/420, Indian Penal Code (IPC) and all consequential actions arising therefrom. 3. The petitioner no. 1 (hereinafter referred to as the petitioner no. 1-company) is a company incorporated under the Companies Act, 1956 having its registered office at Howrah. The petitioner nos. 2-7 are the Directors of petitioner no. 1-company and are residents of various places outside the State of Assam. It is projected that the petitioner no. 1-company, to start a new retail showroom, had entered into a tenancy agreement dated 05.06.2017 with one M/s DRB Developers, Guwahati for taking a commercial place on rent in a building named DRB Heights, located at Raja Maidan Road, Jorhat. The First Information Report (FIR) which has been lodged by the respondent no. 2, is in connection with the disputes and differences which have emanated from the said tenancy agreement dated 05.06.2017. 4. It is submitted by Ms. Kejriwal that the entire issues are with regard to the tenancy agreement dated 05.06.2017 and an addendum entered into between the petitioner no.1 company with the respondent no. 2 on 20.04.2018. A perusal of the FIR would make it amply clear that the dispute arising between the parties is clearly a civil dispute and the respondent no. 2-informant has sought to give criminal colours to it by alleging cheating and criminal breach of trust, etc. 5. Per contra, Mr. Das has submitted that the petitioner no. 1-company and their Directors right since the inception of the agreement, had acted dishonestly in order cause wrongful loss to the respondent no. 2-informant. He has further submitted that earlier, the respondent no. 5. Per contra, Mr. Das has submitted that the petitioner no. 1-company and their Directors right since the inception of the agreement, had acted dishonestly in order cause wrongful loss to the respondent no. 2-informant. He has further submitted that earlier, the respondent no. 2-informant had lodged an FIR which was registered as Jorhat Police Station Case No. 2666/2017 on 16.12.2017 and after registration of the said case, the parties had negotiated and after mutual discussion, an addendum was entered into on 20.04.2018. The petitioner no. 1-company did not adhere to the conditions of the said addendum, more particularly, as regards payment of 7% of the net sale value, retention of sufficient stocks, marketing activities, etc. for increasing the sales of the store. 6. I have considered the submissions of the learned counsel for the parties and have perused the materials made available with the criminal petition including the FIR lodged by the respondent no. 2 which resulted into the registration of Jorhat Police Station Case No. 48/2019 under Sections 420/406, IPC. 7. From a perusal of the FIR as well as tenancy agreement along with the addendum it appears that the parties had business transactions and the disputes and differences had appeared between them out of the said tenancy agreement, addendum, etc. It is the intention which is the core issue to find out whether the dispute is a civil dispute simplicitor or any criminal intent can be attributed on the part of the petitioner no. 1-company and its Directors on for actions. For that purpose, it is necessary to look further into the averments and allegations made in the said FIR. wxyz 7.1. It transpires that M/s DRB Developers is a registered partnership firm and the FIR was lodged by the authorized signatory of M/s DRB Developer who has been impleaded as respondent no. 2 in this petition. From the materials on record and the submissions of the parties, it has emerged that M/s DRB Developers is the owner of a commercial premise located at Raja Maidan Road, Jorhat which is known as DRB Heights. In the FIR, it has, interalia, been mentioned that M/s DRB Developers and the petitioner no. 1-company had entered into a tenancy agreement dated 05.06.2017. It is averred that the said tenancy agreement was executed after several rounds of discussion and performance of a number of formalities. In the FIR, it has, interalia, been mentioned that M/s DRB Developers and the petitioner no. 1-company had entered into a tenancy agreement dated 05.06.2017. It is averred that the said tenancy agreement was executed after several rounds of discussion and performance of a number of formalities. It is stated that the petitioner no. 1-company is a lawful tenant in respect of the said commercial premises. As per the tenancy agreement, the petitioner no.1-company was authorized to run their business from the said tenanted premises. zyxw wxyz 7.2. Clause no. 4 of the said tenancy agreement has been relied on by the respondent no. 2 wherein it was stipulated that the lease period should be for a period of 20 years and it could be extended on mutual agreement between the parties before expiry of the said lease period. It was further stipulated thereafter that the lock-in period shall be for a period of 18 months to be calculated from the date of opening of the showroom. zyxw wxyz 7.3. It has been asserted that the respondent no. 2 had invested huge amount of money in the said tenanted premises as per the demands and as per the requirement of the petitioner no. 1-company before letting out the same. It is alleged that despite compliance of all the formalities on its part, the petitioner no. 1-company initially stopped their operation in the showroom and without any intimation, they tried to shift their business to some other place. It is, thus, alleged that criminal breach of trust had been committed by the petitioner no. 1- company. Alleging such, the respondent no. 2 had earlier lodged an FIR before the Officer InCharge, Jorhat Police Station and the same was registered as Jorhat Police Station Case No. 2666/2017 under Sections 420/406, IPC. The investigation was initiated in connection with the said case and the officials of the petitioner no. 1-company had approached the respondent no. 2 with a prayer to make settlement outside the court. zyxw wxyz 7.4. After mutual discussion, an addendum was entered into between the parties after settlement and as per the said addendum, the petitioner no. 1-company had agreed to keep sufficient stocks in the tenanted premises and also to do sufficient marketing activities and make efforts at their own cost to increase the sales. The said addendum was to be valid for the period from 01.04.2018 to 31.03.2019. 1-company had agreed to keep sufficient stocks in the tenanted premises and also to do sufficient marketing activities and make efforts at their own cost to increase the sales. The said addendum was to be valid for the period from 01.04.2018 to 31.03.2019. It is alleged in the FIR that the petitioner no. 1- company and its officials had, thereafter, intentionally avoided to adhere to the terms and conditions of the addendum and they had stopped running their businesses from the said tenanted premises without any intimation. zyxw wxyz 7.5. The respondent no. 2 has further averred that a legal notice was sent to the petitioner no. 1-company and its Directors. It is asserted that the parties had agreed that the lock-in period was for 18 months initially and after mutual discussion, the addendum was executed wherein the petitioner no. 1-company and its officials had agreed to keep sufficient stocks in the tenanted premises and also to do sufficient marketing activities. It is alleged that the petitioner no. 1-company had failed to keep sufficient stocks in the tenanted premises and they had not intentionally made efforts to make proper activities in order to increase sales. zyxw wxyz 7.6. Alleging commission of the offences of cheating and criminal breach of trust, the respondent no. 2 has lodged the FIR. zyxw 8. It is settled position of law that the inherent powers under Section 482, CrPC can be exercised to prevent the abuse of the process of law and/or to secure the ends of justice. It is true that the inherent powers of the Court available under Section 482, CrPC are to be exercised sparingly and in rarest of the rare cases. It is also true that such powers can be exercised when it is found that there is abuse of the process of the Court and when it is manifestly demonstrated that criminal prosecution has been initiated in order to cause undue harassment. It is settled position of law that the Court in exercise of it power under Section 482, CrPC has to be careful to see that its decision to exercise its inherent powers is based on sound principles. 9. It is settled position of law that the Court in exercise of it power under Section 482, CrPC has to be careful to see that its decision to exercise its inherent powers is based on sound principles. 9. In the decision of State of Haryana vs. Bhajan Lal, (1992) Supp1 SCC 335 , the Supreme Court has indicated 7 (seven) categories of cases, by way of illustration, wherein the inherent powers under Section 482, CrPC can be exercised either to prevent abuse of the process of the court or otherwise to secure the ends of justice, further indicating that it may not be possible to lay down any precise, clearly-defined guidelines or rigid formulae and to give an exhaustive list of cases wherein such powers should be exercised. It has been observed as under : wxyz "102. In the backdrop of the interpretation of the various relevant provisions of the Code under Chapter XIV and of the principles of law enunciated by this Court in a series of decisions relating to the exercise of the extra-ordinary power under Article 226 or the inherent powers under Section 482 of the Code which we have extracted and reproduced above, we give the following categories of cases by way of illustration wherein such power could be exercised either to prevent abuse of the process of any Court or otherwise to secure the ends of justice, though it may not be possible to lay down any precise, clearly defined and sufficiently channelised and inflexible guidelines or rigid formulae and to give an exhaustive list of myriad kinds of cases wherein such power should be exercised. zyxw wxyz (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. zyxw wxyz (2) Where the allegations in the First Information Report and other materials, if any, accompanying the F.I.R. 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 within the purview of Section 155(2) of the Code. zyxw wxyz (2) Where the allegations in the First Information Report and other materials, if any, accompanying the F.I.R. 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 within the purview of Section 155(2) of the Code. zyxw wxyz (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 make out a case against the accused. zyxw wxyz (4) Where, the allegations in the F.I.R. do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code. zyxw wxyz (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. zyxw wxyz (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 proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party. zyxw wxyz (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. We also give a note of caution to the effect that the power of quashing a criminal proceeding should be exercised very sparingly and with circumspection and that too in the rarest of rare cases; that the Court will not be justified in embarking upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the F.I.R. or the complaint and that the extraordinary or inherent powers do not confer an arbitrary jurisdiction on the Court to act according to its whim or caprice." zyxw 10. As Mr. As Mr. Das has submitted that the allegations made in the FIR makes it evident that the instant case is a case of cheating and criminal breach of trust, it is necessary to refer to the provisions in the Indian Penal Code for cheating which is defined in Section 415, IPC and the same reads as under :- wxyz "415. Cheating. Whoever, by deceiving any person, fraudulently or dishonestly induces 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". Explanation. A dishonest concealment of facts is a deception within the meaning of this section." zyxw wxyz Section 420, IPC defines cheating and dishonestly inducing delivery of property in the following words :- zyxw wxyz "420. Cheating and dishonestly inducing delivery of property. Whoever cheats and thereby dishonestly induces the person deceived to deliver any property to any person, or to make, alter or destroy the whole or any part of a 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." zyxw wxyz 10.1. Section 405, IPC defines criminal breach of trust and an offence of criminal breach of trust is punishable under Section 406, IPC. Section 405, IPC and Section 406, IPC read as under :- zyxw wxyz "405. Criminal breach of trust. Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or wilfully suffers any other person so to do, commits "criminal breach of trust"." zyxw wxyz "406. Punishment for criminal breach of trust. 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." zyxw 11. For ready reference, it is apt to refer to the decision in S.W. Patanitkar and others vs. State of Bihar and another, (2002) 1 SCC 241 where the ingredients of both the offences of criminal breach of trust and cheating have been explained in the following manner : wxyz "9. The ingredients in order to constitute a criminal breach of trust are: (1) entrusting a person with property or with any dominion over property, (ii) that persons entrusted (a) dishonestly misappropriating or converting that property to his own use: or (b) dishonestly using or disposing of that property or wilfully suffering any other person so to do in violation (i) of any direction of law prescribing the mode in which such trust is to be discharged (ii) of any legal contract made touching the discharge of such trust. zyxw wxyz 10. The ingredients of an offence of cheating are: (i) there should be fraudulent or dishonest inducement of a person by deceiving him, (ii) (a) the person so deceived should be induced to deliver any property to any person, or to consent that any person shall retain any property; or (b) the person so deceived should be intentionally induced to do or omit to do anything which he would not do or omit if he were not so deceived; and (iii) in cases covered by (ii) (b), the act of omission should be one which causes or is likely to cause damage or harm .to the person induced in body, mind, reputation or property." zyxw 12. In order to attract the provisions of Section 415 and Section 420, IPC, the guilt intended at the time of making the promise is the requirement and an essential ingredient thereto and subsequent failure to fulfill the promise by itself may not attract the provisions of Section 415 or Section 420, IPC. In order to attract the provisions of Section 415 and Section 420, IPC, the guilt intended at the time of making the promise is the requirement and an essential ingredient thereto and subsequent failure to fulfill the promise by itself may not attract the provisions of Section 415 or Section 420, IPC. In this connection, a reference to Illustration G of Section 415, IPC may be referred to :- wxyz "(g)A intentionally deceives Z into a belief that A means to deliver to Z a certain quantity of indigo plant which he does not intend to deliver, and thereby dishonestly induces Z to advance money upon the faith of such delivery. A cheats; but if A, at the time of obtaining the money, intends to deliver the indigo plant, and afterwards breaks his contract and does not deliver it, he does not cheat, but is liable only to a civil action for breach of contract." zyxw 13. The FIR has made reference to the tenancy agreement dated 05.06.2017 and the addendum to the said agreement dated 20.04.2018 and the same are annexed to the instant petition. To have a better understanding of the disputes and differences between the parties, a reference to the relevant terms and conditions of the tenancy agreement dated 05.06.2017 are found necessary : wxyz "4. LEASE PERIOD zyxw wxyz Lease period shall be for 20 (Twenty) years and may be extended on mutual agreement amongst the parties hereof and it will be decided before the expiry of the lease. The lock-in period shall be first 18 MONTHS (eighteen), which shall be calculated from the date of opening of showroom/start of commercial operation. zyxw wxyz 7. ADJUSTABLE /REFUNDABLE SECURITY DEPOSIT zyxw wxyz The LESSEE shall pay an interest free adjustable/refundable security deposit equivalent to 3 (Three) months'' rent to the LESSOR in the manner provided in clause 8. The LESSOR shall adjust an amount equivalent to two months of interest free security deposit to the proportionate of last two month''s rent payable on the termination of the MOU and balance amount of security deposit will be repaid back to the LESSEE upon receipt of the vacant, peaceful and in good condition of the said premises. zyxw wxyz 9. The LESSOR shall adjust an amount equivalent to two months of interest free security deposit to the proportionate of last two month''s rent payable on the termination of the MOU and balance amount of security deposit will be repaid back to the LESSEE upon receipt of the vacant, peaceful and in good condition of the said premises. zyxw wxyz 9. NOTICE PERIOD zyxw wxyz 9.1 After the expiry of lock in period, only the LESSEE, if for any reason, wishes to terminate the agreement prior to the expiry of Lease period, shall serve upon a notice in writing to the LESSOR in their behalf at-least 3 (Three) months in advance. In other words the LESSOR cant terminate the agreement before the expiry of lease agreement. zyxw wxyz 9.2 The LESSOR may terminate the agreement in case of default in payment of monthly rental for continues period of two months by giving three months notice in advance in wring to the LESSEE." zyxw wxyz 13.1. It is also appropriate to refer to the following clauses in the addendum to the agreement dated 20.04.2018 :- zyxw wxyz "1. The LESSEE shall pay 7% of the net sale value excluding GST per month to the LESSOR as the rent of the tenanted premises instead of the fixed monthly rent of Rs. 3,21,000/- plus GST which was agreed between the parties vide the Tenancy Agreement dated 05.06.2017. zyxw wxyz 2. That the said arrangement will be for a period of 01-04-2018 to 31-03-2019. zyxw wxyz 3. The LESSOR has considered the above said request of the LESSEE that LESSEE will pay the 7% of the net sale value excluding GST per month to the LESSOR from the said period. zyxw wxyz 4. That the above said value of the 7% will be calculated by excluding the taxes applicable. Here net sales means (Sales Tax Return Discount). zyxw wxyz 5. That the LESSEE shall share the monthly sale report with the LESSOR which will be done from the showroom running in the tenanted premises by the LESSEE. Further the LESSEE will share their GST Return with the LESSOR and if the sale reported in GST Return exceeds the weekly sale reported to the LESSOR, then the differential rent @ 7% plus GST will also be required to be paid to the LESSOR. zyxw wxyz 6. Further the LESSEE will share their GST Return with the LESSOR and if the sale reported in GST Return exceeds the weekly sale reported to the LESSOR, then the differential rent @ 7% plus GST will also be required to be paid to the LESSOR. zyxw wxyz 6. That the LESSEE shall pay the above said sale value within the 10th day of every month to the LESSOR as the rent of the tenanted premises. zyxw wxyz 7. That the LESSEE shall keep sufficient stock in the store and also do sufficient marketing activities and efforts on its own cost to increase the sale." zyxw 14. A conjoint reading of the FIR, the tenancy agreement and the addendum makes it clear that the disputes and the differences between the parties have arisen because after execution of the addendum dated 20.04.2018, the petitioner no. 1-company who was supposed to keep sufficient stocks in the store and also to do sufficient marketing activities and make efforts on its own cost to increase sales for the period from 01.04.2018 to 31.03.2019, had not done so to the satisfaction of the respondent no. 2-informant. It is the substance of the FIR which is to be seen as a whole. Mere use of the expression cheating and criminal breach of trust, etc. in the FIR is of no consequence. The offence alleged to have been committed by the petitioner no. 1-company is that they had committed the offence under Section 420, IPC and Section 406, IPC. To commit the offence of cheating, there must be deception. To deceive is to induce a man to believe a thing as true which is false and which the person deceiving or knows or believes to be false. It must also be shown that there existed a fraudulent and dishonest intention at the time of commission of the offence. 15. The distinction between the breach of agreement and cheating is a fine one. It is true that in the addendum, it was agreed between the parties that the petitioner no. 1-company would keep sufficient stocks in the showroom and also would do sufficient marketing activities and efforts on its own cost to increase the sales. No benchmark has been mentioned as to how much stocks were to be kept in the showroom and in what manner the marketing activities were to be done. The interests of the respondent no. 1-company would keep sufficient stocks in the showroom and also would do sufficient marketing activities and efforts on its own cost to increase the sales. No benchmark has been mentioned as to how much stocks were to be kept in the showroom and in what manner the marketing activities were to be done. The interests of the respondent no. 2 lies in the fact that he would get 7% of the net sale value excluding GST per month as rent of the tenanted premises as per the addendum. 16. Just because it was found by the respondent no. 2 that the petitioner no. 1-company had not kept sufficient stocks in the showroom and had not done marketing activities in the manner he would have liked, does not make such an action on the part of the respondent no. 1-company and/or its officials, to be prosecuted under the criminal law. What is not sufficient in the estimation of the respondent no. 2 in the absence of any benchmark, would not bring it within the scope and ambit of the offence of cheating. On the basis of the facts projected, one cannot even take a prima facie view that there was any kind of entrustment involved in the transaction between the parties. 17. In the light of the discussions made above and reading the FIR in its entirety, this Court does not find a prima facie case wherefrom the ingredients of the offence under Section 420, IPC and Section 406, IPC can be said to be present. In such view of the matter, this Court is of the considered view that such a criminal prosecution should not be continued. Accordingly, the criminal proceeding of G.R. Case no. 65/2019, arising out of the First Information Report registered as Jorhat Police Station Case no. 48/2019, and the First Information Report of Jorhat Police Station Case no. 48/2019 are quashed. Resultantly, this criminal petition is allowed. The petitioners are treated to be discharged of the offences under Sections 420/406, IPC. There shall, however, be no order as to cost.