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2021 DIGILAW 1554 (BOM)

Avdhesh Harichand Jaiswal v. State of Maharashtra

2021-11-17

M.S.SONAK, PUSHPA V.GANEDIWALA

body2021
JUDGMENT/ORDER 1. Heard Mr. Manoj P. Kariya, learned counsel for the applicant, Mr. S.S. Doifode, learned Additional Public Prosecutor for the non-applicant No.1, Mr. S.V. Manohar, learned Senior Advocate with Mr. Shailesh S. Sitani and Mr. Syed Ahmed, learned Advocate for non- applicant No.2. 2. Rule. The rule is made returnable forthwith at the request of and with the consent of learned counsel for the parties. 3. This petition seeks to quash of First Information Report No.307/2019, registered with Lakadganj Police Station, Nagpur alleging commission of offenses by the petitioner under Ss. 406 and 420 of the Indian Penal Code and the consequent charge-sheet in Regular Criminal Case No.7610/2019 in the Court of Judicial Magistrate, First Class, Court No.3, Nagpur. 4. Mr. Manoj Karia, learned counsel for the applicant submits that registration of the impugned First Information Report and the prosecution of the applicant based upon the same is an abuse of the criminal process. He submits that the dispute between the applicant and the complainant i.e. non-applicant No.2 has an entirely civil profile but the same is given the color of a criminal case. Based on this F.I.R., the Police Authorities have virtually forced the applicant to part with an amount of Rs.50,00,000.00 to the complainant, even by the applicant was in police custody. He submits that by lodging the F.I.R. the non- applicant No.2 is seeking to recover the amount which the complainant regards as due and payable under certain trading transactions. He submits that even if all the allegations in the complaint/F.I.R. are taken at their face value, they do not even remotely spell out any dishonest intention or fulfill the ingredients of Ss. 406 and 420 of the Indian Penal Code. He submits that the registration of such F.I.R. and the consequent proceedings constitutes an abuse of the process and, therefore, rule in this petition may be made absolute. He relies on Mitesh Kumar J. Sha vs. The State of Karnataka and others Criminal Appeal No.1285/2021 decided by Honble Supreme Court on 26 th October 2021, Jaswant Singh vs. State of Punjab and another Criminal Appeal No.1233/2021 decided by Honble Supreme Court on 20 th October 2021, Prof. R.K. Vijayasarathy and another vs. Sudha Seetharam and another (2019)16 SCC 739 , Inder Mohan Goswami and another Vs. State of Uttaranchal and others Criminal Appeal No.1392/2007 decided on 9/10/2007, M/s. Zandu Pharmaceutical Works Limited Vs. Md. R.K. Vijayasarathy and another vs. Sudha Seetharam and another (2019)16 SCC 739 , Inder Mohan Goswami and another Vs. State of Uttaranchal and others Criminal Appeal No.1392/2007 decided on 9/10/2007, M/s. Zandu Pharmaceutical Works Limited Vs. Md. Sharaful Haque Criminal Appeal No.1241/2004 decided on 1/11/2004, Ajay Mitra. vs. State of M.P. and others Criminal Appeal No.129/2003 decided on 28/1/2003, State of Madhya Pradesh vs. Awadh Kishore Gupta and others Criminal Appeal No.292/1997 decided on 18/11/2003. B. Suresh Yadav Vs. Sharifa Bee and another Criminal Appeal No.1444/2007 decided on 12/10/2007, Hridaya Ranjan Pd. Verma Vs. State of Bihar and another Criminal Appeal No.313/2000 decided on 31/3/2000 in support of his submissions. 5. Mr. S.S. Doifode, learned Additional Public Prosecutor submitted that the allegations against the Police Authorities are misplaced. He submitted that the memorandum of settlement was executed by the applicant and non-applicant No.2 on 4/6/2019 after the applicant was released on bail. He submits that even the notary public has given a statement on this aspect in the course of the investigation. He submits that the payment was voluntarily made by the applicant and the allegations about the police recovering this amount are not correct. By referring to the reply filed on behalf of the State, he points out that the allegation in the F.I.R. is that the amount of Rs.2.50 crores was to be paid by the applicant to the non-applicant No.2 towards the maize received from non-applicant No.2. He submitted that the applicant had promised to pay this amount within a short period but could not repay the same and thereafter not only refused to make such payment, but even threatened the non-applicant No.2. He pointed out that even the cheque issued by the applicant was dishonored. He submitted that all this points out to cheating, criminal breach of trust and, therefore, there is no warrant to interfere with the impugned F.I.R. 6. Mr. S.V. Manohar, learned Senior Advocate appearing on behalf of the non-applicant No.2 submitted that the complaint/F.I.R. if read in its entirety, clearly spells out the dishonest intention on the part of the applicant and, therefore, the F.I.R. was quite correctly registered under Ss. 406 and 420 of the Indian Penal Code. He submitted that there are allegations in the F.I.R. that the applicant assured non- applicant No.2 increased volumes of business against 3% commission on supply of enhanced quantities of maize. 406 and 420 of the Indian Penal Code. He submitted that there are allegations in the F.I.R. that the applicant assured non- applicant No.2 increased volumes of business against 3% commission on supply of enhanced quantities of maize. He submitted that there are allegations about how the applicant made some payments only to gain the trust and confidence of non-applicant No.2 and how thereafter, in criminal breach of such trust refused to make further payment. He submitted that in the petition itself, the applicant has stood by the memorandum of settlement dtd. 4/6/2019 and further, the applicant, relied on such memorandum of settlement while seeking bail. He submitted that the non-applicant No.2, based on such memorandum of settlement even returned eight cheques which the applicant had earlier given to non-applicant No.2. He, therefore, submits that this is not a case where extraordinary jurisdiction or inherent powers should be invoked and the impugned F.I.R. or the criminal proceeding based thereon should be quashed. He relied on V Ravi Kumar Vs. State represented by Inspector of Police, District Crime Branch, Salem, Tamil Nadu and others (2019)14 SCC 568 to submit that the proposition that deception or dishonest intention ought to be from the inception in such matters is to be understood in the context of the facts of each case and the allegations are to be taken in their entirety. 7. The rival contentions now fall for our determination. 8. The challenge of the applicant in the present case is premised on the following two propositions : (i) That the allegations made in the F.I.R. or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offense or make out a case against the applicant. (ii) That this is a case where a civil dispute is sought to be given the color or cloak of a criminal offense and the criminal proceedings have been launched to short circuit other civil remedies available in law. 9. Both the aforesaid propositions have been accepted by the Honble Supreme Court as a valid basis for quashing of F.I.R. or criminal proceedings at the very threshold inter alia in the case of Mitesh Kumar J. Sha (supra) decided on 26/10/2021. In the said decision, the Honble Supreme Court has taken into account several precedents on the subject. 9. Both the aforesaid propositions have been accepted by the Honble Supreme Court as a valid basis for quashing of F.I.R. or criminal proceedings at the very threshold inter alia in the case of Mitesh Kumar J. Sha (supra) decided on 26/10/2021. In the said decision, the Honble Supreme Court has taken into account several precedents on the subject. That was also a case where the appellant was alleged to have committed offenses under Ss. 406, 419, and 420 read with Sec. 34 of the Indian Penal Code. The complainant had alleged that the accused persons sold flat more than their entitlement/share and that this was done with a dishonest intention. 10. The Honble Supreme Court, however, ruled that the complaint/F.I.R. did not disclose the ingredients of the offense alleged and further the dispute between the parties was civil and F.I.R. was lodged only to give a criminal cloak. The Honble Supreme Court by accepting the aforesaid two propositions or rather by applying the aforesaid two propositions quashed the impugned F.I.R. by observing that the lodging of such F.I.Rs. constituted an abuse of the process of Court. 11. The main question which, therefore, arises in the present matter is whether the aforesaid two propositions are attracted to the facts and circumstances as borne out from the record in the present case. There is also the disturbing feature about the contention as to how the applicant, had to pay an amount almost of Rs.50,00,000.00 to the non-applicant No.2 even while he was in police custody between 29/5/2019 and 4/6/2019 and how the police authorities, based on the impugned F.I.R. recovered this amount for the complainant. 12. Now, the report/complaint dtd. 28/5/2019 based on which the impugned F.I.R. came to be lodged states that the non- applicant No.2 and the applicant were in the business of sale and purchase of foodgrains like seeds, maize, etc. with each other through firms and other entities. The complaint itself states that such business transactions and dealings between the parties had commenced were continuing since so many years. Based thereon, it was alleged that the non-applicant No.2 used to send seeds (maize) to the applicant, and the applicant would sell the same to his customers in Uttar Pradesh and after receipt of the amount from them, the applicant would make payment to non-applicant No.2 after deducting commission at the agreed rate. 13. Based thereon, it was alleged that the non-applicant No.2 used to send seeds (maize) to the applicant, and the applicant would sell the same to his customers in Uttar Pradesh and after receipt of the amount from them, the applicant would make payment to non-applicant No.2 after deducting commission at the agreed rate. 13. The complaint further alleges that during the period from 1/4/2018 to 31/3/2019, the non-applicant No.2 sent maize to the applicant valued at Rs.5,07,61,490.00 (Rs.5.07 crores). After receipt of this maize, the applicant made payments to non-applicant No.2 to the extent of Rs.2,57,61,510.00 (Rs.2.57 crores) thereby leaving an outstanding amount of approximately Rs.2,50,00,000.00 (Rs.2.50 crores). The complaint then alleges that the applicant initially promised to pay the said amount and even issued ten post-dated cheques towards payment of the same. The complaint then alleges that one of such cheques was dishonored. The complaint further alleges that the applicant promised to make the payment but failed to keep his promise. The complaint then alleges that the applicant thereafter refused to make payment and also threatened the non-applicant No.2, in case non- applicant No.2 persisted with demands for payment. The complaint, in its ultimate paragraph which was emphasized upon by Mr.S.V. Manohar, alleges that the applicant, by making payments from time to time gained the trust of non-applicant No.2 but ultimately, breached this trust when it came to the payment of the balance amount of Rs.2.50 crores. 14. The ingredients of the complaint/F.I.R. which is in Hindi have been explained by the prosecution in paragraph 3 of its reply dtd. 18/9/2021 filed in this matter. Paragraph 3 of the reply is reproduced below for the convenience of reference: 3. It is submitted that, as per the prosecution case, the complainant is doing business of sale and purchase of foodgrains, seeds, maize under the name and style of Janvi Agro Industries and Jay Bhavani Trading at Nagpur. That the applicant/accused is also doing the business of sale and purchase of foodgrains, seeds under the name and style as Bindu Agro Industries at Ramnagar, Banaras (Uttar Pradesh). As such the complainant is running the said two firms and applicant is running the said firm. That the applicant/accused is also doing the business of sale and purchase of foodgrains, seeds under the name and style as Bindu Agro Industries at Ramnagar, Banaras (Uttar Pradesh). As such the complainant is running the said two firms and applicant is running the said firm. That since so many years there was a business transaction between the complainant and the applicant, therefore, the complainant has sent seeds maize to the applicant and after receipt of said maize the applicant has sold the said maize to his customers at Uttar Pradesh and after receipt of amount from his customers he has given said amount to the complainant by deducting 3% commission for said business from the complainant. That during the period of 1/4/2018 to 31/3/2019 the complaint has sent maize to the applicant for total amount of Rs.5,07,61,490.00. After receipt of said maize the applicant has made payment of Rs.2,57,61,510.00 to the complainant and therefore there was remaining amount of Rs.2,50,00,000.00 was to be paid by the applicant to the complainant towards the said received of maize. Hence, the applicant has requested the complainant that he will pay the remaining amount within short period but he could not repay the same. Thereafter, the applicant has refused to make payment and also threatened to the complainant inspite of his cheque was dishonored. That as per the business transaction the applicant has received the maize for worth Rs.5,07,61,490.00. Out of that the applicant has only made of Rs.2,57,61,510.00 and remaining amount of Rs.2,50,00,000.00 is outstanding. Inspite of that the applicant has agreed and promised to make payment hence the complainant has believed on the promise and say of the applicant and inspite of that the applicant has cheated to the complainant and also committed criminal breach of trust by refusing to make payment of remaining amount of Rs.2,50,00,000.00. 15. According to us, from the reading of the complaint/report/ F.I.R. in its entirety and further, accepting all the allegations therein as correct, we are quite satisfied that the same does not make out any case of commission of offenses under Ss. 406 and 420 of the Indian Penal Code by the applicant herein. The ingredients essential for constituting such offenses are conspicuously absent in the complaint/ report/F.I.R. The allegations do not prima facie constitute any offenses under Ss. 406 and 420 of the Indian Penal Code. 406 and 420 of the Indian Penal Code by the applicant herein. The ingredients essential for constituting such offenses are conspicuously absent in the complaint/ report/F.I.R. The allegations do not prima facie constitute any offenses under Ss. 406 and 420 of the Indian Penal Code. This, to us, appears to be a case that has a predominantly civil profile but the entire attempt has been to give it a color of a criminal offense. Therefore, this is a case that warrants the exercise of our extraordinary jurisdiction under Article 226 of the Constitution and the invocation of our inherent powers under Sec. 482 of the Criminal Procedure Code. 16. The allegations in the complaint very clearly point out the business relations between the applicant and the non-applicant No.2/complainant for the last several years. The allegations also referred to the nature and mode of business transactions between the parties. The allegations also acknowledged the payments made from time to time by the applicant. The allegations also acknowledged the payment to the extent of almost Rs.2.57 crores in respect of transactions between 1/4/2018 and 31/3/2019. The complaint then proceeds to allege that there is a balance of Rs.2.50 crores, for which ten post-dated cheques were also issued by the applicant. There is an allegation about one of the cheques being dishonored. There is a record that the remaining nine cheques were never deposited by the non-applicant No.2 and ultimately in terms of the memorandum of settlement dtd. 4/6/2019, the payment of Rs.50,00,000.00 made or arranged by the applicant while he was in police custody was adjusted against two of the ten cheques and the remaining eight cheques were returned by the non- applicant No.2 to the applicant. 17. Even the allegations in the last paragraph of the complaint about the applicant gaining the trust of the non-applicant No.2 by making payments from time to time for the maize supplied by non- applicant No.2 and thereafter breaching such trust, do not, either indicate any dishonest intention or fulfill the ingredients of the offenses alleged. The complaint itself refers to the business transactions spread over the last several years. From the complaint, it is quite clear that this is a case of civil dispute between the parties in the context of business transactions arising out of the supply and trade of maize. The complaint itself refers to the business transactions spread over the last several years. From the complaint, it is quite clear that this is a case of civil dispute between the parties in the context of business transactions arising out of the supply and trade of maize. The complaint itself acknowledges receipt of over 50% of the amount for the disputed period between 1/4/2018 to 31/3/2019. Merely because there may have been some balance as alleged by the non-applicant No.2 and further because the applicant has been resisting payment of this balance or was unable to pay this balance, the matter, cannot be given a criminal cloak. Based on the propositions referred at the outset, a case is made out for quashing of the impugned F.I.R. and the criminal proceeding launched based thereon. 18. In V. Ravi Kumar (supra) the Honble Supreme Court has explained that mere breach of contract is not in itself a criminal offense and gives rise to civil liability of damages. However, the distinction between mere breach of contract and cheating, which is a criminal offense, is a fine one. This has to be determined in the facts and circumstances of each case. The Honble Supreme Court explained that the phrase in those cases where there was any deception played at the very inception employed in Vesa Holdings (P) Ltd vs. State of Kerala 2015(8) SCC 293 cannot be read out of context. The Honble Supreme Court proceeded to state that in the case before it the allegation was not of breach of contract simpliciter but there were serious allegations of forgery of documents, use of blank letterhead, papers, and cheques leaves of the appellant. It is in these circumstances that the Honble Supreme Court held that it could not be said that there were no allegations which prima facie constituted ingredients of offenses under Ss. 420, 409, and 34 of the Indian Penal Code. There were clear allegations of fraud and cheating which prima facie constituted offenses as alleged. 19. In the present case, there are no allegations of forgery of documents or for that matter fraud. The only allegations, even if accepted in their entirety point out to the refusal on the part of the applicant to pay a balance amount of Rs.2.50 crores, even after the applicant, allegedly acknowledged that such amount was indeed due and payable to respondent No.2. The only allegations, even if accepted in their entirety point out to the refusal on the part of the applicant to pay a balance amount of Rs.2.50 crores, even after the applicant, allegedly acknowledged that such amount was indeed due and payable to respondent No.2. Therefore, the decision in V. Ravi Kumar (supra) cannot be of assistance to the complainant in this matter. That by itself is not sufficient to fulfill the ingredients of the offenses alleged. 20. Sec. 405 of the Indian Penal Code defines criminal breach of trust in the following terms: 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. [Explanation [1].A person, being an employer [of an establishment whether exempted under sec. [Explanation [1].A person, being an employer [of an establishment whether exempted under sec. 17 of the Employees Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952), or not] who deducts the employees contribution from the wages payable to the employee for credit to a Provident Fund or Family Pension Fund established by any law for the time being in force, shall be deemed to have been entrusted with the amount of the contribution so deducted by him and if he makes default in the payment of such contribution to the said Fund in violation of the said law, shall be deemed to have dishonestly used the amount of the said contribution in violation of a direction of law as aforesaid.] [Explanation 2.A person, being an employer, who deducts the employees contribution from the wages payable to the employee for credit to the Employees State Insurance Fund held and administered by the Employees State Insurance Corporation established under the Employees State Insurance Act, 1948 (34 of 1948), shall be deemed to have been entrusted with the amount of the contribution so deducted by him and if he makes default in the payment of such contribution to the said Fund in violation of the said Act, shall be deemed to have dishonestly used the amount of the said contribution in violation of a direction of law as aforesaid.] Sec. 406 of the Indian Penal Code provides that.... 21. Sec. 406 of IPC provides the punishment for the offense under sec. 405 IPC and reads as follows: 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. 22. Sec. 420 of the Indian Penal Code, which is to be read along with Sec. 415 of the Indian Penal Code provides that 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. 23. Both Ss. 23. Both Ss. of 405 and 415 of the Indian Penal Code contemplate dishonest intention as a pre-condition for even prima facie establishing the commission of said offenses. The allegations in the complaint, even if they are accepted in their entirety, fall short of such pre-condition. The non-applicant No.2 is irked with non-receipt of the amount which he regards as due and payable and, therefore, the F.I.R. came to be lodged in this matter. Otherwise, the complaint, very clearly indicates that the parties have had business relations with each other spread over several years. Even in respect of the disputed period, it is not as if no payments have been made, rather even the complaint acknowledges payments to the extent of over fifty percent. The complaint also acknowledges the issue of cheques to cover the amounts. The allegations in the complaint, therefore, do not attribute any dishonest intention as such but the allegations predominantly point out to breach of contract simpliciter. By some embellishment, an attempt is made to give the allegations a cloak of criminal offenses, but even here, embellished allegations fall short of bringing home the ingredients of the offenses alleged. 24. In this case, the record bears out that the applicant was placed under arrest on 25/9/2019 based on the impugned F.I.R. lodged on 28/5/2019. This F.I.R. was lodged at Nagpur and the Police Authorities, with swiftness, which is not normally characteristic of them, swung into action and arrested the applicant from Banaras. The applicant was in police custody up to 4/6/2019 when he was released on bail at about 5.00 p.m. 25. The record also bears out that between 29/5/2019 and 4/6/2019, when the applicant was in police custody, the applicant was made to pay, or rather the applicants wife had to arrange to make a bank transfer of an amount of Rs.50,00,000.00 to the non-applicant No.2. No sooner the applicant was enlarged on bail, it is alleged that the applicant and complainant executed before the notary public a memorandum of understanding dtd. 4/6/2019, in which, the applicant, acknowledged that he was due and payable an amount of Rs.2.50 crores to non-applicant No.2 and that he would pay the same in the manner reflected in the memorandum of understanding. Learned counsel for the applicant submitted the applicant was made to sign this memorandum of understanding while in police custody itself. 4/6/2019, in which, the applicant, acknowledged that he was due and payable an amount of Rs.2.50 crores to non-applicant No.2 and that he would pay the same in the manner reflected in the memorandum of understanding. Learned counsel for the applicant submitted the applicant was made to sign this memorandum of understanding while in police custody itself. Learned Additional Public Prosecutor, however, submits that this memorandum of understanding was signed by the applicant after he was released on bail and even the notary public has given a statement in this regard. 26. At this stage, there is no necessity to go into the aforesaid controversy. But based on the aforesaid undisputed circumstances, we cannot completely reject the contention of Mr. Karia that the police authorities have acted as a recovery agent on behalf of the complainant. The police authorities without examining whether the allegations in the complaint make out even prima facie the ingredients of offenses as alleged proceeded to register the impugned F.I.R. Based on the registration of such F.I.R on 28/5/2019, the Police authorities proceeded to Banaras and arrested the applicant. While the applicant was in police custody, the applicant and/or his wife had to arrange for payment of Rs.50,00,000.00 to the complainant. Even if the police version is to be accepted as correct, no sooner the applicant was released on bail, a memorandum of understanding was allegedly executed in which the applicant acknowledged dues to the complainant and even provided a schedule for future payment. According to us, the Police Authorities ought not to have taken such a pro-active stance in a matter of this nature particularly when the allegations in the complaint made out a case of breach of contract and had a pre-dominantly civil flavor. Mr. Karia pointed out some similar instances where the police authorities, quite rightly, refused to register F.I.R. where the dispute between the parties had a pre-dominantly civil flavor. 27. The applicant in this case, indeed referred to the memorandum of understanding dtd. 4/6/2019, when he applied for bail. The non-applicant No.2 also appeared through a counsel in the bail proceeding and even proceeded to give his no objection to grant of bail to the applicant after acknowledging receipt of Rs.50,00,000.00. Mr. 27. The applicant in this case, indeed referred to the memorandum of understanding dtd. 4/6/2019, when he applied for bail. The non-applicant No.2 also appeared through a counsel in the bail proceeding and even proceeded to give his no objection to grant of bail to the applicant after acknowledging receipt of Rs.50,00,000.00. Mr. Karia, however, explained that at that stage, the applicant was quite traumatized with being behind bars for 5 to 6 days and felt that he had no option but to execute and refer to the memorandum of understanding dtd. 4/6/2019 and even to pay the amount of Rs.50,00,000.00 while he was in police custody to the complainant to secure his liberty. In the peculiar facts of the present case, not much turns on this subsequent event because the main issue in this petition was whether the allegations in the complaint/F.I.R. indeed make out the offenses as alleged against the applicant. 28. In the case of M/s Indian Oil Corporation v. NEPC India Ltd.& Ors 2006 (6) SCC 736 the Honble Supreme Court took notice of the growing tendency in business circles to convert purely civil disputes into criminal cases. This was obviously on account of a prevalent impression that civil law remedies are time-consuming and do not adequately protect the interests of lenders/creditorsThere is also an impression that if a person is 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 offense, by applying pressure through criminal prosecution should be deprecated and discouraged. In the present case, we get the impression that this is precisely what the complainant has resorted to. 29. For all the above reasons, we make the rule absolute in this application and quash the F.I.R. No.307/2019 registered with Police Station Lakadganj, Nagpur as well as charge-sheet and proceedings in Regular Criminal Case No.7610/2019 pending before the Judicial Magistrate, First Class, Court No.3, Nagpur. 30. There shall be no order for costs.