S. B. Criminal Misc. Petition No. 1752 of 2012 [ENTITY] vs. State of Raj. and anr. 28.5.2012 HONBLE MR. JUSTICE MAHESH CHANDRA SHARMA Mr. [ENTITY] along with Mr. [ENTITY] and Mr. [ENTITY] for the petitioner.
Mr. [ENTITY], PP for the State
This criminal misc. petition has been filed by the petitioner [ENTITY], who is Chairman cum Managing Director of M/s. Clutch Auto Ltd. under [SECTION] [ACT] for quashing of the FIR No. 116 of 2012 dated 23.3.2012 registered at Police Station Murlipura, Jaipur for offence under [SECTION], [SECTION] and [SECTION] [ACT].
2. The brief facts of the case are that M/s. Garima Overseas Ltd. through its Director Mr. [ENTITY] ( in short complainant respondent company), having its office on Sikar Road, Jaipur filed a complaint before the Metropolitan Magistrate No. 31, Jaipur Metropolitan,Jaipur and the Metropolitan Magistrate No.31 Jaipur forwarded the complaint to the Police Station Murlipura Jaipur under [SECTION] [ACT] and the said Police Station registered the same as FIR No. 116/2012 dated 23.3.2012. As per the complaint it is borne out that from the period April 2008 till July 2008 whatever goods were sent to M/s. Clutch Auto Ltd. New Delhi ( accused petitioner's company) by the complaint company M/s. Garima Overseas Ltd. all the payments were made in time and it was only on 22.7.2008 that the payment of supplied material was not made and at some point of time part payment was made. In paras No.6 and 7 of the complaint/ FIR it has been stated thus :
6 15.9.2011 3,64,17,035
7. 31.03.2010 3,83,80,255 , , , "
Paras 17 and 18 of the said FIR/complaint read as under :
17. ? ? ? . . . [SECTION],[SECTION], [SECTION]
18. 15.11.2011 ? "
3. Mr. [ENTITY], the learned counsel for the petitioner has contended that initially there was no quality related issue, the relation between the petitioner and the Director of complainant respondent No.2 were cordial and from time to time upon receipt of the goods, payments were made by the petitioner through his company, which was duly received by the complainant respondent. However, as the quality with passing of time was not meeting and desired standard of petitioner's company, the petitioner time and again registered this fact with the representative of the complainant- respondent requesting not to compromise with the quality and standard as was agreed initially between the parties. As the goods so supplied by the complaint-respondent which were rejected by the customer of petitioner's company, this fact was also brought to the notice of the complainant-respondent and accordingly, some of the payments were claimed to be due and payable by the complainant-respondent and same were withheld for the aforesaid quality reasons as the petitioner's company had not received the payments from its end from the customers on account of such rejection. The complainant respondent concealing the fact about the rejection caused to send a legal notice dated 8.11.2011 to the petitioner's company through its lawyer under [SECTION] and [SECTION] of the [ACT], which was received by the petitioner's company on 9.12.2011 and the same was duly replied by the petitioner's company vide letter dated 9.1.2012. It has also been submitted by the petitioner's counsel that the petitioner through its representative tried to amicably resolve the matter and accordingly vide letter dated 7.12.2010 offered to make payment towards settlement as was agreed between the parties vide letter dated 24.12.2011 and 3.1.2012 offering to amicably settle the dispute by reconciling the account and agreed on the terms of the settlement, which was acknowldged by the complainant respondent No.2 in its letter dated 20.1.2012. Despite acknowledging the fact that the petitioner through its company had offered to settle the matter and had in discharge thereof made payment to the complainant respondent No.2. The complainant respondent while disputing the terms of settlement once again alleged about the outstanding liability which the petitioner's company had time and again denied on account of quality related issue. It has been further stated by the learned counsel that in the meantime as the petitioner's company on account of its expansion had applied for demerger by presenting the scheme pursuant to which Hon'ble High Court had appointed the Chairman/ Acting Chairman to look into the modalities of the demerger and the same was presented to this Court. Accordingly, a meeting was called upon by the Chairman appointed by this Court in terms of the order dated 27.2.2012 and 14.2.2012. In the said meeting the representative of complainant respondent Mr. [ENTITY], Mr. [ENTITY] and [ENTITY] had not only caused threat to the petitioner but also the other staff members of the petitioner company, these persons also did not allow the proceeding to be held in lawful manner. This fact was duly registered by the petitioner with the SHO PS Haus Khas New Delhi on 17.4.2012. The learned counsel has further contended that the FIR has been registered by the complainant respondent through its representative alleging criminal breach of trust and cheating. The nature of the dispute is purely civil, which was wrongly a colour of criminal offence, wherein the petitioner has been falsely implicated. The complaint as lodged has culminated in the FIR is not only misuse and gross abuse of process of law, but is an arm twist exercise to cause undue pressure on the petitioner by the complainant respondent and its representative so that the petitioner succumbs to the unlawful demand of the complainant respondent whereas the fact remains that no such demand is legally tenable. The fact that the complainant respondent has caused to send legal notice on 8.12.2011 under [SECTION] and [SECTION] of the [ACT] and no proceeding having initiated thereafter, talks of volumes about the fact that the amount claimed in the legal notice is far from truth and is legally untenable. The learned counsel has further argued that the lodging of the FIR on the basis of complaint moved in the court is nothing but the abuse of the process of law and a purely civil dispute have been given colour of criminal offence. Lastly the learned counsel has argued that in response to the notice dated 8.12.2011 the petitioner wrote a letter dated 9.1.2012 in which a detail of each and every aspect was given particularly attention has been made to para 2 at page 2 that Huge rejected material lying at company premises for want of VAT 4 forms which even after repeated requests are yet to be supplied by your client without which we cannot dispatch rejected materials to your client. On these grounds the learned counsel for the petitioner prays that the FIR may be quashed and set aside. In support of his contention the learned counsel for the petitioner has placed reliance on [PRECEDENT].
4. On the other hand Mr. [ENTITY], Public Prosecutor appearing for the State has argued that it is not the stage of quashing the FIR registered at the Police Station Murlipura on the complaint sent by the concerned court under [SECTION] [ACT] for investigation. The nature of the dispute whether it is civil or criminal can only be decided during investigation by the police and it is an admitted fact that the petitioner's company has not paid large sum to the complainant respondent for the last so many years and wanted to grab the complainant- respondent's assets by way of not paying large sum of more than 3 crore and fifty lacs, on the pretext that the VAT form was not forwarded by the complainant respondent and on account of which the rejected material lying with the petitioner's company could not be sent. The petitioner's company requested the complainant respondent for extension of time for making due payments, this shows that the accused petitioner and accused petitioner's company was ready to make payment and for that purpose they have asked the complainant respondent for extension of time for making payment but the same was not made. He has further contended that earlier time limit was for 45 days but it was extended to 90 days. He has drawn attention of this court that it is a criminal liability and not a civil liability as the petitioner and the petitioner's company inspite of extending time for payment has not made the payment to the complainant respondent and it is a criminal breach of trust and prima facie offence under [SECTION], [SECTION] and [SECTION] [ACT] is made out. He has further drawn attention of this court towards [SECTION] B [ACT] because it is a criminal conspiracy in which directors Managing Directors and officers of the company are involved in a scam of crores of rupees. Prima facie it is a criminal breach of trust and investigation is going on in the matter and it is not the stage of quashing FIR and criminal proceedings against the accused petitioner and petitioner's compnay's directors and officers responsible for this criminal activities played with the complainant respondent. The Public Prosecutor undertakes that the State Police officers in the Rajasthan are very fair and without any favour investigating the matters fairly and impartially and once the investigation is started this court should not interfere in the investigation. There is no abuse of the process of the court. The police is investigating the matter as per the directions of the court under [SECTION] [ACT] He has further contended that if the case is of the civil nature and not criminal, the police will submit final report, otherwise the police will file charge sheet, hence the court should not interfere in the investigation. He has further contended that such type of criminal offences related to [SECTION], and [SECTION] are increasing day by day specifically in the State of Rajasthan. The people are making money. By way of filing criminal misc. petitions under [SECTION] [ACT] such a request for quashing the FIR calling it be a civil nature which is otherwise in the nature of criminal breach of trust and cheating, hence the petition filed by the accused petitioner should be rejected and there is no question of quashing of the FIR at the stage of investigation in the case. He has further argued that the case cited by the learned counsel for the petitioner in this case is not applicable to the facts of this case. He has placed reliance on various decisions of the Apex Court in [PRECEDENT] The [PRECEDENT], [PRECEDENT], the [PRECEDENT] on the points of Hand writing Expert. On the point of forgery questioning FIR [PRECEDENT], [PRECEDENT], [PRECEDENT], [PRECEDENT], and State of Haryana and others vs. Ch. [ENTITY] and others (AIR 1992 SC 604, and on the unimpeachable document reliance has been placed on [PRECEDENT], [PRECEDENT], [PRECEDENT], [ENTITY] vs. State of Punjab and another (2009 AIR SCW 7226). He has also placed reliance on [PRECEDENT].
5. I have heard the learned counsel for the parties.
Before proceeding further it would be necessary to have a look at the provisions of [SECTION], [SECTION], [SECTION], and [SECTION] [ACT], which read as under:
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.
[SECTION]. 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.
* * *
[SECTION]. 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.
[SECTION] Punishment of criminal conspiracy.(1) Whoever is a party to a criminal conspiracy to commit an offence punishable with death, 2[imprisonment for life] or rigorous imprisonment for a term of two years or upwards, shall, where no express provision is made in this Code for the punishment of such a conspiracy, be punished in the same manner as if he had abetted such offence.
(2) Whoever is a party to a criminal conspiracy other than a criminal conspiracy to commit an offence punishable as aforesaid shall be punished with imprisonment of either description for a term not exceeding six months, or with fine or with both.
It would also be necessary to have a look at the various decisions of the Apex Court on which reliance was made by the Public Prosecutor and the counsel for the petitioner.
The Apex Court in [PRECEDENT], held as under :
21. It is evident from the above that this Court was considering the rare and exceptional cases where the High Court may consider unimpeachable evidence while exercising jurisdiction for quashing under [SECTION] of the Code. In the present case, however, the question involved is not about the exercise of jurisdiction under [SECTION] of the Code where along with the petition the accused may file unimpeachable evidence of sterling quality and on that basis seek quashing, but is about the right claimed by the accused to produce material at the stage of framing of charge.
29. Regarding the argument of the accused having to face the trial despite being in a position to produce material of unimpeachable character of sterling quality, the width of the powers of the High Court under [SECTION] of the Code and [SECTION] of the [ACT] is unlimited whereunder in the interests of justice the High Court can make such orders as may be necessary to prevent abuse of the process of any court or otherwise to secure the ends of justice within the parameters laid down in [ENTITY] case 1992 Supp (1) SCC 335.
The Apex Court in [ENTITY]'s case ([PRECEDENT] enunciated the following principles, which are as under :
(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] of the Code except under an order of a Magistrate within the purview of [SECTION] 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 make 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 officer without an order of a Magistrate as contemplated under [SECTION] 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 Act concerned (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 Act concerned, 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.
The Apex Court in [PRECEDENT], held as under :
20. We may also place on record that criminal proceedings should not be encouraged when it is found to be mala fide or otherwise abuse of process of court.
22. Ordinarily, a defence of an accused although appears to be plausible should not be taken into consideration for exercise of the said jurisdiction. Yet again, the High Court at that stage would not ordinarily enter into a disputed question of fact. It, however, does not mean that documents of unimpeachable character should not be taken into consideration at any cost for the purpose of finding out as to whether continuance of the criminal proceedings would amount to an abuse of process of court or that the complaint petition is filed for causing mere harassment to the accused. While we are not oblivious of the fact that although a large number of disputes should ordinarily be determined only by the civil courts, but criminal cases are filed only for achieving the ultimate goal, namely, to force the accused to pay the amount due to the complainant immediately. The courts on the one hand should not encourage such a practice; but, on the other, cannot also travel beyond its jurisdiction to interfere with the proceeding which is otherwise genuine. The courts cannot also lose sight of the fact that in certain matters, both civil proceedings and criminal proceedings would be maintainable.
The Apex court in [PRECEDENT], held as under :
22. This Court has repeatedly held that in case of a Director, the complaint should specifically spell out how and in what manner the Director was in charge of or was responsible to the accused company for conduct of its business and mere bald statement that he or she was in charge of and was responsible to the company for conduct of its business is not sufficient. ([PRECEDENT].) In the case on hand, particularly, in Para 4 of the complaint, except the mere bald and cursory statement with regard to the appellant, the complainant has not specified her role in the day-to-day affairs of the Company. We have verified the averments as regards to the same and we agree with the contention of Mr [ENTITY] that except reproduction of the statutory requirements the complainant has not specified or elaborated the role of the appellant in the day-to-day affairs of the Company. On this ground also, the appellant is entitled to succeed.
23. In the light of the above discussion and of the fact that the appellant has established that she had resigned from the Company as a Director in 1998, well before the relevant date, namely, in the year 2004, when the cheques were issued, the High Court, in the light of the acceptable materials such as the certified copy of the annual return dated 30-9-1999 and Form 32 ought to have exercised its jurisdiction under [SECTION] and quashed the criminal proceedings. We are unable to accept the reasoning of the High Court and we are satisfied that the appellant has made out a case for quashing the criminal proceedings. Consequently, [CASE NUMBER] on the file of ACMM, New Delhi, insofar as the appellant herein (A-3) is concerned, is quashed and the appeal is allowed.
The Apex Court in [ENTITY] v. State of Punjab, (2010) 11 SCC 749 held as under :
7. Having heard the learned counsel for the parties and upon careful perusal of the materials placed before us, in our judgment, the order of the High Court cannot be sustained for more than one reason. In the first place, the High Court gravely erred in observing that [ENTITY] married second time on 2-1-2002 while he was already married with [ENTITY] and the aforesaid marriage has not been dissolved.
8. The certificate of divorce dated 26-2-2001 issued by the New Westminster Registry, the Supreme Court of British Columbia shows that the marriage of [ENTITY] and [ENTITY] stood dissolved on 8-2-2001. As a matter of fact, this fact is noticed in the order dated 29-4-2004 whereby the High Court quashed FIR No. 9 and the subsequent criminal proceedings against the family members of [ENTITY].
9. In the affidavit filed by [ENTITY], Deputy Superintendent of Police in response to the petition filed by the appellant under [SECTION] before the High Court, it has been admitted that during investigation on 14-3-2002 [ENTITY] had produced photocopy of divorce certificate purporting to have been issued by the Supreme Court of British Columbia. The observation of the High Court, thus, that [ENTITY] married second time, although his marriage has not been dissolved, is ex facie contrary to record.
10. [SECTION] [ACT], inter alia, requires the following ingredients to be satisfied, namely, (i) the accused must have contracted first marriage; (ii) he must have married again; (iii) the first marriage must be subsisting; and (iv) the spouse must be living. Insofar as the present case is concerned the appellant's marriage with [ENTITY] was not subsisting on 2-1-2002 when he is said to have married second time.
13. We have no hesitation in holding that the first information report lodged by [ENTITY] is manifestly attended with mala fides and actuated with ulterior motive. The prosecution of the appellant is not at all legitimate, rather it is frivolous, vexatious, unwarranted and abuse of process. The appellant has made out a case for quashing the first information report and all subsequent proceedings pursuant thereto.
14. For the reasons indicated above, the appeal is allowed and the order dated 24-5-2006 passed by the High Court of Punjab and Haryana is set aside. Resultantly, FIR No. 9 dated 21-1-2002 registered at Police Station Sehna and all subsequent proceedings pursuant thereto stand quashed and set aside. The pending applications stand disposed of.
The Apex Court in [PRECEDENT], held as under :
8. Jurisdiction under [SECTION] of the Code has to be exercised with great care. In exercise of its jurisdiction the High Court is not to examine the matter superficially. It is to be seen if a matter, which is essentially of a 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 the High Court is to exercise its jurisdiction under [SECTION] 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.
The Apex Court in [PRECEDENT], held as under :
8. Exercise of power under [SECTION] of the Code in a case of this nature is the exception and not the rule. The section does not confer any new powers on the High Court. It only saves the inherent power which the Court possessed before the enactment of the Code. It envisages three circumstances under which the inherent jurisdiction may be exercised, namely, (i) to give effect to an order under the Code, (ii) to prevent abuse of the process of court, and (iii) to otherwise secure the ends of justice. It is neither possible nor desirable to lay down any inflexible rule which would govern the exercise of inherent jurisdiction. No legislative enactment dealing with procedure can provide for all cases that may possibly arise. Courts, therefore, have inherent powers apart from express provisions of law which are necessary for proper discharge of functions and duties imposed upon them by law. That is the doctrine which finds expression in the section which merely recognises and preserves inherent powers of the High Courts. All courts, whether civil or criminal, possess, in the absence of any express provision, as inherent in their constitution, all such powers as are necessary to do the right and to undo a wrong in course of administration of justice on the principle quando lex aliquid alicui concedit, concedere videtur et id sine quo res ipsae esse non potest (when the law gives a person anything, it gives him that without which it cannot exist). While exercising powers under the section, the court does not function as a court of appeal or revision. Inherent jurisdiction under the section though wide has to be exercised sparingly, carefully and with caution and only when such exercise is justified by the tests specifically laid down in the section itself. It is to be exercised ex debito justitiae to do real and substantial justice for the administration of which alone courts exist. Authority of the court exists for advancement of justice and if any attempt is made to abuse that authority so as to produce injustice, the court has power to prevent abuse. It would be an abuse of process of the court to allow any action which would result in injustice and prevent promotion of justice. In exercise of the powers, court would be justified to quash any proceeding if it finds that initiation/continuance of it amounts to abuse of the process of court or quashing of these proceedings would otherwise serve the ends of justice. When no offence is disclosed by the complaint, the court may examine the question of fact. When a complaint is sought to be quashed, it is permissible to look into the materials to assess what the complainant has alleged and whether any offence is made out even if the allegations are accepted in toto.
11. The scope of exercise of power under [SECTION] of the Code and the categories of cases where the High Court may exercise its power under it relating to cognizable offences to prevent abuse of process of any court or otherwise to secure the ends of justice were set out in some detail by this Court in State of Haryana v. [ENTITY]2.
As noted above, the powers possessed by the High Court under [SECTION] of the Code are very wide and the very plenitude of the power requires great caution in its exercise. Court must be careful to see that its decision in exercise of this power is based on sound principles. The inherent power should not be exercised to stifle a legitimate prosecution. The High Court being the highest court of a State should normally refrain from giving a prima facie decision in a case where the entire facts are incomplete and hazy, more so when the evidence has not been collected and produced before the court and the issues involved, whether factual or legal, are of magnitude and cannot be seen in their true perspective without sufficient material. Of course, no hard-and-fast rule can be laid down in regard to cases in which the High Court will exercise its extraordinary jurisdiction of quashing the proceeding at any stage.
It is the material collected during the investigation and evidence led in court which decides the fate of the accused person.
The Apex Court in [PRECEDENT], held as under :
23. This Court in a number of cases has laid down the scope and ambit of courts' powers under [SECTION] [ACT]. Every High Court has inherent power to act ex debito justitiae to do real and substantial justice, for the administration of which alone it exists, or to prevent abuse of the process of the court. Inherent power under [SECTION] [ACT] can be exercised:
(i) to give effect to an order under the Code;
(ii) to prevent abuse of the process of court, and
(iii) to otherwise secure the ends of justice.
24. Inherent powers under [SECTION] [ACT] though wide have to be exercised sparingly, carefully and with great caution and only when such exercise is justified by the tests specifically laid down in this section itself. Authority of the court exists for the advancement of justice. If any abuse of the process leading to injustice is brought to the notice of the court, then the court would be justified in preventing injustice by invoking inherent powers in absence of specific provisions in the statute.
27. The powers possessed by the High Court under [SECTION] of the Code are very wide and the very plenitude of the power requires great caution in its exercise. The Court must be careful to see that its decision in exercise of this power is based on sound principles. The inherent power should not be exercised to stifle a legitimate prosecution. The High Court should normally refrain from giving a prima facie decision in a case where all the facts are incomplete and hazy, more so, when the evidence has not been collected and produced before the Court and the issues involved, whether factual or legal, are of such magnitude that they cannot be seen in their true perspective without sufficient material. Of course, no hard-and-fast rule can be laid down in regard to cases in which the High Court will exercise its extraordinary jurisdiction of quashing the proceedings at any stage.
The Apex Court in [PRECEDENT], held as under :
16. Thus, from the general conspectus of the various sections under which the appellant is being charged and is to be prosecuted would show that the same are not made out even prima facie from the complainant's FIR. Even if the charge-sheet had been filed, the learned Single Judge could have still examined whether the offences alleged to have been committed by the appellant were prima facie made out from the complainant's FIR, charge-sheet, documents, etc. or not.
17. In our opinion, the matter appears to be purely civil in nature. There appears to be no cheating or a dishonest inducement for the delivery of property or breach of trust by the appellant. The present FIR is an abuse of process of law. The purely civil dispute, is sought to be given a colour of a criminal offence to wreak vengeance against the appellant. It does not meet the strict standard of proof required to sustain a criminal accusation. In such type of cases, it is necessary to draw a distinction between civil wrong and criminal wrong as has been succinctly held by this Court in [PRECEDENT], relevant part thereof is reproduced hereinbelow: (SCC p. 505, para 27)
27. A distinction must be made between a civil wrong and a criminal wrong. When dispute between the parties constitute only a civil wrong and not a criminal wrong, the courts would not permit a person to be harassed although no case for taking cognizance of the offence has been made out.
The case in hand unfortunately does not fall in that category where cognizance of the offence could have been taken by the court, at least after having gone through the FIR, which discloses only a civil dispute.
19. The appellant cannot be allowed to go through the rigmarole of a criminal prosecution for long number of years, even when admittedly a civil suit has already been filed against the appellant and Respondent 4 complainant, and is still sub judice. In the said suit, the appellant is at liberty to contest the same on grounds available to him in accordance with law as per the leave granted by the trial court. It may also be pertinent to mention here that the complainant has not been able to show that at any material point of time there was any contract, much less any privity of contract between the appellant and Respondent 4 complainant. There was no cause of action to even lodge an FIR against the appellant as neither the complainant had to receive the money nor was he in any way instrumental to telecast GOD TV in certain areas of Ahmedabad. He appears to be totally a stranger to the same. The appellant's prosecution would only lead to his harassment and humiliation, which cannot be permitted in accordance with the principles of law.
The Apex Court in [PRECEDENT], held as under :
16. The respondents, no doubt, have stated that they had no intention to cheat or dishonestly divert or misappropriate the hypothecated aircraft or any parts thereof. They have taken pains to point out that the aircrafts are continued to be stationed at Chennai and Coimbatore Airports; that the two engines of VT-NEK though removed from the aircraft, are still lying at Madras Airport; that the two DART 552 TR engines of VT-NEJ were dismantled for the purpose of overhauling/repairing; that they were fitted into another aircraft (VT-NEH) which had been taken on lease from M/s Aircraft Financing and Trading BV and that the said aircraft (VT-NEH) has been detained by the lessor for its dues; that the two engines which were meant to be fitted into VT-NEJ (in places of the removed engines), when sent for overhauling to M/s Hunting Aeromotive, UK, were detained by them on account of a dispute relating to their bills; and that in these peculiar circumstances beyond their control, no dishonest intent could be attributed to them. But these are defences that will have to be put forth and considered during the trial. Defences that may be available, or facts/aspects when established during the trial, may lead to acquittal, are not grounds for quashing the complaint at the threshold. At this stage, we are only concerned with the question whether the averments in the complaint spell out the ingredients of a criminal offence or not.
17. The High Court was, therefore, justified in rejecting the contention of the respondents that the criminal proceedings should be quashed in view of the pendency of several civil proceedings.
The Apex Court in [PRECEDENT], held as under :
6. The Court after considering the various submissions directed the investigating agency to get the material collected in the course of investigation examined in Canada. It is noted that it will take some time and therefore the trial court would wait for such a report which will be part of the medical and forensic investigation which can be filed in the trial court under [SECTION] of the Code.
7. The basic stand of the appellants is that the High Court has not kept in view the parameters of [SECTION] of the Code. It is submitted that some evidence which is already in existence but in a country outside India can be collected. But for that purpose (1) an application is required to be made by the prosecution before the competent court of law i.e. the court which is seized of the matter;
(2) the application shall be for collecting the evidence and not for creating the evidence; and (3) on such application being allowed, an appropriate request by way of letter of authority from the competent court of law to the court of law or authority concerned where such evidence is available has to be made.
11. It is well settled that the accused has no right to be heard at the stage of investigation. The prosecution will however have to prove its case at the trial when the accused will have full opportunity to rebut/question the validity and authenticity of the prosecution case. In [PRECEDENT] this Court observed: (SCC p. 743, para 11)
11. There is nothing in [SECTION] to suggest that the court is obliged to hear the accused before any such direction is made. Casting of any such obligation on the court would only result in encumbering the court with the burden of searching for all the potential accused to be afforded with the opportunity of being heard.
12. The accused can certainly avail himself of an opportunity to cross-examine and/or otherwise controvert the authenticity, admissibility or legal significance of material evidence gathered in the course of further investigations. Further in light of the views expressed by the investigating officer in his affidavit before the High Court, it is apparent that the investigating authorities would inevitably have conducted further investigation with the aid of CFS under [SECTION] of the Code.
13. We are of the view that what is the evidentiary value can be tested during the trial. At this juncture it would not be proper to interfere in the matter.
The Apex Court in [PRECEDENT], held as under :
34. The principles enunciated from the abovequoted decisions clearly show that for proceeding under [SECTION] of the Code, the complaint must disclose relevant material ingredients of [SECTION], [SECTION], [SECTION] [ACT]. If there is a flavour of civil nature, the same cannot be agitated in the form of criminal proceeding. If there is huge delay and in order to avoid the period of limitation, it cannot be resorted to as a criminal proceeding.
35. Dr. [ENTITY], learned Senior Counsel for the appellant-accused contended that not only material facts were suppressed from the Magistrate but the previous three complaints to various police authorities and their closure reports were kept away from the Magistrate so as to mislead the court. It is seen from the materials placed that three complaints containing similar allegations have been investigated previously and all were closed as the alleged claim was found to be of civil nature. In those circumstances, it did not lie for Respondent 1 complainant to approach the Magistrate with the same subject complaint. Inasmuch as the dispute arose out of a contract and a constituted remedy is only before a civil court, the Magistrate ought to have appreciated that Respondent 1 was attempting to use the machinery of the criminal courts for private gains and for exerting unjust, undue and unwarranted pressure on the appellants in order to fulfil his illegal demands and extract undeserving monetary gains from them.
36. The courts below failed to appreciate that Ext. 61 is a reply filed by Crime Branch II and Ext. 63 is the statement of Shri [ENTITY], which categorically stated that the complaint preferred by Respondent 1 registered at Crime Register No. 11/2000 was filed as being civil in nature. Even if we accept that the records were destroyed and notwithstanding such destruction, it was a matter of record that the complaint preferred by Respondent 1 was indeed investigated and categorised as civil in nature. This aspect has not been considered either by the Magistrate or by the High Court.
37. It is settled law that the essential ingredient for an offence under [SECTION], which we have already extracted, is that there has to be dishonest intention to deceive another person. We have already quoted the relevant allegations in the complaint and perusal of the same clearly shows that no such dishonest intention can be seen or even inferred inasmuch as the entire dispute pertains to contractual obligations between the parties. Since the very ingredients of [SECTION] are not attracted, the prosecution initiated is wholly untenable. Even if we admit that allegations in the complaint do make out a dispute, still it ought to be considered that the same is merely a breach of contract and the same cannot give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right from the beginning of the transaction. Inasmuch as there are number of documents to show that the appellant Company had acted in terms of the agreement and in a bona fide manner, it cannot be said that the act of the appellant Company amounts to a breach of contract.
38. Though Respondent 1 has roped all the appellants in a criminal case without their specific role or participation in the alleged offence with the sole purpose of settling his dispute with the appellant Company by initiating the criminal prosecution, it is pointed out that Appellants 2 to 8 are the ex-Chairperson, ex-Directors and senior managerial personnel of Appellant 1 Company, who do not have any personal role in the allegations and claims of Respondent 1. There is also no specific allegation with regard to their role.
39. Apart from the fact that the complaint lacks necessary ingredients of [SECTION], [SECTION], [SECTION] [ACT], it is to be noted that the concept of vicarious liability is unknown to criminal law. As observed earlier, there is no specific allegation made against any person but the members of the Board and senior executives are joined as the persons looking after the management and business of the appellant Company.
40. It is useful to demonstrate certain examples, namely, [SECTION] of the [ACT] which specifically provides that:
141. Offences by companies.(1) If the person committing an offence under [SECTION] is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:
41. Likewise, [SECTION] of the [ACT] provides that:
32. Offence by companies, etc.Where a person committing an offence under this Act is a company, or other body corporate, or an association of persons (whether incorporated or not), every director, manager, secretary, agent or other officer or person concerned with the management thereof shall, unless he proves that the offence was committed without his knowledge or consent, be deemed to be guilty of such offence.
42. We have already noted that the offence alleged in the criminal complaint filed by Respondent 1 is under [SECTION] and [SECTION] [ACT] whereunder no specific liability is imposed on the officers of the company, if the alleged offence is by the company. In the absence of specific details about the same, no person other than Appellant 1 Company can be prosecuted under the alleged complaint.
43. The courts below failed to appreciate an important aspect that the complaint came to be filed in the year 2002 when the alleged disputes pertain to the period from 1993-1995. As rightly pointed out, the courts below ought to have appreciated that Respondent 1 was trying to circumvent the jurisdiction of the civil courts which estopped him from proceeding on account of the law of limitation.
44. We have already pointed out that Respondent 1 had previously filed three complaints which were concluded after exhaustive enquiry with the respective police authorities. The first complaint was on 6-5-2000 being [CASE NUMBER] with Crime Branch II, Pune which registered the same in its [CASE NUMBER]. Pursuant thereto, the appellants were summoned and exhaustive enquiry was conducted by Crime Branch II and after recording the statements and perusal of documents and after undertaking an extensive interrogation, Crime Branch II closed the case. The said closure of the case was informed to Respondent 1 by the police authorities by their letter dated 28-7-2000.
45. The materials placed further show that notwithstanding the complaint dated 6-5-2000 which was closed by Crime Branch II, another complaint on the same facts, was filed by Respondent 1 at Bhosari Police Station being [CASE NUMBER]. It is pointed out that the appellant and its officers attended Bhosari Police Station, thereafter the said complaint was also closed after the facts were placed before the officers of Bhosari Police Station.
46. Apart from these complaints, Respondent 1 once again filed a third complaint at the Commissioners Office, Crime Branch, Pune being [CASE NUMBER]. The officers of the appellant Company appeared before the Crime Branch, who after perusing the documents and the written statements of Appellant 1, informed the appellants that the matter was closed.
47. It is the grievance of the appellants that without disclosing these material facts and suppressing the fact that the complainant had previously filed three different complaints to various police authorities and that the said complaints were closed on being classified as civil disputes, the complainant had filed the aforesaid criminal complaint before the Magistrate being [CASE NUMBER].
48. Mr [ENTITY], learned Senior Counsel for Respondent 1 has pointed out that at this stage, namely, issuance of direction to the police for submission of report under [SECTION] of the Code, the accused has no role and need not be heard. The said contention is undoubtedly in consonance with the procedure prescribed. However, in view of specific direction of the Division Bench of the High Court by a common order dated 10-6-20032, disposing of the cases by remitting the matter back to the Magistrate for reconsideration of the entire prayer as made by the complainant and to pass fresh orders, after giving adequate opportunity of hearing to both the sides, and decide afresh the application seeking direction under [SECTION] by giving cogent reasons for coming to such conclusion, the procedure adopted by the Magistrate cannot be faulted with. Though the appellant Company/accused has no right to be heard at this stage in view of the direction of the High Court, no exception be taken to the order of the Magistrate hearing the complainant and the appellant Company/accused even at the stage of calling for a report under [SECTION] of the Code.
49. The entire analysis of the complaints with reference to the principles enunciated above and the ingredients of [SECTION], [SECTION], [SECTION] [ACT] clearly show that there was inordinate delay and laches, the complaint itself is inherently improbable and contains the flavour of civil nature and taking note of the closure of earlier three complaints that too after thorough investigation by the police, we are of the view that the Magistrate committed a grave error in calling for a report under [SECTION] of the Code from the Crime Branch, Pune. In view of those infirmities and in the light of [SECTION] of the Code, the High Court ought to have quashed those proceedings to safeguard the rights of the appellants. For these reasons, the order passed by the Judicial Magistrate, First Class, Pimpri in [CASE NUMBER] on 20-8-2007 and the judgment of the High Court dated 11-1-20081 in [CASE NUMBER] are set aside. The complaint filed by Respondent 1 herein is quashed.
50. For the reasons stated above, the appeal is allowed.
In the case of [PRECEDENT] cited by the learned counsel for the petitioner, there were three complaints and earlier two complaints were rejected describing them to be of civil nature and on the third complaint the Apex Court quashed the proceedings of the Judicial Magistrate under [SECTION] [ACT] Hence the facts of that case are not applicable to this case.
7. Whitecollar crime is a financially motivated, economic, nonviolent crime committed for illegal monetary gain. White collar crimes are on a rise in Rajasthan. The present one crime is a white collar crime. The complainant respondent beyond its capacity supplied the goods to the petitioner and petitioner's company and they are not making the payment on one or the other pretext, which is clearly a whilte collar crime. Admittedly in the instant matter the Judicial Magistrate forwarded the complaint filed by the complainant respondent to the Police under [SECTION] [ACT] and after finding it prima facie that case is made out the police registered the FIR and started investigating in the matter. The ingredients of Criminal breach of trust and cheating are made out in the instant matter on the basis of the FIR, contents of the same is reproduced with the criminal misc. petition and prima facie case is made out against the accused petitioner and petitioner's company and other officials of the company and the matter requires investigation by the police under [SECTION] [ACT] The Hon'ble Apex Court as mentioned above in number of cases directed that the court should not interfere in the investigation at this stage where the investigation is pending. However I do not want to further comments in this matter at length at this stage, which will prejudice the case of either parties. Thus on the basis of the rulings cited and discussed above and the material available on record, I am not inclined to interfere with the investigation of the case by the police under [SECTION] [ACT] at this stage in the inherent jurisdiction of this court under [SECTION] [ACT] Without commenting on the facts and circumstances of the case and the merits of the case, I dismiss the criminal misc. petition with the following directions :
1) The investigating officer, who is investigating the matter will investigate the matter fairly, properly and impartially and submit the progress report before the concerned court.
2) If the petitioner wants to submit any document or representation before the investigating officer, the investigating officer will investigate upon the contents of the document or representation.
The stay application also stands disposed of.
([ENTITY]) J.
Pareek/-
All corrections made in the judgment/order have been incorporated in the judgment/ order being emailed ([ENTITY]) PS-cum JW