IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED 23.07.2010 CORAM THE HONOURABLE MR.JUSTICE P.R.SHIVAKUMAR Crl.O.P.No.2595 of 2007 & M.P.No.1 of 2007 R.Veluswamy .. Petitioner Vs 1.State represented by its Inspector of Police (Crime) Namakkal Town Police Station Namakkal District (Crime No.810/2004) 2.K.K.Kalimuthu .. Respondents PRAYER: Criminal Original Petition filed under section 482 of Criminal Procedure Code praying to quash the proceedings in C.C.No.402 of 2005 on the file of the Learned Judicial Magistrate No.1, Namakkal. For Petitioners:Mr.Karthikeyan For Respondent :Mr. I.Paul Nobel Deva Kumar Government Advocate (Crl.side) for R1 Mr.K.V.Sridharan for R2 ORDER This petition under Section 482 Cr.P.C has been filed by R.Velusamy, the sole accused in Cr.No.402 of 2005, now pending on the file of the learned Judicial Magistrate No.I, Namakkal. The criminal proceedings launched against the petitioner in the above said calendar case for alleged offences under Sections 420 and 402 IPC, is sought to be quashed on the ground that the complaint and continuation of the criminal proceedings is an abuse of process of Court. 2.The facts leading to the filing of the petition can be briefly stated as follows:- https://hcservices.ecourts.gov.in/hcservices/ The petitioner herein is a Transport operator having a transport contract with Bharat Petroleum Corporation Limited, Chennai. The second respondent herein is also a transport operator owning a tanker lorry bearing Registration No.KA-21-4665 and he did not have a direct contract with the Bharat Petroleum Corporation Limited, for transport of bulk quantities of LPG. As such, the petitioner and the second respondent entered into a contract between themselves, by which the above said tanker lorry was allowed to be used by the petitioner for the transport of LPG for Bharat Petroleum Corporation Limited to various filling stations in consideration of the petitioner agreeing to pay 90% of the transport charges received by the petitioner from Bharat Petroleum Corporation Limited after deducting 10% of the transport charges for the LPG transported through the tanker lorry of the second respondent bearing Registration No.KA-21-4665. In accordance with the terms of the said agreement, the above said tanker lorry of the second respondent was used by the petitioner from January 2000 to July 2000 to transport 18 consignments of LPG. According to the second respondent/complainant, the total transport charges received by the petitioner from Bharat Petroleum Corporation Limited for the transport of the above said 18 consignments using the tanker lorry of the second respondent was Rs.8,81,620/- out of which, he had to pay a sum of Rs.7,93,458/-, as 90% in accordance with the terms of the agreement, but, However, the second respondent was paid by the petitioner, a sum of Rs.7,38,961/- alone and there remained a balance of Rs.54,497/-. Contending that the petitioner with dishonest intention induced the second respondent to allow the petitioner to use the tanker lorry of the second respondent for the purpose of transporting LPG and thereafter withheld a part of the amount payable as per the agreement to the second respondent as amount payable out of the transport charges received from Bharat Petroleum Corporation Limited, towards the transport charges for the transport of LPG through the tanker lorry belonging to the second respondent and thereby the petitioner had committed the offences of cheating and criminal misappropriation punishable under Sections 420 and 403 IPC respectively. Based on the said complaint, a case was registered on the file of Namakkal Police Station as FIR No.810 of 2004 and after investigation, the Sub-Inspector of Police, Crime, Namakkal Police Station submitted a final report against the petitioner herein, alleging commission of the above said offences. The same was taken on file by the learned Judicial Magistrate No.I, Namakkal on the file of the said Court as C.C.No.402 of 2005. Thus, having been implicated in the above said criminal case, the petitioner herein has approached this Court for quashing of the said criminal proceedings on various grounds set out in the criminal original petition. 3.This Court heard the submissions made by Mr.R.Karthikeyan, learned counsel for the petitioner, Mr.I.Paul Nobel Deva Kumar, https://hcservices.ecourts.gov.in/hcservices/ learned counsel for the first respondent and Mr. K.V.Sridharan, learned counsel for the second respondent. The materials placed on both sides were also perused. 4.The criminal proceedings pending on the file of the learned Judicial Magistrate No.I, Namakkal is sought to be quashed on the following grounds:- a) Ingredients of any of the offences of cheating and criminal misappropriation punishable under Sections 420 and 403 IPC, having not been made out either in the complaint or in the materials collected by the Investigating Officer during the course of investigation. b) A pure civil dispute regarding the amount to be paid to the second respondent in terms of the agreement between the petitioner and the contractor has been sought to be given a criminal colour, which will show the sheer abuse of process of law. c) Even for the disputed amount, the second respondent filed a suit on the file of the learned District Munsif, Namakkal in O.S.No.643 of 2005 claiming that a sum of Rs.54,497/- as the amount due from the petitioner. But the Civil Court granted a decree after contest, for a sum of Rs.46,352/- alone, of course, with a direction to pay interest for the said amount at the rate of 9% p.a Pendente lite and a post decree interest of 6% p.a. The said fact will make it abundantly clear that there was a bonafide dispute regarding the amount to be paid and the same was adjudicated by a competent Civil Court, which resulted in a decree for lesser amount than the one claimed by the second respondent and it shall be sufficient to negative the contention of the second respondent that there was any dishonest intention at the time of entering into the agreement itself to deceive. d) Pursuant to the decree passed by the Civil Court, Execution Petition was filed and the decree amount was collected fully and a full satisfaction has been recorded. Even after such a recovery and recording of full satisfaction, the persistence of the second respondent to continue the criminal proceedings against the petitioner will show that he was inclined to harass the petitioner by abusing the process of law. e) The amount received by the petitioner from the Bharat Petroleum Corporation Limited as transport charges for the transport of LPG in accordance with the contract the petitioner had with the Bharat Petroleum Corporation Limited cannot be claimed to be the money belonging to the second respondent and https://hcservices.ecourts.gov.in/hcservices/ the said amount cannot be said to be received by the petitioner, on behalf of the second respondent as his trustee. There was no entrustment of the money belonging to the second respondent so as to say that the utilisation of the amount by the petitioner for his own benefit would amount to criminal misappropriation. The liability to pay 90% of the transport charges as commission to the second respondent had arisen only as a contractual liability and therefore, there was no entrustment or even semblance of entrustment to attract Section 403 IPC. 5.The learned counsel for the petitioner, pointing out the above said facts viz., the nature of contract between Bharat Petroleum Corporation Limited and the petitioner and the nature of agreement between the petitioner and the second respondent, argued that there was no question of entrustment of money belonging to the second respondent by anybody to the petitioner which is the sine qua non for prosecuting for criminal misappropriation under Section 403 IPC. It is also the contention of the learned counsel for the petitioner that for prosecuting a person for cheating under Section 420 IPC, the person sought to be prosecuted should have deceived by fraudulently or dishonestly inducing the person so deceived, to deliver any property or to do anything, which he would not do or omit to do, if they were not so deceived. The learned counsel contended that the fraudulent or dishonest intention to deceive is the foundation for prosecuting a person for the offence of cheating and that such fraudulent or dishonest intention should be at the time of making the representation or promise and that the subsequent inability or omission to honour the promise will not amount to cheating. Moreover, according to the arguments advanced by the learned counsel for the petitioner, there was not even such a dishonest intention developed subsequently in this case, as the existence of a bonafide dispute regarding the amount agreed to be paid is very much patent from the fact that the said dispute was resolved by a competent Civil Court, which granted a decree for a lesser amount than what was claimed by the second respondent and by the fact that the entire amount decreed has been recovered from the petitioner. 6. Per contra, the learned counsel for the second respondent contended that there was an understanding between the petitioner and the second respondent that they would do the business of transporting LPG for Bharat Petroleum Corporation Limited for reward in partnership by taking the contract in the name of the petitioner with the further understanding that the share of the second respondent in the transport charges collected from the Bharat Petroleum Corporation Limited shall be 90%. In support of the above said contention, the learned counsel for the petitioner drew the attention of the Court to the admitted fact that a demand https://hcservices.ecourts.gov.in/hcservices/ draft drawn by the second respondent in favour of Bharat Petroleum Corporation Limited for a sum of Rs.30,000/- was deposited with the Bharat Petroleum Corporation Limited, as security for the contract period and contended that if at all there was no such understanding that the transport of LPG for Bharat Petroleum Corporation Limited was to be done by the petitioner and the second respondent as a joint venture, Bharat Petroleum Corporation Limited would not have accepted the demand draft purchased by the second respondent. It is the further contention of the learned counsel for the second respondent that the singular fact that the said demand draft for a sum of Rs.30,000/- was kept with the Bharat Petroleum Corporation Limited for the period of contract for transport of LPG would show that the transport of LPG was undertaken only as a joint venture and the receipt of the amount towards transport charges by the petitioner was on behalf of the second respondent also and therefore, the ingredients of cheating as well as misappropriation are present and that the petition for quashing the criminal proceedings should be dismissed as having no merit. 7.This Court paid its anxious consideration to the rival contentions raised by the counsel appearing on both sides. Upon such consideration, this Court comes to the conclusion that there is no basis for prosecuting the petitioner for the alleged offences punishable under Sections 420 and 403 IPC and that the launching of prosecution itself is nothing but an attempt to give a criminal colour to a pure civil dispute and hence, an abuse of process of law. The continuation of the criminal proceedings even after the civil dispute was resolved by a competent Civil Court resulting in granting a decree in favour of the second respondent for a lesser amount than what was claimed by him evidencing the existence of a bonafide dispute regarding the amount payable to the second respondent, will also show the inclination on the part of the second respondent to perpetuate the abuse of process of law and that therefore, it is a fit case in which this Court has to exercise its inherent power under Section 482 Cr.P.C to quash the criminal proceedings initiated against the petitioner in C.C.No.402 of 2005 on the file of the Learned Judicial Magistrate No.1, Namakkal. The reasons are as follows:- i) Admittedly there is no direct contract between Bharat Petroleum Corporation Limited and the second respondent. The petitioner alone was the recognized contractor for transporting LPG of Bharat Petroleum Corporation Limited. There is no material to show that there was any partnership agreement between the petitioner and the second respondent that the business of transporting of LPG for Bharat Petroleum Corporation Limited was undertaken by them jointly as a partnership business. If at all, it was considered to be a partnership business, then the terms of contract shall be clear as to what would be the contribution of each party for the said business. In case of partnership, there should be a clear contract https://hcservices.ecourts.gov.in/hcservices/ of mutual agency between the partners. Unfortunately, for the second respondent, there is no material to show the existence of such understanding between the petitioner and the second respondent. It is not the case of the second respondent that the tanker lorry of the second respondent bearing Registration No.KA-21-4665 was the only vehicle agreed to be used for transporting LPG of Bharat Petroleum Corporation Limited. On the other hand, even as per the complaint, the gist of the agreement between the petitioner and the second respondent was that 90% of the amount that might be received by the petitioner for the transport of LPG using the tanker lorry of the second respondent bearing Registration No.KA-21-4665 alone would be paid to the respondent. It would show that the business of transporting LPG for Bharat Petroleum Corporation Limited was not carried on jointly by the petitioner and the second respondent either as a partnership business or as a joint venture business, as contended by the second respondent and on the other hand, it was a simple contract, by which the second respondent allowed the petitioner to use the tanker lorry of the second respondent bearing Registration No.KA-21-4665 for transporting LPG, for which he had to get 90% of the transport charges received from Bharat Petroleum Corporation Limited, as the hire charges for the tanker lorry. ii) It is not the case of the second respondent that either of the parties had to account for the expenditure incurred for the lorry for the concerned trips and after meeting the expenditure, certain percentage of the balance had to be paid to the second respondent, as his share in the profit. On the other hand, it is quite obvious from the averments made by the second respondent himself that the contract between the second respondent and the petitioner was a simple contract of the petitioner hiring the vehicle of the second respondent for transporting LPG. The non- payment of the hire charges cannot be termed as criminal misappropriation, since there is no entrustment of money. iii) The very fact that the second respondent had taken a Demand Draft for Rs.30,000/- in favour of Bharat Petroleum Corporation Limited and the same was given by the petitioner as security to Bharat Petroleum Corporation Limited, will not give any room for an inference that the contract with the Bharat Petroleum Corporation Limited was obtained by the petitioner on behalf of the second respondent also. On the other hand, since the tanker lorry of the second respondent was to be used for transporting bulk quantities of LPG valued at high amount, in order to ensure the safe transport of the same, as the tanker lorry would be manned by the drivers of the second respondent, the petitioner thought it fit to get a Demand Draft for a sum of Rs.30,000/- drawn in favour of Bharat Petroleum Corporation Limited only as a security. Such a method was adopted by the petitioner to ensure that the LPGs transported in the tanker lorry of the second respondent was not https://hcservices.ecourts.gov.in/hcservices/ diverted or misused either by the second respondent or by his employees. The same does not mean that the second respondent was recognized to be a partner of the petitioner in the business of transporting LPG for Bharat Petroleum Corporation Limited. iv) Bharat Petroleum Corporation Limited would require the contractor to give security in the form of Demand Draft drawn in favour of it, to ensure the safety of the LPG transported in the vehicles used by the contractor. It may not be concerned with the person who had taken the Demand Draft, because there won't be any impediment for the Bharat Petroleum Corporation Limited to encash the Demand Draft in case there is any breach of contract or loss is caused , since the Demand Draft is drawn in favour of BPCL. It is also obvious that soon after the contract was over, the said Demand Draft was returned and the second respondent got back the money by surrendering the same to the Bank from which it was drawn. Therefore, this Court is satisfied with the contention raised on behalf of the second respondent that by no stretch of imagination, the amount or any part of the amount received by the petitioner from Bharat Petroleum Corporation Limited as transport charges in accordance with the contract he had with the Bharat Petroleum Corporation Limited, can be construed to be the amount received by him on behalf of the second respondent to attract Section 403 IPC and that the liability of the petitioner to make payment for the use of the second respondent's vehicle is only contractual and the same is sought to be given a criminal colour. 8. In similar circumstances, in U.Dhar and another Vs. State of Jharkhand and others reported in AIR 2003 Supreme Court 974, the Apex Court has held that the plea of misappropriation and cheating was not maintainable. The relevant paragraphs are as follows:- "5.In our view, what is relevant is that the contract between TCPL and the complainant is an independent contract regarding execution of certain works and even assuming the case of the complainant to be correct, at best it is a matter of recovery of money on account of failure of TCPL to pay the amount said to be due under the contract. The complainant has alleged that TCPL has already received the money from the SAIL for the work in question and it has misappropriated the same for its own use instead of paying it to the complainant and it is for this reason that the offences are alleged under Sections 403, 406 and 420 etc., 6.The Courts below have overlooked the fact that the contract between Bokaro Steel (a unit of SAIL) and TCPL is a separate and independent contract. The contract between complainant and TCPL is altogether a different contract. The contractual obligations under both the contracts are https://hcservices.ecourts.gov.in/hcservices/ separate and independent of each other. The rights and obligations of the parties i.e., the complainant and TCPL are to be governed by the contract between them for which the contract between TCPL and Bokaro Steel (SAIL) has no relevance. Therefore, even if Bokaro Steel has made the payment to TCPL under its contract with the latter, it will not give rise to plea of misappropriation of money because that money is not money or movable property of the complainant. 7.Further Section 403 uses the word 'dishonestly' and 'misappropriate'. These are necessary ingredients of an offence under Section 403 IPC. Neither of these ingredients are satisfied in the facts and circumstances of the case. In Para 14 of the complaint, the complainant has stated as under: "... Release of payments to complainant was never depended on the payment released by Bokaro Streel Plant a unit of SAIL to TISCO Growth Shop and TCPL." 8. Thus, admittedly the two contracts are independent of each other and payment under one has no relevance qua the other. It can not be said that there is any dishonest intention on the part of appellants nor it can be said that TCPL or the appellants have misappropriated or converted the movable property of the complainant to their own use. Since the basic ingredients of the relevant Section in the Indian Penal Code are not satisfied, the order taking cognizance of the offence as well as the issue of summons to the appellants is wholly uncalled for. Such an order brings about serious repercussions. So far as the appellants are concerned when no case is made out for the alleged offences even as per the complaint filed by the complainant, there is no reason to permit the appellants to be subjected to trial for the alleged offences. Hence, the appeal is allowed. The impugned orders of the High Court as well as of Chief Judicial Magistrate are hereby ordered to be quashed." 9. So far as the charge for the offence of cheating punishable under Section 420 is concerned, this Court is satisfied with the contention of the learned counsel for the petitioner that there was no fraudulent or dishonest intention to deceive and that in fact there was only a bonafide dispute regarding the quantum to be paid to the second respondent under the agreement. The second respondent has claimed that a sum of Rs.8,81,620/- was the amount received by the petitioner from Bharat Petroleum Corporation Limited as transport charges for the 18 consignments transported using the tanker lorry of the second respondent bearing Registration No.KA-21- https://hcservices.ecourts.gov.in/hcservices/ 4665 during the period between January 2000 and July 2001, out of which after deducting 10% as commission, the balance of Rs.7,93,458/- was to be paid to the second respondent. Out of the amount payable to the second respondent, admittedly a sum of Rs.7,38,961/- was paid and what remained was only Rs.54,497/-, comparatively a meager amount even as per the contents of the complaint. The second respondent, besides preferring the complaint, chose to file a suit for the recovery of the said amount and the said suit viz., O.S.643 of 2005 on the file of Principal District Munsif, Namakkal was contested by the petitioner and after contest, a decree was passed for a lesser sum than what was claimed by the second respondent. Admittedly, decree amount was recovered and full satisfaction was recorded subsequent to the date of decree. The same will show that there was a bonafide dispute regarding the amount to be paid. Under such circumstances, the launching of criminal proceedings against the petitioner is no doubt an attempt to convert a civil dispute into a criminal case and thus, an abuse of process of Court. It should be noticed that even after the civil case ended in a decree for lesser amount than what was claimed by the second respondent and after satisfaction of the decree, the second respondent has chosen to insist upon the continuation of the criminal proceedings which also amounts to a glaring example of abuse of process of Court. 10. For all the reasons stated above, this Court holds that it is a fit case in which this Court has to exercise its inherent power under Section 482 Cr.P.C to quash the proceedings initiated against the petitioner here in C.C.No.402 of 2005 on the file of the Learned Judicial Magistrate No.1, Namakkal. Accordingly, the petitioner succeeds and the criminal proceedings pending against the petitioner in C.C.No.402 of 2005 on the file of the Learned Judicial Magistrate No.1, Namakkal is hereby quashed. Consequently, the connected miscellaneous petition is closed. Sd/- Asst.Registrar. /true copy/ Sub Asst.Registrar. gpa To 1. The Judicial Magistrate No.I Namakkal https://hcservices.ecourts.gov.in/hcservices/ 2. The Inspector of Police (Crime) Namakkal Town Police Station Namakkal District (Crime No.810/04) 3. The Public Prosecutor, High Court, Madras 1 cc to Mr.K.V. Sridharan, Sr. 54343 1 cc to mr.r. karthikeyan, Sr. 53996 Crl.O.P.No.2595 of 2007& M.P.No.1 of 2007 MRD (CO) kk 2/8 https://hcservices.ecourts.gov.in/hcservices/