IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD WEDNESDAY, THE FIFTH DAY OF AUGUST TWO THOUSAND AND NINE PRESENT THE HON'BLE SRI JUSTICE G.BHAVANI PRASAD CRIMINAL PETITION NO : 2716 of 2009 Between: Umesh Kumar Chadha S/o. Late Jogindera Kumar R/o. 501/502, Belseot, Lokhandawada complex Andheri West, Mumbai - 53. ..... PETITIONER AND 1 M/s. Titan Energy Systems Ltd. Rep. by Managing Director Rao Sys Chodagam, 16 Aruna Enclave, Trimulgherry Secunderabad - 500 015. 2 The State of A.P. Rep. by P.P. High Court of A.P. Hyderabad. .....RESPONDENTS Petition under Section 482 of Crl.P.C praying that in the circumstances stated in the grounds filed therewith, the High Court will be pleased to quash the proceedings in Crime No.14/2009 of P.S.CCS. DD. Hyderabad The Petition coming on for hearing, upon perusing the Petition and the grounds filed in support thereof and upon hearing the arguments of Mr.SYED GHOUSE BASHA, Advocate for the Petitioner, and of Mr. P. VISHNUVARDHAN REDDY, Advocate for the 1st respondent and of the Public Prosecutor, on behalf of the 2nd Respondent. The Court made the following: ORDER: The 2nd accused in Crime No.14 of 2009 on the file of Central Crime Station, Hyderabad filed the criminal petition for quashing the proceedings against him. Heard Sri Syed Ghouse Basha, learned counsel for the petitioner, Sri P. Vishnuvardhan Reddy, learned counsel for the 1st respondent and Sri H. Prahalad Reddy, learned Additional Public Prosecutor for the 2nd respondent. The first information report under Sections 406 and 420 read with Section 120B of the Indian Penal Code was registered on the complaint of the Managing Director of the 1st respondent alleging that M/s. Luminus Energy Private Limited, of which the 1st and 2nd accused are Directors and Authorised Signatories, placed a purchase order with the 1st respondent for supply of Solar Power Supply Systems for telemetry project of Oil and Natural Gas Commission for a total consideration of Rs.6,07,30,570/- and after discount, the 1st respondent has to receive Rs.5,39,71,283/-. The advance amount of 20% was paid through cheques and the required material was supplied from time to time as per schedule after due inspection and clearance, for which, the three cheques issued by the concern of the accused were cleared. Then 11 cheques were issued by the accused for a total of Rs.3,82,62,457/- and the cheques were not presented as requested by the 1st accused. On information that the Oil and Natural Gas Commission has released the entire amount to the concern of the accused, the 1st respondent presented two cheques after due information to the accused, out of which the second cheque for Rs.44,05,680/-, dated 15-11-2008 was dishonoured due to insufficiency of funds. Seven more cheques similarly presented were returned due to 'stop payment' instructions from the accused. The 1st respondent alleged that the accused conspired to cheat and commit criminal breach of trust and misappropriation. The 2nd accused contended that the bank accounts of their concern were illegally frozen on erroneous registration of the crime preventing even payment of salaries to the employees by the company. It is a purely civil dispute not attracting any of the penal provisions cited, for which, recourse can be had in civil law or company law, but not in criminal law. No notice was given to the 2nd accused by the de facto complainant and the 2nd accused is not involved in the actions of the 1st accused in entering into the contract or giving 'stop payment' instructions as the Executive Director. The 2nd accused had, in fact, given a written complaint against the 1st accused and two others to the Economic Offences Wing of Bombay Police through his counsel in respect of various offences prejudicial to the interests of the 2nd accused. The cheques were stated to have been given only as security and there was no dishonest intention on the part of the 2nd accused at any time. Hence, the 2nd accused sought for quashing of the criminal proceedings and defreezing of the company's bank accounts. The learned counsel for the petitioner also filed a calculation memo claiming a difference of Rs.76,76,659/- in the claim of the 1st respondent. The 1st respondent filed a counter claiming that specific allegations were made against the petitioner and the Manager of the Corporation Bank, Bombay specifically stated about the petitioner diverting Rs.4.10 crore to his personal account from the company account. The 1st respondent also referred to the confessional statement of the 3rd accused about the petitioner also issuing instructions to issue 'stop payment' instructions to the bank. The 1st respondent, therefore, contended the criminal proceedings to be very much legal and sustainable. The remand report of the 3rd accused also alleged that the investigation established the alleged offences committed by accused 1 to 4. The petitioner filed a copy of the letter, dated 24-03-2009 from the Corporation Bank of having received payment of Rs.4.10 crore on 20-02-2009 to the credit of the company of the accused. Sri P. Vishnuvardhan Reddy, learned counsel for the 1st respondent relied on, – (1) State of Maharashtra v. Ishwar Piraji Kalpatri[1], wherein it was held that the High Court is not justified at the stage of quashing a first information report in embarking upon an enquiry as to the probability, reliability or genuineness of the allegations made therein and even mala fides on the part of the complainant are considered irrelevant at that stage. (2) State of Punjab v. Kasturi Lal and others[2], wherein it was held that exercise of the power under Section 482 of the Code of Criminal Procedure is an exception and not the rule. (3) Md. Salauddin v. Surjit Dutt and another[3], wherein it was held that the power of the Court under Section 482 of the Code of Criminal Procedure should be exercised sparingly only when otherwise it would be an abuse of the process of Court. (4) S.M. Datta v. Shah of Gujarat and another[4], wherein it was held that the genuineness of the averments in the first information report cannot be gone into and the criminal proceedings in the normal course of events ought not to be scuttled at the initial stage. (5) Manohar M. Gilani v. Ashok N. Advani[5], wherein it was held that the High Court was not justified in interfering with the complaint by entering into an elaborate discussion on the merits of the matter. (6) J. Raghuraj Goud v. Sub-Inspector of Police[6], wherein it was held that interference by Courts with the first information reports and the investigation is very rare only in exceptional circumstances. (7) Rameshbhai Dayalal Pandya v. Padmadevi S. Jain[7], wherein it was held that the process started by legal exercise of the power cannot be strangulated for no reasonable cause at premature stage and the accused can wait for arrival of the report of investigation. (8) Tammineedi Bhaskara Rao v. State of A.P.[8], wherein the scope of Section 482 of the Code of Criminal Procedure was discussed at length and the primary consideration was stated to be whether the allegations taken at face value and accepted in entirety, do not make out a case against the accused. (9) Clough Engineering Ltd., Mumbai v. State of A.P.[9], wherein the existence of prima facie material to attract the ingredients of penal provisions led to refusal to quash the proceedings. (10) Jagdish Ram v. State of Rajasthan[10], wherein it was held that criminal proceedings do not deserve to be quashed merely on account of delay without anything more and without going into the reasons for the delay. (11) Girish Sarwate v. State of A.P.[11], wherein it was held that the High Court's inherent power to pass orders to secure the ends of justice is not limited by any provision in the Criminal Procedure Code and under what circumstances, such power can be exercised would depend upon the facts and circumstances of a given case. (12) State of T.N. v. Thirukkural Perumal[12], wherein evaluation of the genuineness and reliability of the allegations made in the first information report on the basis of the evidence collected during the investigation was held to be unjustified in a petition under Section 482 of the Code of Criminal Procedure and embarking upon such an enquiry as to the reliability and genuineness of the allegations in a rather casual manner, was deprecated. (13) Mahavir Prashad Gupta v. State of National Capital Territory of Delhi[13], in which it was held that undoubtedly, there could be interference in rarest of rare cases and one such case would be when the complaint itself does not disclose any offence, and lastly, (14) State of Haryana v. Bhajan Lal[14], which elaborated the categories of cases where the inherent power under Section 482 of the Code of Criminal Procedure can be exercised by the High Court. In effect and substance, the precedential law is clear that the power under Section 482 of the Code of Criminal Procedure may be exercised to prevent abuse of process of law or to secure the ends of justice, where the first information report or the complaint or other materials even if accepted at face value in entirety do not prima facie constitute any offence or when they are absurd and inherently improbable or expressly barred by law or maliciously instituted with ulterior motives. The power should be exercised very sparingly with circumspection in rarest of rare cases and the Court will not be justified in embarking upon an enquiry as to the reliability or genuineness or otherwise of the allegations. So tested, the facts of the present case do not present a situation where such an inherent power can be invoked. The learned counsel for the petitioner, Sri Syed Ghouse Basha referred to Coromandal Cements Limited v. State of A.P.[15] to contend that to hold a person guilty of cheating, fraudulent or dishonest intention should be present at the time of making the promise and from mere failure to keep up the promise, such a culpable intention since the beginning cannot be presumed and a purely civil dispute has to be adjudicated through the process of civil Courts. He also relied on Vir Prakash Sharma v. Anil Kumar Agarwal[16], wherein non-payment or under payment of price of the goods by itself was held not to amount to cheating or criminal breach of trust, but to amount to a civil dispute, more so, when there were no allegations about the ingredients of any offences. He further relied on S.K. Alagh v. State of U.P.[17], wherein also vicarious liability was held to be not extendable to the Director or Officer of a company under Section 406 of the Indian Penal Code, unless he is charged directly for the commission of the offence. The principles are unexceptionable, but the facts of the present case do not appear, ex facie, to present a purely civil dispute or the absence of any scope for implicating the petitioner. The petitioner was also described to be a Director and Authorised Signatory for his company along with the 1st accused and though the 1st accused was the Executive Director who placed the purchase order, the written complaint from the Managing Director of the 1st respondent specifically alleged the other Directors of the company to be part of the requests to present the cheques for payment and the mala fide intentions to conspire to commit cheating, criminal breach of trust and misappropriation by instructing the bankers to stop payment to cause wrongful loss to the 1st respondent after receiving the goods and after receiving monies from the Oil and Natural Gas Commission. Even the complaint from the petitioner against the 1st accused, her husband and the 3rd accused through his counsel on 31-12-2008, before the present complaint by the 1st respondent, mentioned the petitioner to be the major shareholder and promoter of the company and the 1st accused to be guilty of misrepresentations to the clients. The petitioner specifically alleged the 1st accused and others to have committed such offences and though he specifically referred to taking Rs.4.10 crore of the company into his custody to use the same to discharge the liabilities of the company, the admitted misdemeanours committed on behalf of the company by the 1st accused and others may fasten criminal liability to the petitioner also, in case his claims are not substantiated and if the allegations of the 1st respondent about his positive involvement are established. The subsequent repayment of Rs.4.10 crore to the credit of the company or any dispute about the actual amount due to the 1st respondent, etc., do not erase the possible liability of the petitioner, if the allegations made in the first information report are true. The statements of the Managing Director of the 1st respondent and the Chief Manager of Corporation Bank and the confessional statement of the 3rd accused also, said to have been made to the police about the specific instructions from the petitioner, filed along with the counter of the 1st respondent, may not indicate the allegations in the written complaint leading to the first information report against the petitioner to be totally unfounded. If the first information report and the material on record were to be considered in entirety, it cannot be said that there is no offence made out against the petitioner even prima facie. Whether there was culpable intention or knowledge for the petitioner to constitute any offences since inception, etc., has to be investigated into and concluded by the investigating agency or if a final report were to be filed against him, by the trial Court on appreciation of the oral and documentary evidence to be placed before it during trial and any deep probe into the disputed questions of fact cannot be made here. Though non-payment of price for the goods supplied, per se, is only a civil wrong and not a criminal offence, whether such non-payment is accompanied with the ingredients of the offences alleged, is a question to be investigated and tried and on the facts of the present case, the same does not appear to be susceptible to being nipped at the bud. While the criminal petition should, therefore, fail, the learned counsel for the petitioner submitted that the petitioner has absolutely no past criminal record and is of high repute in business and industrial circles and any prolonged detention would be prejudicial to his person and reputation. However, no conclusive directions in this regard can be positively given, except to request the Court concerned to consider any relevant request from the petitioner with all expedition that such a request deserves, preferably on the same day on which such a request is made. Therefore, the criminal petition is dismissed, but if the petitioner were to surrender himself to or to be produced for judicial custody before the Court of competent jurisdiction and if he were to make a request for release on bail, such Court shall consider such request in accordance with law on the same day on which such request is made. _____________________ G. BHAVANI PRASAD, J Date: 05-08-2009 Svv ASSISTANT REGISTRAR // TRUE COPY // SECTION OFFICER To 1.Two CC's to Public Prosecutor 2.Two CD Copies 3.One CC to Form-NIC-0GS/CRLP{ND} [1] 1996 (1) ALD (Crl.) 139 (S.C.) [2] 2004 (2) ALD (Crl.) 481 (SC) [3] 2001 (2) ALD (Crl.) 730 (SC) [4] 2001 (2) ALD (Crl.) 553 (SC) [5] 2000 (1) ALD (Crl.) 297 (SC) [6] 2005 (1) ALD (Crl.) 177 (AP) [7] 2003 ALD (Crl.) 113 (NOC) (Bom.) [8] 2007 (1) ALD (Crl.) 533 (AP) [9] 2007 (1) ALD (Crl.) 950 (AP) [10] 2004 (1) ALD (Crl.) 672 (SC) [11] 2005 (1) ALD (Crl.) 150 (AP) (FB) [12] (1995) 2 Supreme Court Cases 449 [13] (2000) 8 Supreme Court cases 115 [14] 1992 Supp (1) Supreme Court Cases 335 [15] 2006 (2) ALD (Crl.) 234 (AP) [16] (2007) 7 Supreme Court Cases 373 [17] 2008 (2) ALD (Crl.) 78 (SC)