WP(C) 1398/2007 BEFORE HON’BLE MR. JUSTICE B.K. SHARMA The issue raised in this writ petition is the maintainability of the par ticular criminal proceeding initiated against the petitioners by the respondent No. 1. 2. The respondent No. 1 who is the complainant in the criminal proceeding i nitiated against the petitioners is a Company incorporated under the provision o f Companies Act. It is engaged in the business of manufacture and sale of craft s, bins and furniture. Its registered office and factory is at Silvassa in the Union Territory of Dadra and Nagar Haveli. 3. The petitioner No. 1 is also a Company incorporated under the provision of the Companies Act and the petitioners No. 2 to 5 are the Directors of the Com pany. 4. The present proceeding has arisen out of the criminal complaint lodged b y the respondent No. 1 against the petitioners in the Court of the Judicial Magi strate, Dadra and Nagar Haveli at Silvassa registered and numbered as Criminal C omplaint No. 119/06 and the orders passed therein. The petitioners by means of this application under Article 226 of the Constitution of India has prayed for s etting aside and quashing of the aforesaid Criminal Complaint No. 119/06 and the order dated 30.11.06 by which the learned Judicial Magistrate, Dadra and Nagar Haveli at Silvassa issued process to the petitioners upon taking cognizance of t he complaint lodged by the respondent No. 1 against the petitioners expressing p rima facie satisfaction to proceed against the accused /petitioners u/s. 406, 41 5, 417, 420 read with Section 120(B) IPC. 5. In the complaint lodged by the respondent No. 1 against the petitioners, it has been stated that the accused petitioners No. 2 to 5 are the directors of the accused petitioner No. 1 Company. As the directors are actually involved in the business and are looking after the affairs of the Company, all the accused petitioners are responsible for day to day working of the Company and it had be en interacting with the respondent No. 1/complainant for various transactions be tween them. 6. It has been stated in the complaint that the respondent No. 1/ complaina nt has been dealing with the petitioner No. 1 Company since many years and has b een purchasing plastic materials from the accused petitioner No. 1 as per the ag reement entered into between them. They entered into an agreement on 06.03.02 fo r manufacturing and sale of injection moulded plastic articles. For the purpose of starting manufacturing facilities, the accused were in need of finance and he nce requested the respondent No. 1/complainant for a short term loan on certain terms and conditions which the respondent No. 1/ complainant agreed in view of the good business relations with the petitioners. Consequently, the agreement da ted 06.03.02 was signed by the parties with the provision for short term loan of Rs. 2 crores. 7. As per the complaint, the aforesaid loan was secured by first charge on the building situated in the premises in which the accused/petitioners carry on their business and also on the plant and machinery. The loan was utilized for th e purpose as mentioned in the agreement in terms of which the respondent No. 1 a dvanced a sum of Rs. 1,24,45,000/- from 31.03.2002 onwards in five installments towards inter-corporate deposits at the rate of 15% per annum. As per the agreem ent, the installments were due half yearly. However, the accused petitioners sta rted to pay only in July, 2004. It is the case of the complainant/respondent No. 1 that the accused petitioners owe a sum of Rs. 75,05,000/- to the complainant/ respondent No. 1 towards repayment of the loan. 8. For the purpose of carrying out the business activities, namely manufact uring of plastic articles and as provided in the agreement, the complainant/ res pondent No. 1 forwarded injection mould from time to time to the accused petitio ners. The moulds were required for manufacturing of plastic articles. The respon dent No. 1 complainant has mentioned about sending of such injection moulds at t he cost of Rs. 54,47,266/- to the accused/petitioners under invoice No. 61030058 08 on 06.03.06. 9. According to the complaint lodged by the respondent No. 1/ complainant, contrary to the agreement, the accused/petitioners stopped supplying the finishe d goods to the complainant/respondent No. 1 from the month of July, 2006 without any reason. It has been stated in the complaint that for the period of 11.04.06 to 03.07.06 the complainant had placed the orders for 10,840 numbers of shares, but the accused/ petitioners did not comply with the order and sent the goods i n parts. The complainant in all received only 5321 number of shares as against t he order of 10,840 number of shares and the balance 5519 number of shares was st ill lying with the accused/petitioners. 10. On failure on the part of the accused/petitioners and they having acted contrary to the terms and conditions of the agreement, the respondent No. 1 dema nded back its mould earlier given to the accused/petitioners. The complainant by its letter dated 13.07.06 had demanded back their mould furnished to the accuse d/ petitioners on 06.03.06. The complainant called upon the accused to return ba ck the mould before 19.07.06 and to send requisition for another one, if require d and in the event of the accused/petitioners deciding to supply the goods as or dered. In spite of receipt of the letter, the accused/petitioners failed to resp ond to the same and also did not return back the mould. The complainant alleging that the accused/petitioners in one or other pretext kept on postponing the re turn of the moulds, has stated that the complainant/ petitioners kept the mould belonging to the complainant/ respondent No. 1 without any justifiable reason. I n addition, the accused petitioners also stopped delivery of the goods without a ny reason. It has been stated in the complaint that the accused/petitioners are making use of the mould for their own use and purpose and have been carrying on their business with the moulds belonging to the complainant/ respondent No. 1. A s per the complaint they have been producing the goods with the help of the moul d and selling the same to other persons contrary to the terms of the agreement. Thus, according to the complaint, the accused petitioners have committed breach of trust. 11. It has further been stated in the complaint that the accused petitioners had assured to make payments against the amount due to the complainant but fail ed to clear the outstanding dues obtained by way of ICD and an amount of Rs. 75 ,00,000/- is still due and payable to the complainant. Although the accused peti tioners have forwarded some cheques to the complainant for payments, but the sam e were of lesser value and not sufficient to clear the outstanding dues. Some of the cheques were also dishonored and the complainant has initiated separate pro ceeding in respect of the same. According to the complainant, the accused petit ioners are holding back both the amount due as well as the mould of the complai nant illegally and are making illegal gains by making use of the same. 12. It has further been stated in the complaint that the accused/petitioners misrepresented the complainant about their financial capacity. The illegal acti on on the part of the accused/petitioners induced and deceived the respondent No . 1/ complainant to advance ICD and to part with the mould which the complainant would not have done, but for such deceitful act on the part accused petitioners . It has also been stated in the complaint that the faction of the accused in no t to repay the ICD and consequently the retention of property illegally without authority has caused loss, harm and damage to the complainant with consequential immense mental tension. 13. According to the complaint, the accused/petitioners had obtained the mou ld with the intention to retain the same permanently and to use for their own pu rpose. The accused/petitioners never revealed their such intention and at all ma terial time made the complainant to believe that they would return the same and make the payment. According to the respondent No. 1/ complainant such conduct o n the part of the accused/ petitioners are nothing but commission of offence of criminal breach of trust and cheating. It is the case of the complainant that th e accused/ petitioners are liable for hatching conspiracy of duping the complain ant by obtaining ICD and not repaying back and also to retain mould and to use i t for the purpose of other than the agreement. 14. In the complaint it has been stated that the complainant has been dealin g with the accused from its registered office at Silvassa in the Union Territory of Dadra and Nagar Haveli. Consequence of the illegal retention of the mould an d failure to repay the amount as per the agreement has resulted in loss to the r espondent No. 1 Company and the conduct on the part of the accused/petitioners h as given rise to the offence U/s. 406, 415, 417 read with Section 120 (B) IPC. 15. Learned Judicial Magistrate, Dadra and Nagar Haveli at Silvassa having t aken cognizance of the complaint lodged by the respondent No. 1 recording prima facie satisfaction of the offence allegedly committed by the accused/ petitioner s under the aforesaid Sections, the petitioners have invoked the writ jurisdicti on of this Court for setting aside and quashing of the said proceeding. The grou nds urged for such relief have been indicated under paragraph -6 as the ground numbers (A) to (D). While dealing with the purported factual aspect of the matte r controverting the facts stated in the complaint, it has been urged by the peti tioners that not a single event has taken place at Silvassa in respect of the al legations made in the complaint and consequently the Court at Silvassa lacks jur isdiction. It is the case of the petitioners that even if any offence has been c ommitted by the accused/ petitioners same being within the jurisdiction of Guwah ati, the Court at Silvassa cannot assume jurisdiction. 16. Further grounds urged in the writ petition is that the use of the mould at Guwahati even if attracts the ingredients of criminal breach of trust, then a lso, same having being utilized in Guwahati, the Court at Silvassa cannot have a ny jurisdiction. According to the petitioners the alleged non-payment of the amo unt as per the agreement even if taken on the face value, same cannot tantamount to commission of criminal offence. According to the accused/ petitioners, the p etitioner No. 1 being a body corporate, cannot be prosecuted under the law for t he alleged commission of the offence narrated in the complaint. 17. As against the aforesaid stand of the petitioners, the respondent No. 1/ complainant in its affidavit in opposition has justified the action on its part to lodge the criminal complaint at Silvassa and issuance of process upon taking cognizance of the complaint by the learned Judicial Magistrate. It has been bro ught on record that the accused/petitioners duly appeared before the learned Jud icial Magistrate at Silvassa as many as 5 times and prayed for adjournments. Fur ther, the accused/petitioners No. 2 to 5 by way of filing the application on 02. 02.07 prayed for exemption from personal appearance U/s. 205 Cr.P.C. As regards the plea of the accused petitioners that the respondent No. 1 Company in absence of any mens rea cannot be made liable for any criminal offence, it has been st ated in the affidavit that the company is vicariously liable for the crime comm itted by its Directors in the course of their agency. Further ground urged in th e affidavit is that if at all the petitioners are aggrieved by initiation of pro cess by the learned Judicial Magistrate at Silvassa, their remedy lies before th e Bombay High Court under whose jurisdiction the Silvassa Criminal Court functio ns. 18. I have heard Mr. G.N. Sahewalla, learned Sr. counsel assisted by Mr. Asl am and Mr. D. Senapati, learned counsel for the petitioners. I have also heard Mr. D. Das, learned counsel assisted by Mr. J. Lahiri, learned counsel for the r espondent No. 1. I have also considered the entire materials on record. 19. While Mr. Sahewalla, learned Sr. counsel for the petitioners submitted t hat on perusal of the complaint petition, no ingredients of any criminal offence are traceable, Mr. Das, learned counsel for the respondent No. 1 submitted that a prima facie criminal offence having been committed by the petitioners, learne d Judicial Magistrate at Silvassa has rightly taken cognizance of the matter and the writ court will be reluctant to interfere with the same. According to Mr. D as the writ petition is also not maintainable having regard to the fact that the dispute involved is between two private parties. He further submitted that even if any case is made out for quashing the criminal proceeding, this Court having no territorial jurisdiction, will not do so and the right course of action for the petitioners will be to approach the Bombay High Court under which the crimin al court at Silvassa functions. 20. While Mr. Sahewalla, learned counsel for the petitioner has placed relia nce on the following decisions: i) (1998) 5 SCC 749 (Pepsi Foods Ltd. and another vs. Special Judicial Magi strate and others) ii) (2000) 7 SCC 640 (Navinchandra N. Majithia vs. State of Maharastra and o thers) iii) 2005 (1) GLT 67 (Bhabesh Ch. Baroowa vs. Escorts Finance Ltd.) iv) 2004 (3) GLT 582 (HPS India (P) Ltd. & ors. Vs. Shri International Fina nce Ltd.) v) (2005) 10 SCC 228 (Anil Mahajan vs. Bhor Industries Ltd. and another) 21) Mr. Das, learned counsel for the respondent No. 1 has placed reliance on the following decisions: i) (2006) 3 SCC 658 (Mosaraf Hossain Khan vs. Bhagheeratha Engg. Ltd. and o thers) ii) (1998) 5 SCC 749 (Pepsi Foods Ltd. and another vs. Special Judicial Magi strate and others) iii) (2005) 4 SCC 530 (Standard Chartered Bank and others vs. Directorate of Enforcement and others) iv) (2003) 10 SCC 733 (M.C. Mehta vs. U.O.I.) v) (2003) 8 SCC 639 (General Manager, Kisan Sahkari Chini Mills Ltd., Sulta npur, U.P. vs. Satrughan Nishad and others) vi) (2005) 6 SCC 616 (U.P. State Road Transport Corpn. Vs. Omaditya Verma an d others) vii) 2004 (3) GLT 582 (HPS India (P) Ltd. & ors. Vs. Shri International Fina nce Ltd.) viii) (2005) 6 SCC 657 (Binny Ltd. vs. V. Sadasivan) 22) Before dealing with the respective merits of the case of the parties, it will be appropriate to appreciate the principles enunciated in such type of mat ters highlighting which, the learned counsel for the parties have placed relianc e on the aforesaid decisions. 23) In the case Pepsi Foods Ltd. and another (supra), the Apex Court dealing with the scope of High Court’s power in quashing the criminal proceeding in ex ercise of power under Article 226 and 227 or Section 482 of the Cr.P.C. observed that nomenclature under which petition is filed is not so relevant and the peti tion under Article 226 of the Constitution can be treated as one under Article 2 27 or Section 482 Cr.P.C. This case has been pressed into service so as to cont end that the writ court is empowered to quash criminal proceeding. The decision in the case of Navinchandra N. Majithia (supra) has been pressed into service so as to contend that this Court has territorial jurisdiction in the matter. In that case the writ petition was filed before the Bombay High Court for quashing the criminal complaint filed at Shillong on the ground that it was false and had been filed with the malafide intention of causing harassment and putting pressu re on the petitioner. It was held that Bombay High Court erred in dismissing th e writ petition on ground of lack of jurisdiction. It was found that part of ca use of action arose within the territorial limits of Bombay High Court. In the i nstant case, it is the case of the petitioner that even if cause of action, if a ny, part of it having arisen in Guwahati, the writ petition is maintainable. 24. In the case of Bhabesh Ch. Baroowa (supra), same view has been expresse d in respect of territorial jurisdiction. In that case the cheques were presente d by the opposite party with its Banker at Gurgaon. Information regarding dishon oring the cheques was also conveyed at Gurgaon. Notice of demand was issued from Delhi at the petitioner’s address at Guwahati. It was held that refusal to make the payment demanded having occurred at Guwahati, this Court had the territori al jurisdiction to entertain the writ petition. In the case of HPS India (P) Ltd (supra) also similar view has been expressed. 25. In Anil Mahajan (supra) dealing with the question of cheating, the Apex Court observed that fraudulent dishonest intention must be shown to be existent from the very beginning of the transaction and that the mere failure to keep th e promise at a subsequent stage would not lead to offence of cheating. It was ob served that mere use of the words ’cheating’ in the complaint would not be suffi cient and that substance of the complaint is to be seen. 26. In the case reported in (2005) 6 SCC 657 (Binny Ltd. and another vs. V.S adasivan and others), the Apex Court dealt with the question of maintainability of the writ petition under Article 226 of the Constitution. The Apex Court point ed out that the remedy under Article 226 is pre-eminently a public law remedy an d it is available against a private body or persons if such private body is disc harging the public function. According to the learned counsel for the respondent No. 1 since there is no allotment of public duty by and between the parties, th e writ petition filed by the petitioner is not maintainable. Same view has been expressed by the Apex Court in the case of General Manager, Kisan Sahkari Chini Mills Ltd. (supra). 27. In the case of Mosaraf Hossain Khan (supra), it was held by the Apex Cou rt that the High Court in exercising the power under Article 226 of the Constitu tion of India should not ordinarily interfere with the order passed by a compete nt court except in a appropriate case. It was further held that only such High C ourt within whose jurisdiction the subordinate court passes order has jurisdicti on to entertain the application under Article 227 of the Constitution. It was al so observed that the High Court must also keep in mind the doctrine of forum non conveniens. 28. The case Standard Chartered Bank (supra) has been pressed into service to emphasize on prosecution and fixation of criminal liability of the Corporate body (Company and Farms). 29. As regards the plea of the respondent No. 1 that since the dispute relat es to private parties, the writ petition is not maintainable, I am of the consid ered opinion that the argument is misplaced. This Court is not entertaining the writ petition to resolve any dispute between the two private parties, but the wr it petition is primarily for quashing the criminal proceeding initiated by the J udicial Magistrate at Silvassa. As to whether the criminal proceeding is liable to be interfered with or not will be altogether a different matter, but to say t hat the question cannot be gone into entertaining the writ petition since the pr ivate disputes are involved, will be altogether different. The petitioners have approached this Court by filing the writ petition under Article 226 of the Cons titution questioning the very initiation of the criminal proceeding and taking c ognizance of the same by the learned Judicial Magistrate at Silvassa. Thus, the question primarily is, whether the learned Judicial Magistrate is within its com petence and jurisdiction to entertain the complaint and to issue process and n ot to resolve any dispute between the two private parties. 30. As regards the plea of the petitioners that the petitioner No. 1 Compan y cannot be prosecuted, there cannot be any dispute that the Company is liable to be prosecuted and punished for criminal offence. Although there are earlier a uthorities to the effect that Corporations cannot commit a crime, the generally accepted modern rule is that except for such crimes as a Corporation is held inc apable of committing by reason of the fact that they involve personal malicious intent, a Corporation may be subjected to indictment or other criminal process, although the criminal act is committed through its agents. In this connection, t he observation of the Apex Court in the case of Standard Chartered Bank (supra) may be indicated. 7. As in the case of torts, the general rule prevails that the Corporation may be criminally liable for the acts of an officer or agent, assumed to be done by him when exercising authorized powers, and without proof that his act was ex pressly authorized or approved by the Corporation. In the statues defining crime s, the prohibition is frequently directed against any person who commits the p rohibited act, and in may statues the term person is defined. Even if the usua lly construed to include a Corporation so as to bring it within the prohibition of the statue and subject it to punishment. In most of the statues, the word pe rson is defined to include a Corporation. 31. Apart from the above, the petitioner No. 1 Company is represented by its Directors who are the accused/petitioner Nos. 2 to 5. In the complaint petition it has been specifically stated that the said accused/petitioners being the Dir ectors of the accused petitioner No. 1 are actively involved in the business and are looking after the affairs of the Company and that they are responsible for the day to day working of the Company and have been dealing with the complainant / respondent No. 1 for various transactions between the two Companies. In such a situation apart from the liability of the accused petitioner Nos. 2 to 5, the t ransaction being in the name of the petitioner No. 1 Company represented by the said Directors, it can not be said that apart from the other petitioners, the pe titioner No. 1 Company is not liable for the nature of the criminal office alleg edly committed by it. 32. As regards the territorial jurisdiction of this Court as has been raised by the respondent No. 1, same will have to be viewed from the perspective of th e provision of Section 181 of the Cr.P.C. Section 177 Cr.P.C. provides that ever y offence shall ordinarily be inquired into and tried by a Court within whose lo cal jurisdiction it was committed. While it is the case of the respondent No. 1 complainant that the accused/petitioners committed the offence within the local jurisdiction of the criminal court, Silvassa, it is the case of the accused/peti tioners that even if any offence has been committed, the same having been commit ted at Guwahati, the criminal court at Silvassa does not have any jurisdiction. Section 181 (4) of the Cr.P.C. provides that any offence of criminal misappropr iation or of criminal breach of trust may be inquired into or tried by a Court w ithin whose local jurisdiction the offence was committed or any part of the prop erty which is the subject to the offence was received or retained, or was requir ed to be returned or accounted for, by the accused person. 33. In the instant case both the agreements, i.e. the loan