1 vks IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION CRIMINAL WRIT PETITION .919 OF 2009 Ajit B Zota & Anr .. Petitioners -versus The State of Maharashtra & ors .. Respondents Mr. Subhash Jha, i/b Law Global for petitioners Mr. A.S.Gadkari, APP for the State. Mrs. Sadhana Dhuri, for Respondent No.2 CORAM: Smt. RANJANA DESAI & R. G. KETKAR JJ DATE ON WHICH THE JUDGMENT IS RESERVED : 22nd June, 2009. DATE ON WHICH THE JUDGMENT IS PRONOUNCED:2nd JULY, 2009 2 JUDGMENT (PER R.G. KETKAR, J) 1. The petitioners have prayed for quashing and setting aside of the FIR No.109 of 2007 of 2009 registered at Santacruz Police Station, against them for commission of offences under sections 420, l20 (B) Indian Penal Code (for short “IPC”). The said FIR is lodged by the second respondent against the petitioners. It appears that sometime in July,2007, Vineet Rastogi approached M/s Unimex , a partnership firm duly registered under the Indian Partnership Act, l932. The petitioners are partners of said partnership firm. The said Rastogi offered to sell certain pharmaceutical bulk drugs which he claims to have been imported from different countries under agreements dated May l8, 2007. M/s Unimex agreed to purchase l200 Kg. Qty. of Riboflavin for Rs.l6,68,000/-. The said firm further entered into agreements on June l0, 2007 with said Rastogi for purchasing another l200 Kg of Riboflavin for Rs.l6,68,000/-. On account of dis-honour of cheques worth Rs.l,47,00,000/-, said Rastogi had filed complaint under section l38 of the Negotiable Instruments 3 Act, 1881. By communication dated May 7,2008, Unimex informed Savers Impex about rejection of 7725 Kg of Zinc Oxide 99.7% of Rs.12,89,689/- and called upon to lift the said material. 2. It is the case of the petitioners that Savers Impex had jacked up prices on Folic acid which was agreed to be sold @ 1221.7 per kg whereas Saver Impex claimed Rs. 2788. Likewise petitioner’s claim that Riboflavin was agreed to be sold at Rs.l390 per kg. As against which Savers Impex claimed the rate of Rs.5,000/- per kg. The petitioners also contend that the FIR lodged by the respondent No.l is fraudulent and at any rate is a civil dispute between the parties for the goods sold and delivered. There is no criminality in the transactions between the parties. The FIR does not disclose any commission of offence. 3. Shri.Subhash Zha, learned counsel for the petitioner relied upon the judgment of the Apex Court, in case of Suryalakshmi Cotton Mills Ltd -vs- Rajvir 4 Industries Ltd , (2008), l3, Supreme Court Cases 678 to contend that section 420 IPC can not be attracted in the instant case, as there has to be fraudulent or dishonest inducement at the inception and not at later stage. 4. On the other hand learned counsel for the respondent No.2 as also learned APP submitted that the FIR clearly makes out a case of cheating. The Learned APP has also produced record for our perusal. In order to find out whether, the complaint discloses offences or not, we will have to consider the allegations made in the complaint. The gist of the allegations are to the following effect. 5. Unimex company issued various cheques in the name of Savers Impex which were cross cheques. However, the crossed cheques were converted into bearer cheques and they were encashed/realised in the account of somebody else. Thus, the petitioner represented that the payment was made to Savers Impex 5 by issuing cheques in its favour, but in reality payments were received by someone else and not by Savers Impex. Total amount of these cheques is said to be to the tune of Rs.82,00,000/-. 6. On going through the record produced by the learned APP, we find that the Investigating Officer has recorded the statement of certain persons which indicate that the petitioners handed over cheques and in particular cheque No.686930 dated November 29, 2007 for Rs.5,00,000/- and issued in the name of Savers Impex. The other cheque bearing No.33000 dated December 29, 2007, for Rs.5,00,000/-, issued in the name of Savers Impex was actually realized by said person and the said amounts were credited in his account. Prima facie there is sufficient material to indicate that though these cheques were issued in favour of Savers Impex, amount did not reach Savers Impex. The cheques were initially cross cheques. The petitioners changed them over to bearer and they were discounted and the amount was taken 6 back by the petitioners on payment of commission charges of these persons. 7. There may be cases where partly a complaint may have civil profile and partly criminal profile. In the instant case we are more than satisfied that the case has criminal profile and in our judgment it would not be appropriate to quash the FIR. 8. In the case of Trisun’s Chemicals Industries -vs Rajesh Agrawal (1999) 8 SCC 686, the complainant Company had alleged that the directors of another company offered to supply, “toasted soybean extractors” for a price higher than the market price. The complainant company had to pay the price in advance as demanded by the accused Company. Complainant paid the amount through cheques. However, the accused supplied the commodity, which was of a most inferior and substandard quality and the complainant suffered a loss of Rs.l7 lakhs. The complainant alleged that he was 7 induced to pay the price on the representation that the best quality commodity would be supplied. A criminal complaint was filed alleging commission of the offence punishable under Section 420-A. The Magistrate forwarded the complaint for investigation under section l56(3) Cr. P.C. The accused directors moved the High Court for quashing the complaint alleging that the dispute was purely of a civil nature and hence no prosecution should have been permitted. The High Court accepted this plea and the complaint was quashed. But the Apex Court held in paras 8 and 9 of the judgment as follows : SCC p. 690. Merely because an act has a civil profile is not sufficient to denude it of its criminal outfit. We are unable to appreciate the reasoning that the provision incorporated in the agreement for referring the disputes to arbitration is an effective 8 substitute for a criminal prosecution when the disputed act is an offence. Arbitration is a remedy for affording reliefs to the party affected by breach of the agreement but the arbitrator cannot conduct a trial of any act which amounted to an offence albeit the same act may be connected with the discharge of any function under the agreement. Hence, those are not good reasons for the High Court to axe down the complaint at the threshold itself. The investigating agency should have had the freedom to go into the whole gamut of the allegations and to reach a conclusion of its own. Pre- emption of such investigation would be justified only in very extreme cases”. 9. In Pratibha Rani -vs- Suraj Kumar (l985) 2 SCC 370, the question arose that when the civil as well as 9 the criminal remedy is available to a party, can a criminal prosecution be completely barred. In this case, the matter related to the stridhan property. The complainant alleged that her husband, father in law and other relatives misappropriated her jewelery and other valuable articles entrusted to them by her parents at the time of marriage. The complainant alleged that these dowry articles were meant for her exclusive use and that the accused misbehaved and maltreated her and ultimately he turned her out without returning the dowry articles. The accused filed a criminal miscellaneous petition under Section 482 for quashing the criminal proceeding and the High Court quashed the same. The accused contended that the dispute was of a civil nature and no criminal prosecution would lie. Under those circumstances, the Apex Court held in para 2l at pp.382, 83 as under “There are a large number of cases where criminal law and civil law can run side by side. The two remedies 10 are not mutually exclusive but clearly coextensive and essentially differ in their content and consequence. The object of the criminal law is to punish an offender who commits an offence against a person, property or the State for which the accused, on proof of the offence, is deprived of his liberty and in some cases even his life. This does not, however, affect the civil remedies at all for suing the wrongdoer in cases like arson, accidents, etc. it is an anathema to suppose that when a civil remedy is available, a criminal prosecution is completely barred. The two types of actions are quite different in content, scope and import”. 10. In Hridaya Ranjan Prasad Verma & Ors -vs- State of Bihar and Anrr (2000) 4 ACC 168, the Apex Court 11 considered section 4l5 IPC and observed thus, Cheating is defined in Section 4l5 of the Code as : “13. 4l5. Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to ‘cheat’. Explanation – A dishonest concealment of facts is a deception within the meaning of this section. The section requires - 1. deception of any person 2. (a) fraudulently or dishonestly inducing that person. 12 (i) to deliver any property to any person, or (ii) to consent that any person shall retain any property ; or (b) intentionally including that person to do or omit, to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likel6y to cause damage or harm to that person in body, mind, reputation or property. 14. On a reading of the section it is manifest that in the definition there are set forth two separate classes of acts which the person deceived may be induced to do. In the first place he may be induced fraudulently or dishonestly to deliver any property to any person. The second class of acts set forth in the section is the doing or omitting to do anything, which the person deceived would not do or omit to do if he were not so deceived. In the first class of cases the inducing must be fraudulent or dishonest. In the 13 second class of acts, the inducing must be intentional but not fraudulent or dishonest. 15. In determining the question, it has to be kept in mind that the distinction between mere breach of contract and the offence of cheating is a fine one. It depends upon the intention of the accused at the time of inducement which may be judged by his subsequent conduct but for this subsequent conduct is not the sole test. Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction that is the time when the offence is said to have been committed. Therefore, it is the intention which is the gist of the offence. To hold a person guilty of cheating it is necessary to show that he had fraudulent or dishonest intention at the time of making the promise. From his mere failure to keep 14 up promise subsequently such a culpable intention right at the beginning, that is, when he made the promise cannot be presumed.” 11. Mr.Zha, learned counsel submitted that the cheques were issued in favour of Saver Impex for the accounting purpose. We are unable to accept this submission. The said purpose could have been achieved by issuing cheques in favour of somebody else other than Saver Impex. The petitioner’s had issued crossed cheques which were converted into bearer and were subsequently realized by persons other than Saver Impex. 12. Mr. Zha further submitted that the case should be investigated by Economic Offence Wing. In support of his submission, he relied on police circular dated December 11, 2003, and March 29, 2007. He also relied upon the order dated January 22, 2007, passed by Division Bench of this Court in Criminal Petition No.2667 of 2006, where one of us was party (Smt.Ranjana Desai, J). He relied upon order dated July 10, 2007 in Criminal 15 WP No.1148 of 2007, passed by Division Bench of this Court. In order dated January 22, 2007, statement was made by learned APP on instructions from the concerned Officer that the Investigation would be transferred to Economic Offence Wing. In order dated January 22, 2007 by consent, order passed by the learned Metropolitan Magistrate dated April l8, 2007 in CC No.179/Misc of 2005 was set aside. Those orders are based either on concession or on consent. The perusal of circulars envisages that if the investigation is not complicated and is not likely to affect the public at large, the concerned Police Station can investigate the offence. 13. In view of this we do not find any substance in the said submission. No case is made out for interference at the hands of this Court. The petition is accordingly dismissed. (Smt. RANJANA DESAI, J) (R.G. KETKAR, J)