Criminal Misc. No. M-44535 of 2007 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Criminal Misc. No. M-44535 of 2007 Date of Decision: 24.02.2010 1. Harbans Singh son of Joginder Singh, s/o Arjan Singh, r/o near Gurudwara Tutti Gandi Sahib, Ward No. 5, Muktsar, Distt. Muktsar. 2. Balwant Singh s/o Gurcharan Singh s/o Joginder Singh, r/o near Gurudwara Tutti Gandi Sahib, Ward No. 5, Muktsar, Distt. Muktsar. ... Petitioners Versus 1. The State of Punjab. 2. Punjab State Civil Supplies Corporation Limited (PUNSUP), Muktsar, through District Manager, Muktsar. ...Respondents CORAM: HON'BLE MR. JUSTICE SHAM SUNDER Present: Mr. R.S. Rangpuri, Advocate, for the petitioners. Mr. T.S. Salana, Deputy Advocate General, Punjab, for respondent No. 1 – State. Mr. C.S. Bakshi, Advocate, for respondent No. 2. SHAM SUNDER, J. This petition under Section 482 Cr.P.C., for quashing the order dated 19.09.06 (Annexure P2), passed by the Chief Judicial Magistrate, Muktsar, vide which, the application, moved by the petitioners, for discharge was dismissed, and charge under Section Criminal Misc. No. M-44535 of 2007 2 406 IPC was framed against them, and the order dated 17.02.07 (Annexure P4), passed by the Additional Sessions Judge (Adhoc), Fast Track Court, Muktsar, vide which, the revision, filed by the petitioners, against the order dated 19.09.06, was dismissed, and, Section 409 IPC, was also added alongwith Section 406 IPC, has been filed by the petitioners. 2. The facts, in brief, are that, the petitioners, are the partners, in the firm, namely M/s Gobind Khalsa Rice Mill, Ballamgarh, situated at Muktsar. It was stated that the aforesaid firm entered into an agreement with the complainant/respondent No. 2, for custom milling of paddy, in the year 2002-03, as a result whereof, 107159 bags of 'A' class paddy, weighing 37505.65 quintals paddy, were allotted to it. It was further stated that the firm acknowledged the receipt of the aforesaid number of bags. It was further stated that, as per the agreement, the firm, was to return the rice, after milling paddy @ 68%, to Food Corporation of India, in the account of the complainant/respondent No. 2. It was further stated that the weight of rice @ 68%, was worked out to be 25503.85 quintals. It was further stated that the rice was to be returned upto 30.06.03. However, the firm only returned 16850.51 quintals of rice after milling the paddy. It was further stated that 8653.34 quintals of rice was still outstanding against the firm, in lieu of 12725.50 quintals of paddy. It was further stated that the Field Officer of the complainant/respondent No. 2, conducted physical verification of the stock, on 22.07.03, during the course whereof, 36359 bags, weighing Criminal Misc. No. M-44535 of 2007 3 12725.50 quintals of paddy were found short. It was further stated that, as such, the petitioners, misappropriated the aforesaid quantity of paddy, to the tune of Rs. 94,45,838/-. It was further stated that a written complaint, was moved to the Police, against the petitioners, on the basis whereof, the first information report, was registered against them. After the completion of investigation, they were challaned. 3. On their appearance, in the Court, the accused, were supplied the copies of documents, relied upon by the prosecution. 4. When the case was fixed for framing of charge, the accused, moved an application for discharge. However, the said application, was dismissed by the trial Court, and, charge under Section 406 IPC, was ordered to be framed against them. 5. Feeling aggrieved, a revision-petition, was preferred, by the revision-petitioners, which was dismissed, by the Additional Sessions Judge (Adhoc), Fast Track Court, Muktsar, and Section 409 IPC, was also added alongwith Section 406 IPC. 6. Still feeling dissatisfied, the instant petition, has been filed by the petitioners. 7. I have heard the Counsel for the parties, and, have gone through the documents, on record, carefully. 8. The Counsel for the petitioners, submitted that the paddy was supplied to M/s Gobind Khalsa Rice Mill, Ballamgarh, situated at Muktsar, of which, the petitioners, are the partners, for dehusking and the firm was to supply rice, to the Punjab State Civil Supplies Criminal Misc. No. M-44535 of 2007 4 Corporation Limited (hereinafter to be called as the 'PUNSUP' only), as per the terms and conditions, mentioned in the aforesaid agreement. He further submitted that there was an arbitration clause, in the agreement, according to which, in case, the miller caused any loss to the stored paddy stocks, because of misappropriation, theft etc., or if the rice manufactured by him, did not conform to the specifications, he was to be liable to make good the loss of the custom milled rice, from the date, it became payable till the date of actual realization. He further submitted that, even according to clause 13 of the agreement, all disputes and differences, arising out, or, in any manner, touching or concerning the agreement, were to be referred, to the Arbitrator. He further submitted that, in view of the aforesaid clauses, in the agreement, which was executed, between the parties, even if, there was alleged misappropriation of the paddy, on the part of the aforesaid partnership firm, of which, the petitioners, are the partners, no criminal liability, was constituted, and, at the most, the matter could be referred to the Arbitrator. He further submitted that the orders of the Courts below, being illegal, are liable to be set aside. 9. On the other hand, the Counsel for the respondents, submitted that the same gamut of facts, can constitute the civil as well as criminal dispute. They further submitted that M/s Gobind Khalsa Rice Mill, Ballamgarh, situated at Muktsar, of which, the petitioners, are the partners, was entrusted 107159 bags of 'A' class paddy, weighing 37505.65 quintals, in the year 2002-03, and an Criminal Misc. No. M-44535 of 2007 5 agreement, was executed, by the said firm, in favour of the PUNSUP. They further submitted that the firm, was to return the rice, after milling the paddy @ 68% to the Food Corporation of India, in the account of PUNSUP. They further submitted that the weight of the rice @ 68%, which was to be delivered, by the petitioners, after dehusking the paddy, came to be 25503.85 quintals. This was to be returned upto 30.06.03. They further submitted that the firm only returned 16850.51 quintals of rice. They further submitted that 8653.34 quintals of rice, was still outstanding, against the firm. They further submitted that, on physical verification of the stock, on 22.07.03, 12725.50 quintals of paddy was found short. They further submitted that, as such, the petitioners, misappropriated the paddy, the price whereof, worked out to be Rs. 94,45,838/-. They further submitted that, since the firm and the petitioners, were the agents of the PUNSUP, by misappropriating the paddy of the value aforesaid, they committed the offences, punishable under Section 406 and 409 IPC. They further submitted that the orders impugned, being legal and valid, are liable to be upheld. 10. After giving my thoughtful consideration, to the rival contentions, raised by the Counsel for the parties, in my considered opinion, the petition, is liable to be dismissed, for the reasons, to be recorded, hereinafter. Undisputedly, the paddy, referred to above, was entrusted to M/s Gobind Khalsa Rice Mill, Ballamgarh, situated at Muktsar, of which, the petitioners, are the partners for dehusking. After dehusking the paddy, the petitioners, were to supply rice, to the Criminal Misc. No. M-44535 of 2007 6 extent of 68%. The petitioners, did not supply the rice, to the extent of 68%, but, on the other hand, paddy worth Rs. 94,45,838/-, was allegedly misappropriated by them. The PUNSUP, was the owner of the paddy, which was entrusted, to M/s Gobind Khalsa Rice Mill, Ballamgarh, situated at Muktsar, of which, the petitioners, are the partners. Section 405 IPC, reads as under:- 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 willfully suffers any other person so to do, commits “criminal breach of trust.” 11. In order to constitute the offence of criminal breach of trust, necessary ingredients are (i) a person should have been entrusted with property, or entrusted with dominion over the property; (ii) that person should dishonestly misappropriate or convert to his own use that property, or dishonestly use or dispose of that property or willfully suffer any other person to do so; (iii) that such misappropriation, conversion, use or disposal should be in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract which the person has made, touching the discharge of such trust. 12. In order to maintain a complaint/lodge an FIR, the complainant, was required, to prima-facie disclose the ingredients of Criminal Misc. No. M-44535 of 2007 7 the offence of misappropriation, as extracted hereinabove. The allegations, contained in the FIR, in the instant case, clearly constituted the offences, punishable under Sections 406 and 409 IPC.M/s Gobind Khalsa Rice Mill, Ballamgarh, situated at Muktsar, and the petitioners, were the agents of the PUNSUP, for the purpose of dehusking the paddy, entrusted to them, by it (PUNSUP) and the return of rice, in lieu thereof, @ 68%. As stated above, the rice, which was to be supplied, in lieu of the paddy, entrusted to the petitioners, came to be 25503.85 quintals, but, they only supplied 16850.51 quintals of rice, which fell much short, than the actual quantity. Thus, M/s Gobind Khalsa Rice Mill, Ballamgarh, situated at Muktsar, and the petitioners, misappropriated the paddy worth Rs. 94,45,838/-. The mere fact, that there was an arbitration agreement, providing for referring the disputes, to the Arbitrator, did not mean, that no criminal liability of the petitioners, was constituted. The Arbitrator, could not decide the criminal liability of the petitioners, in pursuance of the arbitration agreement. The Criminal Courts, can only decide the criminal liability of the petitioners. The arbitration agreement, therefore, did not debar the PUNSUP, from initiating criminal proceedings, against the petitioners, for misappropriation of the paddy, entrusted to them. In Pawan Kumar Vs. State of Haryana, 2006(2), RCR (Criminal), 162, it was held, that arbitration clause, would not be a bar, if the act of the party, amounted to a criminal offence. It was further held that, both criminal and civil proceedings, could be launched. In Trisuns Chemical Industry Vs. Criminal Misc. No. M-44535 of 2007 8 Rajesh Aggarwal, 1999(4), RCR (Criminal), 2236 (SC), Raj Kumar Singla Vs. State of Punjab, 2000(1), RCR (Criminal), 161 (P&H), S.W. Palanitkar Vs. State of Bihar, 2001(4), RCR (Criminal), 572 (SC), and, Sham Lal Vs. State of Punjab, 2001(3), RCR (Criminal), 535 (SC), relied upon, by the Counsel for the respondents, it was held, that criminal and civil proceedings, can continue together, if the same arise out of the same gamut of facts. The orders, rendered by the Courts below, therefore, do not suffer from any illegality or perversity, and, are liable to be upheld. 13. The Counsel for the petitioners, however, placed reliance, on Bal Kishan Das Vs. P.N. Nayar, 1991(3), RCR (Criminal), 374, and, Kailash Verma Vs. Punjab State Civil Supplies Corporation and another, 2005(1), RCR (Criminal), 727 (SC), to contend, that no criminal offence, was constituted, from the facts, contained in the FIR. In the cases, relied upon, by the Counsel for the petitioners, the Apex Court, did not lay down any invariable proposition of law, that the existence of an arbitration clause or the pendency of arbitration proceedings, would bar the launching of criminal proceedings. In Bal Kishan Das's case (supra), after examining the facts and circumstances of the case, and specifically taking note of the fact, that after registration of the case, under Section 409 IPC, the Vigilance Department, dropped the case, and that arbitration proceedings had been pending for more than 17 years, the Apex Court, quashed criminal proceedings. This judgement, therefore, could not be construed to be a precedent for the proposition that the Criminal Misc. No. M-44535 of 2007 9 existence of an arbitration clause, bars the filing of a complaint or lodging of the FIR, for the offences, under Sections 406 and 409 IPC. In Kailash Verma's case (supra), no absolute proposition of law, was laid down, that the existence of an arbitration clause, would necessarily oust the remedy of an aggrieved party, to lodge an FIR. In Kailash Verma's case (supra), the appellant, was discharged, by the trial Court. The said order was reversed and the matter was remitted to the trial Court for fresh decision. The Apex Court, held that, as there was no prima-facie evidence of entrustment of paddy to the miller or shortage of rice, supplied by the miller to the Corporation, and the dispute disclosed, being civil in nature, the petitioner, could not be prosecuted. So, no help, can be drawn, by the Counsel for the petitioners, from these cases. The submission of the Counsel for the petitioners, in this regard, being without merit, must fail, and the same stands rejected. 14. For the reasons recorded above, Criminal Misc. No. M-44535 of 2007, being devoid of merit, must fail, and the same stands dismissed. Any observation, made in this order, shall not be taken, as an expression of mind, on merits of the case. The trial Court is directed to proceed further, in accordance with law. 15. Registry is directed, to comply with the order, by sending the copies thereof, to the Courts concerned, immediately. 24.02.2010 (SHAM SUNDER) Amodh JUDGE