IN THE HIGH COURT OF JUDICATURE AT MADRAS DATE: 22.1.2008. CORAM THE HON'BLE MR.JUSTICE M.JEYAPAUL Crl.O.P.No.32369 of 2007 and M.P.Nos.1 and 3 of 2007 1. Shyam Kumar Shrivastava 2. Sudeep Shrivastava 3. Sandeep Shrivastava 4. P.S.Salian 5. Prem Kumar Saraogi 6. Madhusudan Petitioners(Accused 1 to 6) vs. 1. The State rep by Sub Inspector of Police, Central Crime Branch/I, Egmore, Chennai 600 008. 2. Thaika Ahmed Nubail Respondents(1st respondent & Complainant) Criminal Original Petition filed under section 482 Cr.P.C. to call for the records in Crime No.401 of 2007 on the file of the Sub Inspector of Police, Central Crime Branch/I, Egmore, Chennai and to quash the same. For petitioners : Mr.R.Shanmugasundaram, Senior Counsel for Mr.R.Murali For R1 : Mr.Hasan Mohamed Jinnah, Govt. Advocate (Crl. Side) For R2 : Mr.P.Jayaraman, Senior Counsel for Mr.K.Sakthivel ORDER The petition is filed seeking quashment of the criminal proceedings in Crime No.401 of 2007 on the file of the Sub Inspector of Police, Central Crime Branch/I, Egmore, Chennai. https://hcservices.ecourts.gov.in/hcservices/ 2. Petitioners 1 to 4 are the Directors of M/s.Deccan Minerals Private Limited. Petitioners 5 and 6 are the Directors of M/s.Vidarbha Mining Private Limited and Goldstar Metal Solutions Private Limited. 3. The private complaint given by the second respondent referred under section 156(3) of the Code of Criminal Procedure by the XIV Metropolitan Magistrate, Egmore, Chennai and registered in Crime No.401 of 2007 would read as follows:- During the month of September 2004, A1 to A3 approached the complainant and represented that they were owners of certain mines and they intended to lease out the said mines to the second respondent for raising iron ore and selling the same. Believing the representation of the accused to be true, the complainant and the accused entered into an agreement on 1.10.2004 for development of the mines and sales of the iron ores from the said mines in collaboration with the accused company by name Deccan Minerals Private Limited. The complainant paid a sum of Rs.1,75,00,000/= on 23.9.2004 and Rs.25,00,000/= on 15.12.2004 to the accused company as security deposit and irrevocable power of attorney was given for ten years to the complainant company on 15.12.2004 by the accused company. The complainant started extracting iron ore from the above mines by engaging workers, having invested a total sum of Rs.8,00,00,000/= for extracting and raising iron ore. Within a short span of time, the accused started giving trouble to the complainant by preventing the complainant from extracting iron ore from the said mines. A memorandum of understanding was entered into between the accused and the complainant on 5.9.2005. But, the complainant, all of a sudden on 13.1.2007, with an evil intention to cheat and defraud the complainant, obstructed the mining operation carried on by the complainant, with the help of goondas. Though the complainant questioned the illegal activities of the accused, A2 to A6 came down to the company of the complainant on 7.4.2007 and threatened the complainant that they would do away with the life of the complainant. All the accused, with an evil intention to defraud and cheat the complainant, induced the complainant to part with huge money and committed criminal breach of trust. They have committed offences punishable under sections 406, 420 and 506 (ii) of the Indian Penal Code. 4. The petition seeking quashment is filed by the accused on the following grounds:- https://hcservices.ecourts.gov.in/hcservices/ a) During the course of business, there were breach of agreements entered into between petitioners 1 to 3 and the complainant. A sole arbitrator was appointed by the High Court, Mumbai in A.P.No.259 of 2005 to resolve the dispute between petitioners 1 to 3 and the complainant. As a consensus was reached and all the disputes were resolved by executing a memorandum of understanding dated 5.9.2005, the complainant started removing ores in the mines belonging to the area of the first petitioner illegally and therefore, the petitioners cancelled the memorandum of understanding by their letter dated 13.1.2007. Even as against the cancellation of the agreements and the memorandum of understanding, the complainant has raised civil dispute before the High Court, Mumbai in Chamber Summons No.1637 of 2006. This is an attempt made by the complainant to corner the petitioners by invoking the criminal jurisdiction. b) The complaint, even if it is taken at its face value and accepted in its entirety, does not constitute any offence or make out a case as against the petitioners. The entire cause of action arose at Maharashtra and the learned Metropolitan Magistrate at Chennai has no jurisdiction to issue any direction under section 156(3) of the Code of Criminal Procedure. There has been a delay of seven months in registering the FIR. The complaint has been lodged with a mala fide intention to wreak vengeance and to cause harm to the petitioners. Since the High Court, Mumbai has not granted any interim relief to the complainant in the suit filed for attachment of mines and for injunction, the complainant has converted the civil dispute into a criminal case. The alleged threat wielded by the petitioners at Chennai is a figment of the imagination of the complainant. The petitioners have sought for quashment in the above facts and circumstances. 5. The short point that arises for consideration is whether the complaint reflects commission of cognizable offences warranting reference under section 156(3) of the Code of Criminal Procedure by the learned Metropolitan Magistrate. 6. Learned Senior Counsel for the petitioners would vehemently submit that the entire dispute between the petitioners and the second respondent relates to mining rights. The parties had also resorted to civil forum seeking relief. The civil dispute has been mischievously converted into a criminal case just to punish the petitioners against the spirit of the judgment of the High Court of Mumbai. In a catena of cases, this court has held that a civil dispute between the parties cannot be dragged to the criminal court abusing the process of law. https://hcservices.ecourts.gov.in/hcservices/ 7. Learned Government Advocate (Criminal Side) would submit that the investigation could not be proceeded further on account of stay granted by this court. 8. Learned Senior Counsel appearing for the second respondent would submit that all the allegations constituting the offence of cheating have been clearly set out in the complaint. Further, the threat wielded by the petitioners to do away with the life of the second respondent has been alleged in the complaint. The second respondent has sufficient material to substantiate the evil design of the petitioners to cheat the second respondent who are adopting the very same modus operandi as against some other companies also, he would further contend. 9. The complaint discloses a serious charge of cheating as against the petitioners. The second respondent has also detailed about the misrepresentation made to him to enter into an agreement with the petitioners. The inducement made by the petitioners to the complainant to part with huge money and the criminal breach of trust committed by the petitioners have been unambiguously stated in the complaint. Further, it is found that there is a specific allegation that petitioners 2 to 6 came down to Chennai and threatened the complainant that they would do away with his life on being questioned by the complainant about the illegal activities of the petitioners. The aforesaid details found in the complaint reflects unerringly the allegation of commission of various offences by the petitioners. 10. The fact remains that on account of certain dispute between the petitioner and the second respondent who entered into an agreement for raising ores and for sale of the same, a memorandum of understanding was entered into between the parties. A civil dispute was also raised before the High Court of Mumbai by the second respondent challenging the cancellation of the agreements and the memorandum of understanding entered into between the parties. The question that arises for consideration is whether in such circumstances, the second respondent can invoke the criminal jurisdiction to book the petitioners for various criminal offences. 11. The Supreme Court in M/S.MEDCHL CHEMICALS AND PHARMA PRIVATE LIMITED v. M/S.BIOLOGICAL E.LIMITED (AIR 2000 SC 1869) has held that a complaint cannot be quashed merely on the ground that a civil remedy is available for the complainant. 12. The Supreme Court in TRISUNS CHEMICAL INDUSTRY v. RAJESH AGARWAL (AIR 1999 SC 3499) has observed as under:- "We are unable to appreciate the reasoning https://hcservices.ecourts.gov.in/hcservices/ that the provision incorporated in the agreement for referring the disputes to arbitration is an effective 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 tis own. Pre-emption of such investigation would be justified only in very extreme cases as indicated in State of Haryana V. Bhajaj Lal (1192 AIR SCW 237 : AIR 1992 SC 604 : 1992 Cri LJ 527)" 13. In the instant case, it is true that an arbitrator was appointed and on account of some amicable settlement, a memorandum of understanding was entered into between the parties. But, that cannot be a ground to quash the criminal proceedings when the investigation has just begun for the charges of criminal breach of trust, cheating and criminal intimidation effectively alleged in the complaint. 14. Only in a case where the complaint is bereft of material particulars necessary for making out the offence, the court may think in terms of quashing the complaint. 15. The complaint, as stated earlier, makes out, prima facie, commission of offences by the petitioners. Therefore, it is not fair to quash the very complaint even before the investigation reaches its logical end. 16. Of course, the court should not permit the prosecution without any basis against innocent persons as instrument of harassment or to mount pressure on the accused to toe the line of the complainant. But, the court should not throw away the complaint when serious charges are levelled in the complaint and the same requires thorough investigation. 17. This court in PURUSHOTHAMAN,S. v. ASSOCIATED TRADING CORPORATION PRIVATE LIMITED ((2006) 1 MLJ (Crl.)589) has held that for a breach of contract or for non-compliance of the terms https://hcservices.ecourts.gov.in/hcservices/ of conditions of memorandum of understanding, no criminal prosecution can be launched. In the instant case, it is found that though there is civil dispute between the petitioners and the second respondent, specific allegation of cheating, breach of trust and criminal intimidation have been set out in the complaint. Therefore, the ratio laid down in the aforesaid authorities does not apply to the facts and circumstances of this case. 18. In a commercial transaction, criminal proceedings were initiated to intimidate and harass the accused in order to get back the dues at a faster phase. Such an attitude of the complainant was deprecated and the criminal proceedings were quashed in M/S.BELLARY STEELS AND ALLOYS LIMITED v. M/S.MAN TAKRAF (INDIA) PRIVATE LIMITED ((2006) 1 MLJ (CRL.) 264. 19. The Supreme Court in INDER MOHAN GOSWAMI v. STATE OF UTTARANCHAL (2007(5) CTC 614), has held that initiation of criminal proceedings based on a dispute of purely civil in nature amounts to abuse of the process of court. It is found that breach of contractual obligations in the said case has given rise to the initiation of criminal proceedings. But, in the instant case, apart from the civil dispute between the parties, cogent allegation of cheating, criminal intimidation and breach of trust have been alleged. 20. It is found that the investigation has been stopped at a nascent stage. The serious charges levelled against the petitioners will have to be thoroughly probed into by the investigating agency. 21. In view of the above, the petition seeking quashment stands dismissed. Miscellaneous Petition No.1 of 2007 for interim stay is also dismissed vacating the stay already granted. As the main criminal original petition seeking quashment has been dismissed, Miscellaneous Petition No.3 for vacating the stay stands closed. ssk. Sd/ Asst.Registrar /true copy/ Sub Asst.Registrar https://hcservices.ecourts.gov.in/hcservices/ To 1. The Sub Inspector of Police, Central Crime Branch/I, Egmore, Chennai 600 008. 2. The Public Prosecutor, High Court, Madras. + 2 ccs to Mr. R. Murali, Advocate SR No. 2396 and 2368 + 1 cc to Mr. K. Sakthivel, Advocate SR No. 2174 ORDER IN Crl.O.P.No.32369/2007 NG(CO) SR/29.1.2008 https://hcservices.ecourts.gov.in/hcservices/