1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION CRIMINAL WRIT PETITION NO. 2333 OF 2007 Sayed Mohammed Masood, ) age 51 years, carrying on business ) as Chairman in the Company ) M/s. City Limouzines (India) Ltd., ) Mittal Tower, B-Wing, Nariman ) Point, Mumbai – 21. ).. .. Petitioner. Versus 1) State of Maharashtra, through ) the Inspector Incharge, EOW Wing) Crime Branch, Crawford Market, ) Mumbai to be served through the ) Public Prosecutor, High Court, ) Bombay. ) 2) Mr. Jalandhar Ganpat Pansare, ) adult, Indian Inhabitant, ) residing at D-13, Happy Home ) Society, Jaideep Nagar, Bhandup ) (E), Mumbai – 400 042. .. ) ... ...Respondents. Mr. K. T. S. Tulsi, Sr. Counsel, with Mr. A. M. Saraogi for the Petitioner. Mr. A. A. Kumbhakoni, Associate Advocate General, with Mr. S. R. Borulkar, Public Prosecutor, for the State. CORAM : BILAL NAZKI and S. A. BOBDE, JJ. DATED : 3RD MARCH, 2008. JUDGMENT (Per Bilal Nazki,J.) : Rule. 2 2. Learned Associate Advocate General appearing for the State waives service. 3. By consent of the parties and looking to the issues involved, Rule made returnable and heard forthwith. 4. This Writ Petition has been filed by the petitioner for quashing of the F.I.R. being F.I.R. No. 151 of 2007 registered with Cuffe Parade Police Station and thereafter numbered as 74/2007 transferred with EOW Wing of crime Branch, Mumbai, under Sections 406, 420, and 120(B) of the Indian Penal Code on a complaint having been made by respondent No.2. Earlier also this petitioner had filed a writ petition being Writ Petition No. 1796 of 2007, which was withdrawn by him with liberty to approach the Court again in case need arises. 5. The F.I.R. which is sought to be quashed by the Court, makes certain allegations against the petitioner and it was stated in the complaint that the accused persons, in collusion and in connivance with each other, preplanned and established a company known as City Limouzines (India) 3 Pvt. Ltd. They promoted the scheme of “Go/Vehicle on rental basis and earning by sitting at home”, assuring the people for earning the moneys in easy way. The company issued public advertisement in a newspaper. They also issued pamphlets and attracted huge investments. The accused persons accepted crores of rupees and the amount so realised was misappropriated and thereby the investors were deceived. Thereafter, it is the case of the prosecution that the statement of the complainant was recorded in which he gave details with regard to the affairs of the company and he stated that he saw an advertisement in the local Marathi newspaper which read as “Give the Motor Car on rental basis and earn the moneys sitting at home”. In the said advertisement the name and address of the company was given as M/s. Limouzine India Limited, 102, Mittal Tower, B-Wing, 10th Floor, Nariman point, Mumbai – 400 021. In the advertisement, it was also mentioned that the motor car would be purchased in the name of the investors and if the same was given on rental basis, good profit per month shall be given to the investors on their investments. On reading the said advertisement, he went to make detailed inquiry. He along with his friend went to the address given in the said advertisement of the company. There were many persons sitting in the office, who were also making inquiry. When he made inquiries, he was 4 sent to a cabin where one Smt. Geeta Razaki was sitting. The said Geeta Razaki introduced herself as the Administrative Director of the said Company. The other person sitting there also introduced himself as Sayed Mohamed Masood Jamdar, as the Managing Director of the said Company. At that time the Complainant asked them about the reference in the newspaper. The said two persons then told him the details about the Company and also gave information with respect to the scheme. He was told that the car would be of ownership of the investors and the investors would be entitled to profit per month. The scheme was that the owner would purchase a car of Maruti Omni and the same would be given to the Company on rental basis. He was told that he would have to invest an amount of Rs.97,907/- in the Company, the company shall purchase a Maruti Omni car in his name and the same shall be allowed to run on rental basis to other companies and the Complainant would get a sum of Rs.4,000/- per month for a period of sixty months and after completion of the period of sixty months the said car would remain in the ownership of the Complainant as it would be returned to him. Then on 26th July, 2007, he prepared a cheque for the amount of Rs.97,907/- and handed it over to the Company and thereafter an agreement was signed by the parties. The Company paid per month Rs.4,000/- to the Complainant as agreed upon, 5 but after completion of five years the Maruti Omni car was not handed over to the Complainant. 6. Therefore, the dispute revolves whether the Company had promised to handover the car back to the investors or the company had only promised to pay Rs.4,000/- per month for a period of five years. Since it is not disputed that Rs.4,000/- per month were paid by the Company for a period of five years, it would mean that after investing Rs.97,907/- the Complainant has already received an amount of Rs.2,40,000/- within five years. 7. The F.I.R. has been challenged mainly on the ground that even if there is any dispute with regard to the interpretation of a particular clause in the agreement, it would be a civil dispute and would not be a matter for criminal investigation. In this connection, the learned Senior Counsel Mr.Tulsi, appearing for the petitioner, has drawn our attention to the various clauses of the agreement and in particular clauses 8 and 15, which read thus: "8. Buy Back: The Lessee will have the option at the discretion of 6 the Lessor / registered owner to purchase the vehicle at a fair market value upon mutual consent after the expiry of the agreement. However, this buy-back clause is not to be construed to be conferring any enforceable right on the Lessee but the first option to buy the car shall be that of the Lessee herein. 15. Issue of Preference Shares: The Lessee undertakes to issue redeemable Preference shares to the Lessor towards the margin money paid (excluding Insurance & RTO charges) which will be held by the Lessor as security for the entire period of the validity of the agreement being 60 months from the date of issue to ensure smooth installment payments to the bank and the lease / hire charges to the Lessor.” 8. On the other hand learned Associate Advocate General has submitted that the Petitioner has duped several hundred investors by this scheme by not handing over the vehicle to them after the agreed period was over. He has also drawn our attention to some clauses of the agreement and in particular clause Nos.4 and 10, which read thus: "4. Inspection: The Lessor is entitled to inspect the Vehicle given on Lease / rent once in 3 months by giving 15 day' s prior notice to the above stated address and inspect the vehicle at any of the offices of the Lessee in India. 10. Completion of contract: Upon successful completion of the terms of this agreement, the Lessor shall receive the leased Vehicle in proper working condition including the tyres and battery in good condition with normal wear and tear acceptable depending on the period of use.” 7 The learned Associate Advocate General submits that as a matter of fact this agreement shows that the car would be purchased in the name of the investor, but the car was not at all purchased in the name of the investor and was purchased in the name of the Company. Therefore, from the beginning the petitioner had the intention to deceive and, therefore, whether the car had to be returned at the completion of the contract or not would not be material. But the material question would be whether the petitioner had, from the beginning, intention to deceive, which he had in fact, as the vehicle was not purchased in the name of the investor. In this connection, the learned Associate Advocate General has drawn our attention to clause VIII of the Lessee's Covenants, which reads thus: "VIII) Permit the Lessor to terminate the agreement forth with and take possession of the vehicle let out on lease / hire from the Lessee in the event of determined failure or default by the Lessee of any of the terms and conditions of this agreement and to successfully settling the outstanding if in favor of the H.P. Owner Finance company, which will be the sole responsibility and liability of the Lessor.” 9. Since there is no controversy on facts and no further facts need to be even investigated by the police because it is admitted case of both the 8 parties that the monies were paid for a period of five years at the rate of Rs.4,000/- per month but the vehicle was not returned. Whereas the case of the petitioner is that they could retain the vehicle and in terms of the agreement they could sell the vehicle to anybody and the complainant had the preference. In any case, Mr. Tulsi, learned Senior Counsel, submitted that the price of the car after being used for a period of five years would be very low. Learned Senior Counsel further submitted that such controversies have always been held to be, at the best, a subject matter of civil litigation rather than a criminal litigation. He has drawn our attention to the various judgments of the Supreme Court and has filed a compilation listing 19 cases. But he has relied on only few of them. One of them being the case of M/s. Indian Oil Corporation v. M/s. NEPC India Limited and others, reported in AIR 2006 SC 2780. The case of the Complainant in this case was that in case of breach of a contract he was entitled to take possession of certain aircrafts and in this connection the relevant portion of the complaint was, “The complainant states that the act of NEPC India Limited in removing the engines and certain other parts from the aircraft stationed at the Coimbatore Airport, Coimbatore, is against the terms of the hypothecation deed dated 1st May, 1997 as well as terms of agreement dated 20th September, 1997 and will amount to theft, criminal breach of 9 trust and cheating which are punishable under Sections 378, 403, 405, 415 and 425 of the Indian Penal Code.” The Supreme Court in paragraphs 10 and 11 of the judgment observed as under: “10. While on this issue, it is necessary to take notice of a growing tendency in business circles to convert purely civil disputes into criminal cases. This is obviously on account of a prevalent impression that civil law remedies are time consuming and do not adequately protect the interests of lenders / creditors. Such a tendency is seen in several family dispute also, leading to irretrievable break down of marriages / families. There is also an impression that if a person could somehow be entangled in a criminal prosecution, there is a likelihood of imminent settlement. Any effort to settle civil disputes and claims, which do not involve any criminal offense, by applying pressure through criminal prosecution should be deprecated and discouraged. In G. Sagar Suri v. State of U.P. (2000 (2) SCC 636), this Court observed: "It is to be seen if a matter,which is essentially of civil nature, has been given a cloak of criminal offense. Criminal proceedings are not a short cut of other remedies available in law. Before issuing process a criminal court has to exercise a great deal of caution. For the accused it is a serious matter. This Court has laid certain principles on the basis of which High Court is to exercise its jurisdiction under Section 482 of the Code. Jurisdiction under this Section has to be exercised to prevent abuse of the process of any court or otherwise to secure the ends of justice.” While no one with a legitimate cause or grievance should be prevented from seeking remedies available in criminal law, a complainant who initiates or persists with a prosecution, being fully aware that the criminal proceedings are unwarranted and his remedy lies only in civil law, should himself be made accountable, at the ends of such misconceived criminal proceedings, in accordance with law. 10 One positive step that can be taken by the courts, to curb unnecessary prosecutions and harassment of innocent parties, is to exercise their power under section 250 Cr.P.C. More frequently, where they discern malice or frivolousness or ulterior motives on the part of the complainant. Be that as it may. 11. Coming to the facts of this case, it is no doubt true that IOC has initiated several civil proceedings to safeguard its interest and recover the amounts due. It has filed C.S. No.425/1997 in the Madras High Court and O.S. No.3327/1998 in the City Civil Court, Chennai seeking injunctive reliefs to restrain the NEPC India from removing its aircrafts so that it can exercise its right to possess the Aircrafts. It has also filed two more suits for recovery of the amounts due to it for the supplies made, that is CS No.998/1999 against NEPC India (for recovery of Rs.5,28,23,501.90) and CS No.11/2000 against Skyline (for recovery of Rs.13,12,76,421.25), in the Madras High Court. IOC has also initiated proceedings for winding up NEPC India and filed a petition seeking initiation of proceedings for contempt for alleged disobedience of the orders of temporary injunction. These acts show that civil remedies were and are available in law and IOC has taken recourse to such remedies. But it does not follow therefrom that criminal law remedy is barred or IOC is estopped from seeking such remedy.” Mr. Tulsi, learned Senior Counsel, has also drawn our attention to another judgment of the Supreme Court in the case of Zandu Pharmaceutical Works Ltd. and Others v/s Md. Sharaful Haque and others , reported in (2005) 1 SCC 122, to submit that if the Court finds that there is no criminal case it is duty bound to quash the proceedings. In this case the Court held, “it would be abuse of the process of the court to allow any action which would result in injustice and prevent promotion of justice. In 11 exercise of the powers court would be justified to quash any proceeding, if it finds that initiation / continuance of it amounts to abuse of the process of court or quashing of these proceedings would otherwise serve the ends of justice. When no offense is disclosed by the complaint, the court may examine the question of fact. When a complaint is sought to be quashed, it is permissible to look into the materials to assess what the complainant has alleged and whether any offense is made out even if the allegations are accepted in toto”. The Court further held, “When exercising jurisdiction under Section 482 of the Code, the High Court would not ordinarily embark upon an inquiry whether the evidence in question is reliable or not or whether on a reasonable appreciation of it accusation would not be sustained. That is the function of the trial Judge. Judicial process should not be an instrument of oppression, or, needless harassment. Court should be circumspect and judicious in exercising discretion and should take all relevant facts and circumstances into consideration before issuing process, lest it would be an instrument in the hands of a private complainant to unleash vendetta to harass any person needlessly”. Then, there are well known and well recognized facts laid down by the Supreme Court is the case of State of Haryana v. Bhajan Lal , reported in 1992 Supp (1) 335. In the said case the Supreme Court observed, “A note of caution was, 12 however, added that the power should be exercised sparingly and that too in rarest of rare cases”. The illustrative categories indicated by the Supreme Court are as follows: "(1) Where the allegations made in the first information report or the complaint, even if they are taken at their face value and accepted in their entirely do not prima facie constitute any offense or make out a case against the accused. (2) Where the allegations in the first information report and other materials, if any, accompanying the FIR do not disclose a cognizable offense, justifying an investigation by police officers under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section 155(2) of the Code. (3) Where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offense and make out a case against the accused. (4) Where the allegations in the FIR do not constitute a cognizable offense but constitute only a non-cognizable offense, no investigation is permitted by a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code. (5) Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused. (6) Where there is an express legal bar engrafted in any of the provisions of the Code or the Act concerned (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or Act concerned, providing efficacious redress for the grievance of the aggrieved party. 13 (7) Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge.” 10. Learned Senior Counsel also submitted that in order to make an offense under Section 420 of the Indian Penal Code, the accused must have the intention at the inception of the contract. However, there is nothing in the complaint or in the statement of the complainant to show that the accused had such an intention at the inception of the contract. In this connection, reliance is placed on the judgment of the Calcutta High Court in Raymond Ltd. (JKFT Division) v/s H. V. Doshi and Brothers Pvt. Ltd., reported in 2006(1) CHN 578, wherein the Court held, “In order to establish cheating as provided in Section 420 of IPC it must be established that the accused petitioner had the intention to induce, deceive and cheat the complainant right from very beginning. In the instant case, nothing such happened as it transpired from petition of complaint.” Similarly, the Supreme Court in Hira Lal Hari Lal Bhagwati v/s CBI, New Delhi, reported in (2003) 5 SCC 257, held, “It is settled law, by a catena of decisions, that for establishing the offense of cheating, the complainant is required to show that the accused had fraudulent or dishonest intention at the time of making promise or representation. From his making failure to keep 14 promise subsequently, such a culpable intention right at the beginning that is at the time when the promise was made cannot be presumed”. In case of A jay Mitra v/s State of M.P. & Ors ., reported in 2003(1) SCALE 487, analyzing Sections 420 and 415 of the Indian Penal Code, the Supreme Court in para 16 of the said judgment held as under: "A guilty intention is an essential ingredient of the offense of cheating. In other words `means rea' on the part of the accused must be established before he can be convicted of an offense of cheating. (See Jeswantrai Manilal Akhaney v. The State of Bombay – AIR 1956 SC 575). In Mahadeo Prasad v. State of West Bengal, AIR 1954 SC 724, it was held as follows: "Where the charge against the accused is under S. 420 in that he induced the complainant to part with his goods, on the understanding that the accused would pay for the same on delivery but did not pay, if the accused had at the time he promised to pay cash against delivery an intention to do so, the fact that he did not pay would not convert the transaction into one of cheating. But if on the other hand he had no intention whatsoever to pay but merely said that he would do so in order to induce the complainant to part with the goods then a case of cheating would be established.” The Supreme Court in SW Palanitkar & Ors. V/s. State of Bihar & Anr., reported in 2002 (1) SCC 241, in paragraph 24 of its judgment held as under: "Many a times, complaints are filed under Section 200 Cr.P.C. By the parties with an oblique motive or for collateral purposes to harass, to 15 wreck vengeance, to pressurize the accused to bring them to their own terms or to enforce the obligations arising out of breach of contract touching commercial transactions instead of approaching civil courts with a view to realize money at the earliest. It is also to be kept in mind that when parties commit wrongful act constituting a criminal offense satisfying necessary ingredients of an offense, they cannot be allowed to walk away with an impression that no action could be taken against them on the criminal side. A wrongful or illegal act such as criminal breach of trust, misappropriation, cheating or defamation may give rise to action both on civil as well as on the criminal side when it is clear from the complaint and sworn statements that necessary ingredients of constituting an offense are made out. May be parties are entitled to proceed on civil side only in a given situation in the absence of an act constituting an offense but not to proceed against the accused in a criminal prosecution. Hence before issuing a process a Magistrate has to essentially keep in mind the scheme contained in the provisions of Sections 200-203 Cr.P.C. keeping in mind the position of law stated above and pass an order judiciously and not mechanically or in a routine manner.” In Alpic Finance Limited v/s P. Sadasivan and Anr., reported in 2001(2) SCALE 75, the Supreme Court held as under: "The facts in the present case have to be appreciated in the light of th various decisions of this Court. When somebody suffers injury to his person, property or reputation, he may have remedies both under civil and criminal law. The injury alleged may form basis of civil claim and may also constitute the ingredients of some crime punishable under criminal law. When there is dispute between the parties arising out of a transaction involving passing of valuable properties between them, the aggrieved person may have right to sue for damages or compensation and at the same time, law permits the victim to proceed against the wrongdoer for having committed an offense of criminal breach of trust or cheating. Here the main offense alleged by the appellant is that respondents committed the offense under 16 Section 420 I.P.C. And the case of the appellant is that respondents have cheated him and thereby dishonestly induced him to deliver property. To deceive is to induce a man to believe that a thing is true which is false and which the person practicing the deceit knows or believes to be false. It must also be shown that there existed a fraudulent and dishonest intention at the time of commission of the offense.