Crl. Misc. No.M-28227 of 2009 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. Crl. Misc. No.M-28227 of 2009 Date of Decision: 09.08.2010 M/s Euro Scaff (India) Ltd. and another ....Petitioners Versus Ashok Aggarwal ...Respondent CORAM : Hon'ble Ms. Justice Nirmaljit Kaur Present:- Mr. Sanjay Kaushal, Advocate and Mr. Deepak Suri, Advocate for the petitioner. Mr. Vishal Aggarwal, Advocate for the respondent. ***** 1. Whether Reporters of Local Newspapers may be allowed to see the judgment ? 2. To be referred to the Reporters or not ? 3. Whether the judgment should be reported in the Digest ? ** NIRMALJIT KAUR, J. This is a petition under Section 482 Cr.P.C for quashing the complaint No.109/2 dated 05.06.2007, as well as, the impugned Order dated 31.07.2008 against petitioner No.1 and the Order dated 19.08.2009, vide which, bailable warrants have been issued against petitioner No.2, being the ex-director of the petitioner No.1 and for quashing of any other order arising out of said proceedings. Brief facts of the case are that the petitioner No.1 is a Crl. Misc. No.M-28227 of 2009 2 Company, which is into the business of manufacturing scaffolding and framework. The petitioner No.2 was the Director in the Company from 31.03.2007 to 01.03.2008. The respondent/complainant is proprietor of M/s Himalaya Steel Industries, H-6, Textile Colony, Industrial Area-A, Ludhiana and is running the business of trading M.S. Rounds etc. The respondent was supplying goods to petitioner No.1 against which the petitioner had made part payments from time to time. A complaint was filed by the respondent against the petitioners alleging that the payments were not made by the petitioner for the entire goods purchased and an outstanding amount of Rs.29,16,068/- with interest was due from the petitioners. The respondent on the same set of allegations as made in the abovementioned complaint under Section 420 IPC, also had earlier made a complaint to the Director General of Police, Punjab, Chandigarh alleging non payment of dues by petitioner No.1 with a request to interfere and look into the matter. The Director General of Police marked the inquiry to the Senior Superintendent of Police, Mohali. The Senior Superintendent of Police got the matter resolved through the Deputy Superintendent of Police, City-I. On 18.07.2007, parties were called upon by the Office of Deputy Superintendent of Police. The matter was resolved and a compromise statement of the parties and a statement with respect to withdrawal of complaint was made by the respondent before the Office of Deputy Superintendent of Police. The offices of Senior Superintendent of Police vide letter dated 23.07.2007 reported to the Director General of Police about the settlement of disputes between the parties. Further, vide letter dated 23.07.2009, the Director General of Police instructed to consign the records of the said complaint filed by the respondent on the basis of mutual compromise arrived at between the parties and statement of withdrawal of complaint by the respondent. Crl. Misc. No.M-28227 of 2009 3 However, the complainant-respondent did not withdraw the complaint pending in the Court of Judicial Magistrate Ist Class, Ludhiana in spite of the compromise. Accordingly, the petitioners were shocked when they were summoned vide Order dated 31.07.2008 passed by the Judicial Magistrate Ist Class, Ludhiana in the aforesaid complaint No.109/2 dated 05.06.2007. Aggrieved, the petitioners were forced to file the present petition after the bailable warrants were issued vide Order dated 19.08.2009. Reply has been filed by the complainant-respondent. While opposing the present petition, learned counsel for the respondent vehemently argued that although the matter was compromised but the terms and conditions of the compromise have not been fully complied with. The entire amount of Rs.29,16,068/- was required to be paid along with interest. No doubt, the principal amount was paid but the amount towards interest was still due and therefore, the petitioners are guilty of the offence under Section 420 IPC. Further, the complaint was filed before the compromise. Learned counsel for the parties are heard. It is not denied that the matter has been compromised. In fact, it is admitted that the compromise was duly entered into and vide which, it was agreed that the petitioner No.1 would settle the accounts. It is also not denied that an amount of Rs.29,16,068/- stands already paid to the respondent in pursuance to the said compromise. The only dispute is now with respect to the interest. Since, it is not denied that the matter has been compromised and it is also not denied that the entire amount of Rs.29,16,068/- has been paid and received by the respondent, the only thing that requires to be seen is as to whether any interest was required to be paid as per the terms and conditions of the compromise or not. The Crl. Misc. No.M-28227 of 2009 4 admitted compromise dated 18.07.2007 reads as under :- “ Today, dated 18.7.2007, in the presence of the following persons, this compromise has been made that the amount about Rs.29,16,068/- which has to be taken by Ashok Aggarwal of M/s Himalayan Steel Industries, Ludhiana from Bhupinider Kaul etc. of Euro Scaff regarding that both the parties have mutually compromised, the written copy of which is also being submitted. This compromise has been executed with the consent of both the parties and not has been executed under any influence of anybody else and the same is accepted by both the parties.” The detail of the cheques issued by the petitioner, in favour of the respondent, as encashed, are as under:- S.No. Cheque No. Date Amount Paid on date 1 169642 20.07.2007 5,00,000/- 24.07.2007 2 169745 11.08/.2007 10,00,000/- 16.08.2007 3 177577 17.09.2007 5,00,000/- 26.09.2007 4 177681 18.10.2007 5,00,000/- 23.10.2007 5 134042 19.11.2007 4,01,068/- 23.11.2007 Separate statement of Ashok Aggarwal-complainant was also got recorded to the effect that his complaint be filed in the Office. The same reads as under :- “ Statement of Ashok Aggarwal s/o Dina Nath Aggarwal, resident of H.No.29-D, Mall Road, Ludhiana, aged about 60 years. Stated that I am resident of the above said address and I had submitted a complaint against owners/manager etc. of Euro Scaff, regarding which, today, we both the parties have compromised. Therefore, now I do not want any further legal action on this complaint. My this complaint be filed in the office. I got recorded my statement to you, heard and found correct.” Crl. Misc. No.M-28227 of 2009 5 It is apparent from the above that there is no mention of the interest either in the said compromise or in the statement. From the statement, it appears that the respondent was satisfied and had no objection if the complaint was finally filed by the authorities. Even otherwise, it is admitted that there was business relationship between the parties. Section 415 of the Indian Penal Code reads as under :- “ 415. 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 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.” Therefore, an offence of cheating would be constituted when the accused has fraudulently or dishonest intention at the time of making promise or representation. A pure and simple breach of contract does not constitute an offence of cheating. In the present case, the petitioners have already paid an amount of Rs.29,16,068/-. Thus, there appears to be no intention to dishonestly cheat the respondent. Hon'ble the Supreme Court, in the case of Dalip Kaur vs. Jagnar Singh reported as 2009(4) R.C.R. (Criminal) 504, while remanding the matter to High Court to re-consider on the aspect as to whether the vendor was guilty of an offence under Section 420 of the Indian Penal Code when he did not return the earnest money after the cancellation of the Agreement to Sell or not, went on to hold that the dispute between the Crl. Misc. No.M-28227 of 2009 6 parties was essentially a civil dispute resulting from a breach of contract on the part of the appellants. By non-refunding the amount of advance, the same would not constitute an offence of cheating. Hon'ble the Supreme Court, in the case of Ajay Mitra vs. State of M.P. reported as 2003(1) R.C.R. (Criminal) 674, held that no offence of cheating was made out against the appellant on account of the fact that notice was given to the complainant that the bottling agreements will not be renewed any further after expiry of the initial term. Thus, even if the allegations made in the complaint are accepted to be absolutely true and correct, the appellants cannot be said to have committed any offence of cheating as provided in Section 420 Indian Penal Code and while holding so, reliance was placed on the judgment of Hari Prasad Chamaria v. Bishun Kumar Surekha & Ors., A.I.R. 1974 S.C. 301, wherein, it was held that unless the complaint showed that the accused had dishonest or fraudulent intention at the time the complainant parted with the money, it would not amount to an offence under Section 420 Indian Penal Code and it may only amount to breach of contract. Reliance was further placed on the judgment of G.V. Rao v. L.H.V. Prasad & Ors., 2000(2) RCR (Crl.) 290 (SC), wherein it was held that guilty intention is an essential ingredient of the offence of cheating and, therefore, to secure conviction `mens rea' on the part of the accused must be established. It has been further held that in order to constitute the offence of cheating the intention to deceive should be in existence at the time when the inducement was offered. This Court, in the case of Smt. Pushpa Khera and anr. vs. Pishori Lal reported as 1990(3) R.C.R. (Criminal) 446, while relying on the judgment of Hon'ble the Apex Court rendered in the case of Municipal Corporation of Delhi v. Ram Kishan Rohtagi and others, AIR 1983 Supreme Court 67, held in para 4 as under :- “ 4. xxx xxx proceedings against an accused Crl. Misc. No.M-28227 of 2009 7 in the initial stages can be quashed only if on the face of the complaint, or, the papers accompany the same, no offence is co situated. In other words, the test is that taking the allegations and the complaint as they are, without adding or subtracting anything, if no offence is made out then the High Court will be justified in quashing the proceedings in exercise of its powers under Section 482 of the Code. In the instant case, admittedly, from the allegations, made in the complaint, it is quite patent that the complainant had supplied Bardana goods worth Rs.2,64,175/- to the petitioners and their four other co-accused on various occasions during the period 28.09.1984 to 09.01.1985, and, they had made the payment to the tune of Rs.2 lacs at various times. Subsequently, the accused purchased Bardana goods worth Rs.77,780/-, and made payment to the tune of Rs.99,943/-. Thus the balance of Rs.42,012/- remained due from the petitioners and their other co- accused, to the complainant by the end of the year 1985. A cheque for Rs.15,000/- was issued on 25.11.1986 by Arvan Khera petitioner in favour of the complainant and the same was dishonoured, as payment thereof was stopped by the drawer. From all these facts detailed in the complaint, it is quite obvious that the said cheque for Rs.15,000/- was not issued against the delivery of goods. Rather the delivery of goods, purchased by the petitioners and their other co-accused from the complainant, had been made much before the said cheque was issued in favour of the complainant. Thus, at the time of issuance of the said cheque the complainant was not, in any manner, induced to deliver, or, part with any property, or, to do, or to omit to do anything, by any of the accused. The dispute between the parties merely amounts to breach of promise, and gives rise to civil liability, and, does not amount to commission of an offence of cheating.” Crl. Misc. No.M-28227 of 2009 8 Admittedly, the petitioners are business partners. There was a dispute between the parties with regard to defective material supplied by the respondent and, accordingly, the petitioners are stated to have withheld the payment towards the said goods. However, the matter was ultimately settled and in pursuance to the said settlement, an amount of Rs.29,16,068/- was paid. The dispute qua the interest cannot be given the colour of dishonest intention. In the facts of the present case, it cannot be said that there was any intention to cheat. If at all, it is a breach of contract. Accordingly, no offence under Section 420 IPC is made out against the petitioners and allowing the criminal proceedings to proceed any further will amount to an abuse of the process of law. In view of the above facts and discussion, the present petition is allowed and complaint No.109/2 dated 05.06.2007, as well as, the impugned Order dated 31.07.2008 against petitioner No.1 and the Order dated 19.08.2009, vide which, bailable warrants have been issued against petitioner No.2, being the ex-director of the petitioner No.1 and any other order arising out of said proceedings are quashed with liberty to the respondent to avail of any other civil remedy as available for the recovery of the said amount towards interest, if made out or if liable to pay. (NIRMALJIT KAUR) 09.08.2010 JUDGE gurpreet