IN THE HIGH COURT OF GUJARAT AT AHMEDABAD CRIMINAL REVISION APPLICATION No 267 of 2000 For Approval and Signature: Hon'ble MR.JUSTICE C.K.BUCH ============================================================ 1. Whether Reporters of Local Papers may be allowed : YES to see the judgements? 2. To be referred to the Reporter or not? : YES 3. Whether Their Lordships wish to see the fair copy : NO of the judgement? 4. Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder? 5. Whether it is to be circulated to the Civil Judge? : NO @ SHRIRAM VINYL & CHEMICAL INDUSTRIES, Versus BISIL LPLAST LTD. -------------------------------------------------------------- Appearance: 1. Criminal Revision Application No. 267 of 2000 MR SA DESAI for Petitioner No. 1 MS SM AHUJA for Petitioner No. 1 MR MIHIR H JOSHI for Respondent No. 1-6 MR SS PATEL, APP for Respondent No. 7 -------------------------------------------------------------- CORAM : MR.JUSTICE C.K.BUCH Date of decision: 02/05/2002 ORAL JUDGEMENT 1. Applicant Shriram Vinyl & Chemical Industries Ltd., a fully Subsidiary Company of DCM Shriram Consolidated Ltd., Bombay, is the original complainant of criminal complaint lodged in the Court of ld. Chief Metropolitan Magistrate, Court No.15, Ahmedabad through one Shri O.P.Gupta, duly Constituted Attorney. Complaint before the ld. Metropolitan Magistrate came to be lodged against Bisil Plast Ltd. and Directors of the Company and one of the officers of this company Mr. Jhony George who was Accounts Manager of accused no.1 Bisil Plast Ltd. at the relevant point of time, for the offence punishable under Sections 409, 420, 422 R/w Sec.34 of IPC on 27.3.1997. The said complaint was numbered as Inquiry Case No. 46/97. Complaint was supported by some documents. Considering the contents of the complaint and documents produced in support thereof and the arguments advanced by the counsel appearing for the complainant, ld. Metropolitan Magistrate directed Ellisbridge Police Station, City of Ahmedabad to investigate into the matter under Section 156(3) of CrPC. Ellisbridge Police Station, on receipt of the order passed by ld. Metropolitan Magistrate, Ahmedabad started investigating the alleged offence and according to the petitioner, certain statements were also recorded. 2. On or about 25.7.1997, respondent (original accused) moved this Court by filing Spl.Criminal Application No. 927/97 under Articles 226 & 227 of the Constitution of India and under Section 482 of CrPC praying that criminal proceedings initiated by the complainant be quashed and set aside. It was simultaneously prayed that till the hearing and disposal of the petition, there should be interim stay against the police and there should not be any further investigation against the accused. It was also prayed that order of investigation also be placed under suspension. It is not a matter of dispute that the petitioner accused was granted interim relief in that petition on 31.7.1997 and investigation came to be stayed. As per record available to this Court, it seems that this writ petition was not formally resisted, but with a view to get interim stay vacated, original complainant moved this Court by filing Criminal Misc. Application NO. 358/1998. 3. Investigating Officer, in the meanwhile, has made substantial progress in investigation and it is on record that though there was no formal vacation of interim stay, investigating agency filed its final report under Section 173(2) of CrPC and prayed for "C" summary stating that dispute between the parties is a civil dispute and no criminal offence has been made out. As the original complainant had moved the Court for vacating the interim stay and also for expeditious hearing of quashing petition, Spl. Criminal Application No. 927/1997 came to be heard by this Court and ultimately decided vide order dated 8.5.1998 ( Coram : M.H. Kadri, J). Ld. counsel appearing for the petitioner has placed reliance on some of the part of the decision in the said writ petition. It would be appropriate to refer relevant part of the decision because the Court decided to discharge Rule and to vacate the interim relief granted earlier. Conclusive part of the said decision says that :- " Therefore, in my view, when the investigation is over, it would not be proper for me to express any opinion about the allegations made in the complaint. It is true that inherent powers under Section 482 of the Code are to be exercised in a rarest of rare cases and very sparingly. The Court will not be justified in embarking upon the enquiry as to the reliability or genuineness or otherwise of the allegations made in the first information report or the complaint. The learned Metropolitan Magistrate had not taken cognizance of the complaint, and directed investigation under Section 156(3) of the Code. It would be a futile exercise, if any opinion on merits is expressed with regard to the allegations made in the complaint at this stage when the final report is submitted by the investigating agency, because it may cause prejudice to either of the parties. Therefore, in my view, this application deserves to be rejected at this stage. It would be open to the petitioners as well as respondent no.2 to take further action when the final report is accepted or rejected by the learned Metropolitan Magistrate by initiating appropriate proceedings." 4. Ld. Metropolitan Magistrate on receipt of "C" summary report from the investigating agency, issued notice to the original complainant and after giving an opportunity of being heard to the parties and after considering the say of ld. APP, prayer of investigating officer to grant "C" summary was accepted vide order dated 23.12.1998. Feeling aggrieved by the order passed by the ld. Metropolitan Magistrate, Court No. 13, original complainant moved the Court of Sessions by filing Criminal Revision Application No. 123/1999. Copy of the revision application is available on record at page 41. The allegations in the memo of revision against investigating officer are serious in nature, but so far as present proceedings are concerned, nature of allegations are not much relevant. Ld. Addl. Sessions Judge, Court NO.13, City of Ahmedabad, after hearing ld. counsel appearing for the revisioner Mr. Bhaumik and ld. APP Mr. A.P.Desai, allowed the revision application and set aside the order granting "C" summary passed by the ld. Metropolitan Magistrate and further directed the ld. Metropolitan Magistrate to send matter for an investigation by DCB Crime Branch, Ahmedabad or CID Branch. It was also observed that some limited time must be given to the investigating agency to submit the report. It would be appropriate to deal with the language of final order passed by ld. Sessions Judge because it gives an impression that ld. Sessions Judge has directed the ld. Metropolitan Magistrate to send the matter to totally independent investigating agency and any of the two agencies may investigate the crime denovo, though direction is not specific or limited to the effect that any of these investigating agencies shall investigate the crime further as provided under Section 173(8) of CrPC. Of course, it has been argued by ld. counsel appearing for the petitioner that the order of ld. Sessions Court is of directing the agency to investigate further in the matter and not of denovo investigation ignoring the previous exercise undertaken by the Ellisbridge Police Station. This order of ld. Addl. Sessions Judge dated 7.7.1999 came to be challenged by way of filing Criminal Misc. Application No. 4350/99 on various grounds, but after hearing the parties at length, this Court (Coram: R.P. Dholakia, J), vide order dated 1.2.2000 issued certain directions to the parties and especially to ld. Metropolitan Magistrate. It would be appropriate and beneficial to refer relevant part of the said order which says :- "3. At the end of arguments, learned counsel appearing for the respective parties have agreed that the part of the order passed by the Court below in Criminal Revision Application No. 123/99 is required to be quashed and set aside partly as the learned Sessions Judge ought not to have specified any particular investigating agency for the task and, instead, he should have left the exercise to the learned trial Magistrate. Same way direction is required to be given to the Court below to hear the case i.e. Inquiry Case No. 46/97 from the sage when the police has submitted "C" Summary. Therefore, the Court below i.e. Metropolitan Magistrate, Court NO.15, Ahmedabad is directed to hear learned counsel appearing for the Complainant, accused and State and to pass an appropriate order after giving them proper opportunity. In case, the learned Metropolitan Magistrate comes to a conclusion that further investigation under Section 173(8) is a must, then he is at liberty to direct any police station authority situated at Ahmedabad city, except Ellisbridge police station, to make further investigation. 4. xxx xxx xxx 5. Subject to the aforesaid directions, this application is partly allowed and part of the judgment and order dated 7.7.1999, passed by the learned Judge, Court NO.13, City Civil & Sessions Court, Ahmedabad in Criminal Revision Application No. 123/97 is hereby set aside. Rule made absolute to the aforesaid extent. " 5. These petitioners were anxious to have the order in their favour that ld. Metropolitan Magistrate shall pass appropriate order of sending the complaint for further investigation to any police agency other than the officers of Ellisbridge Police Station. It is submitted that the parties have appeared before the ld. Metropolitan Magistrate and detailed arguments were advanced and it was also attempted that the Court may even issue process considering the documents produced by the complainant ignoring "C" summary report. Ld. Metropolitan Magistrate, vide impugned order dated 31.3.2000, decided to dismiss the complaint under Section 203 of CrPC. The order dated 31.3.2000 under challenge is around 14 typed pages whereby the ld. Metropolitan Magistrate has tried to justify that "C" summary report filed by the Investigating Officer was appropriate and has held that dispute between the parties is of civil nature and there is no element of breach of trust or cheating. It has been simultaneously held by the ld. Magistrate that ingredients of any of the criminal offence mentioned in the complaint, do not emerge from the papers of investigation and evidence produced before him. 6. Relevant decision brought to the notice of ld. Metropolitan Magistrate has also been referred by him. This order has been assailed by the present petitioner mainly on four grounds; viz (i) Ld. Metropolitan Magistrate has no jurisdiction to dismiss the complaint under Section 203 of CrPC as he was bound by the directions issued by this Court vide order dated 1.2.2000 passed by this Court (Coram : R.P.Dholakia,J) and observations made therein; (ii) Ld. Metropolitan Magistrate was not legally authorised to pass any order other than of sending the complaint for further investigation to any other independent agency except Ellisbridge Police Station or issuance of process exercising powers under Section 190 of CrPC and, therefore, the order is erroneous and bad-in-law; (iii) When serious allegations were made against the officers of Ellisbridge Police Station, none of the papers of investigation including statements recorded, could have been considered by the ld. Metropolitan Magistrate for dismissing the complaint especially when "C" summary report was turned down by the ld. Addl. Sessions Judge on merits; (iv) Element of breach of trust or cheating exfacie on record and the same are reflected from the papers produced by the complainant including the exchange of notices and the fact that by inducing one of the servants of the petitioner, the accused have tried to cause wrongful loss to the complainant to the tune of Rs. 50 lacs. The dishonest intention to have wrongful gain, by not paying consideration of PVC Resign sold, is also apparent as the share certificates which were given as instrument of security by pledging, have been sold and transferred to the complainant company. 7. It is the say of the respondents that Respondent No.1 Company had regular business dealings pursuant to the complainant supplying PVC Resin to the Respondent No.1 Company and the payments were made from time to time by the Respondent No.1 Company for such purchase. Accounts between the parties were settled in the month of July-August 1996. More than Rs. 52 Lacs were to be paid by the accused Bisil Plast Ltd. and in lieu of cash payment, the petitioner company got delivered 5 Lacs fully paid-up Equity Shares of the face value of Rs. 10/ each and after having ascertained that the market value of the share was higher than its face value, complainant Shri Ram Vinyl Industries accepted the same as consideration. The say of the complainant Company is that these shares were delivered by way of Security and not as consideration towards supply of materials, but Ld. Counsel Mr. Bhaumik, during the course of his oral submissions, has accepted that said share certificates along with duly executed transfer forms were delivered and accepted. A memorandum regarding this transaction was entered into between the parties on 7.8.1992. According to Mr. Bhaumik, this person was not authorised either as a representative or as a duly constituted attorney, to accept the share certificates along with transfer form in any way and, therefore, complainant company has terminated his services. 8. Say of the accused is that by reading the memorandum, the complainant company got issued a notice on 23.10.1996 demanding an amount of Rs. 52,55,489-00 from respondent no.1 Company. Second notice correcting earlier version was served on 8.11.1996. It is on record that both these notices are replied on 28.10.1996 and 23.11.1996 respectively. 9. Mr. Bhaumik has admitted in response to the query raised by the Court that the complainant company had filed winding up petition against the accused company Bisil Plast Ltd. on 4.2.1997 and notice was issued in the month of April 1997. It is not a matter of dispute that this winding up petition has been dismissed. It would be appropriate to refer some part of observations of the Company Court made in the Company Petition :- " The petitioner says and submits that from the above facts, it is very clear that the respondent company has no funds to pay the dues of the petitioner and thereafter, it has committed a fraud by stating that the shares deposited with the company as security were sold to the petitioner company towards the dues and its face value should be treated as the sale value and accordingly, the respondent company had discharged its liability for the payment of Rs. 50 lacs. The petitioner submits that the aforesaid plea of the respondent company is nothing but an after thought to avoid payment of the legitimate amount due by it to the petitioner and the story of alleged sale is a concocted story to defraud the claim of the petitioner." 10. According to Mr. Bhaumik, proceedings initiated under the provisions of the Companies Act are totally independent and more than one parallel proceedings provided under the law can be initiated and there was no bar in filing criminal complaint as the present case is either a clear case of cheating or is the case of criminal breach of trust. Accused no.7, being a servant of accused no.1 Bisil Plast Ltd., complaint under Section 409 of IPC has been filed, but till today, no proceedings have been initiated against the officer or person who have accepted the transfer deeds. He was also not joined as co-accused in the complaint filed by the petitioner. In the papers of investigation submitted to the ld. Metropolitan Magistrate, it is clear that the parties were in regular commercial transactions and accused no.1 company never disputed the amount of consideration which was to be paid against the supply of material. It is the consistent stand that more than Rs. 52 Lacs were to be paid to the complainant Company and during the course of settlement of accounts, one Mr. Balram Ahuja had accepted and received on behalf of the complainant Company 5 Lac shares of Rs. 10/ each. Distinctive numbers of shares and certificates are reflected in the letter addressed to the complainant company dated 7.8.1996. Handwritten endorsement on the basis of the letter reads as under:- "Accepted and Received for Shriram Vinyl & Chemical Industries. sd/ Balram Ahuja 7.8.1996." Signature of Shri Balram Ahuja is also found on the bottom of the letter along with the signature of one Shri Sanjay Shah, Director of the Company. If it is considered closely the contents of the correspondence between the parties and especially the letters written by Bisil Plast Ltd. to complainant Company and filing of criminal complaint after initiating winding up proceedings, the finding recorded by ld. Metropolitan Magistrate should be considered. Page-333 of the papers of investigation is a zerox copy of one part of the page of "The Economic Times" dated 16.1.1997. This date is relevant because on 7.8.1996, 5 Lacs shares were delivered to the complainant company and till April 1997, criminal complaint was not filed nor any winding up proceedings were initiated till February 1997. Zerox copy of the part of the page of "The Economic Times" dated 16.1.1997 indicates last score of share prices of Accused No.1 Bisil Plast Ltd. is shown as Rs. 6.25 ps. The last column indicates 52 weeks high and low price quoted in the market and on 16.1.1997, price quoted is the lowest of last 52 weeks. It would not be probable or otherwise logical to accept that complainant Company was not aware about the work of the share of Accused no.1 Company. There is no categoric averment in the say of the complainant that on 7.8.1996, price of the share of accused company Bisil Plast Ltd. was much less than Rs. 10/ i.e. less than the face value per share and the share certificates were given and in turn were accepted by way of security and as stop gap arrangement. Ld. Metropolitan Magistrate, appreciating all relevant aspects has recorded the findings accepting "C" Summary and it would be difficult to accept that this finding was nothing but a result of non- application of mind. Though there was a stay against further investigation, Ellisbridge Police has filed "C" Summary Report. 11. Investigation carried out by Ellisbridge Police Station is incomplete, contrary to documentary evidence and manipulated and, therefore, further investigation should be made by the independent agency like CID Crimes or DCB, was the prayer made by the petitioner before the Sessions Court in the above-referred Criminal Revision Application. Prior to the criminal revision application filed before the Court of Sessions, the petitioner Company attempted to get interim stay against the investigation was made by moving Misc. Criminal Application No. 358/98, it would be relevant to quote relief prayed by the petitioner Company in the aforesaid application which reads as under:- "(a) to vacate the ex-parte stay of investigations embarked upon in Investigation & Report Case No. 46 of 1997 before the Ld. Metropolitan Magistrate, Ahmedabad, which was snatched from this Hon'ble Court by the petitioners (orig.accused) on or around July 31,1997; (b) direct the Director, State (CID) to carry out the investigations in I & R Case No. 46 of 1997 in which the petitioners are the accused, and to submit their Report, to the trial Court within a time-bound frame; (c) expedite hearing of Spl. Criminal Application No.927 of 1997 frivolously lodged by the petitioners in the cae (who are the orig. Accused); (d) levy exemplarary costs on the petitioners for misguiding this Hon'ble Court and holding back relevant details and information vis-a-vis the investigations which are already well underway; (e) costs; (f) any other and further orders as may be expedient in the interest of justice, equity, good conscience and fair play." 12. So, till filing of above criminal revision application, no grievance or dissatisfaction was expressed against methodology and the procedure adopted by the Ellisbridge Police Station while investigating in connection with the complaint filed by the petitioner Company. But for formal vacation of the interim stay granted by this Court in Spl.Criminal Application No. 927/1997, Ellisbridge Police submitted report under Section 173(2) of CrPC going against the interest of the complainant. On one hand, complainant submits that this is a clear case of fraud and criminal breach of trust by Bisil Plast Ltd. and its directors and Bisil Plast Ltd. is also liable for winding up for non-payment of alleged dues and it was not able to pay value of the goods supplied to the large sum worth more than Rs. 52 Lacs, but it is on record that on 23.7.1996, a cheque of Rs. 2,84,194-00 was issued by Bisil Plast Ltd. to the complainant company and as referred above, 5 lacs fully paid up equity shares of face value of Rs.10/ each worth Rs. 50 Lacs were physically handed over on 7.8.1996. This delivery whether was a pledge as security towards the outstanding amount and whether it was agreed that the complainant company will be at liberty to sell the equity shares at the risk of the Bisil Plast Ltd. or it was against the settlement of accounts, is the basic controversy which Ellisbridge police seems to have tried to resolve. Investigating agency was supposed to find out whether any element of criminality is peeping out from this transaction or not and ultimately "C" Summary was filed. Date of filing of complaint is 27.3.1997. Revision Application preferred before the Court of Sessions has been disposed of by ld. Addl. Sessions Judge by a reasoned order wherein certain facts are also narrated, but it would not be correct or legal to say that one party if had taken some tricky benefit or had taken some advantage, all such advantages taken would not become automatically a criminal wrong and such situation may give rise to a dispute, but when there is no element of criminality, such dispute can be termed as "civil dispute". Filing of "C" Summary report by the Investigating Officer may be violative of High Court's prohibitory order, but this violation can be said to be actionable wrong so far as the Court issuing prohibitory order and the party who has obtained such prohibitory order are concerned. In my opinion, it is not necessary to elaborate this aspect, but as the same involves many other issues factual as well as legal, it would be proper to observe that at least party who was kin to get interim stay vacated and praying completion of investigation at the earliest, would not have tried to get the order granting "C" Summary report set aside on the ground that police has wrongly submitted the said report though there was a stay by this Court against the investigation. This is important when this ground was argued before the Court of Sessions while arguing revision application as accused were not present. I agree that accused are not required to be heard at the time when "C" Summary report was under scrutiny, but when the report has been accepted and ld. Metropolitan Magistrate had granted "C" Summary report and original accused persons were joined as party, the observations if made by the ld. Addl. Sessions Judge, commenting either upon the conduct of the accused or investigating agency or on factual aspect reflected from the police report, would not be binding to the party who was not offered an opportunity. Ld. Addl. Sessions Judge of City of Ahmedabad (Court No.13), while disposing of criminal revision application, has set aside the order granting "C" Summary report and further directed that investigation in the matter be handed over to DCB Crimes, Ahmedabad or CID Crimes etc. This order was challenged by way of Cri. Revision Application invoking inherent powers of the Court and I have referred relevant part of the order herein above. Before passing of the order, at the end of arguments, parties had agreed that part of the order passed by the revisional court while dealing with Cri. Revision Application No. 123/97 requires to be quashed and set aside, but it would not be correct to say that parties had agreed in turning down the