Case: Sharon Michael  Vs. State Of Tamil Nadu

the appellant would contend that the dispute between the parties having arisen out of a contract qua contract, the complaint petition was not maintainable. 8. Mr. V. Kanagaraj, learned senior counsel appearing on behalf of Respondent No.2, on the other hand, submitted that the complaint petition had to be filed only because the appellant did not pay the entire amount representing the value of the garments exported. It was contended that the appellants having made part payment of the entire dues cannot be permitted now to turn round and contend that they have no liability in the matter at all.9. Indisputably Respondent No.2 is the producer of the garments. The buyer is a German Company. Rightly or wrongly, the buyer refused to accept the goods, inter alia, on the premise that the same were defective and sub-standard. We will assume that the appellant company was assured payment for such supplies. Even if that be so, it would be a del credere agent. Its liability is, therefore, a civil liability. The allegations contained in the First Information Report did not reveal that any misrepresentation was made at the time of formation of the contract. The goods were to be supplied by Respondent No.2. They were presumably required to meet the requirements of the buyer. Even if the certificate granted by the appellant company was incorrect, an appropriate action against them could have been taken for breach of contract. 10. The ingredients of an offence as contained in Section 420 of IPC are as under: "i) Deception of any persons;ii) Fraudulently or dishonestly inducing any person to deliver any property; oriii) to consent that any person shall retain any property and finally intentionally inducing that person to do or omit to do anything which he would not do or omit." Criminal breach of trust is defined in Section 405 of IPC. The ingredients of an offence of the criminal breach of trust are : "1. Entrusting any person with property or with any dominion over property.2. That person entrusted (a) dishonestly misappropriating or converting to his own use that property; or (b) dishonestly using or disposing of that property or willfully suffering any other person so to do in violation—(i) of any direction of law prescribing the mode in which such trust is to be discharged, or(ii) of any legal contract made touching the discharge of such trust." Ingredients of Section 409 of IPC read as under : "(i) The accused must be a public servant;(ii) He must have been entrusted, in such capacity, with property.(iii) He must have committed breach of trust in respect of such property." 11. The First Information Report contains details of the terms of contract entered into by and between the parties as also the mode and manner in which they were implemented. Allegations have been made against the appellants in relation to execution of the contract.No case of criminal misconduct on their part has been made out before the formation of the contract. There is nothing to show that the appellants herein who hold different positions in the appellant-company made any representation in their personal capacities and, thus, they cannot be made vicariously liable only because they are employees of the company. 12. In R. Kalyani v. Janak C. Mehta & Ors. [2008 (14) SCALE 85 ], this Court held : "24. As there had never been any interaction between the appellant and them, the question of any representation which is one of the main ingredients for constituting an offence of cheating, as contained in Section 415 of the Indian Penal Code, did not and could not arise.25. Similarly, it has not been alleged that they were entrusted with or otherwise had dominion over the property of the appellant or they have committed any criminal breach of trust. So far as allegations in regard to commission of the offence of forgery are concerned, the same had been made only against the respondent No. 3 and not against the respondent No. 2. Sending a copy thereof to the National Stock Exchange without there being anything further to show that the respondent No. 2 had any knowledge of the fact that the same was a forged and fabricated document cannot constitute offence. Allegations contained in the FIR are for commission of offences under a general statute. A vicarious liability can be fastened only by reason of a provision of a statute and not otherwise. For the said purpose, a legal fiction has to be created. Even under a special statute when the vicarious criminal liability is fastened on a person on the premise that he was in- charge of the affairs of the company and responsible to it, all the ingredients laid down under the statute must be fulfilled. A legal fiction must be confined to the object and purport for which it has been created." It was furthermore observed:- "27. If a person, thus, has to be proceeded with as being variously liable for the acts of the company, the company must be made an accused. In any event, it would be a fair thing to do so, as legal fiction is raised both against the Company as well as the person responsible for the acts of the Company." The liability of the company is, therefore, a civil liability. It is also not a case where although a prima facie case had been made out disclosing commission of an offence, the court is called upon to consider the defence of the accused. The First Information Report itself refers to the documents. They can, therefore, be taken into consideration for the purpose of ascertaining as to whether the allegations made in the complaint petition read as a whole, even if taken to be correct in its entirety, discloses commission of any cognizable offence or not. As admittedly Respondent No.2 was the supplier of garments which were found out to be defective in nature, we are of the opinion that the dispute between the parties is civil in nature.13.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]Indisputably Respondent No.2 is the producer of the garments. The buyer is a German Company. Rightly or wrongly, the buyer refused to accept the goods, inter alia, on the premise that the same were defective and sub-standard. We will assume that the appellant company was assured payment for such supplies. Even if that be so, it would be a del credere agent. Its liability is, therefore, a civil liability. The allegations contained in the First Information Report did not reveal that any misrepresentation was made at the time of formation of the contract. The goods were to be supplied by Respondent No.2. They were presumably required to meet the requirements of the buyer. Even if the certificate granted by the appellant company was incorrect, an appropriate action against them could have been taken for breach ofFirst Information Report contains details of the terms of contract entered into by and between the parties as also the mode and manner in which they were implemented. Allegations have been made against the appellants in relation to execution of the contract.No case of criminal misconduct on their part has been made out before the formation of the contract. There is nothing to show that the appellants herein who hold different positions in the appellant-company made any representation in their personal capacities and, thus, they cannot be made vicariously liable only because they are employees of theliability of the company is, therefore, a civil liability. It is also not a case where although a prima facie case had been made out disclosing commission of an offence, the court is called upon to consider the defence of the accused. The First Information Report itself refers to the documents. They can, therefore, be taken into consideration for the purpose of ascertaining as to whether the allegations made in the complaint petition read as a whole, even if taken to be correct in its entirety, discloses commission of any cognizable offence or not. As admittedly Respondent No.2 was the supplier of garments which were found out to be defective in nature, we are of the opinion that the dispute between the parties is civil in nature.