V. RAVI KUMAR versus STATE, REP. BY INSPECTOR OF POLICE, DISTRICT CRIME BRANCH, SALEM, TAMIL NADU & ORS.
[2018] 14 S.C.R. 828, Supreme Court of India, 2018
Outcome: Appeal(s) allowed (Granted)
Segment: Ratio
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828                    SUPREME COURT REPORTS            [2018] 14 S.C.R.
V. RAVI KUMAR
v.
STATE, REP. BY INSPECTOR OF POLICE, DISTRICT CRIME
BRANCH, SALEM, TAMIL NADU & ORS.
(Criminal Appeal No. 111 of 2011)
DECEMBER 14, 2018
[R. BANUMATHI AND INDIRA BANERJEE, JJ.]
Penal Code, 1860 – ss. 420 and 409 r/w. s.34 – Appellant
alleged that he supplied cotton lint to a Mill for conversion into
yarn, however, all the respondents-accused connived with each other
and sold entire lint and appropriated the sale proceeds – Complaint
was filed by the appellant – FIR was registered u/ss. 420 and
409 r/w. s.34 of IPC on basis of appellant’s complaint – Respondent
Nos. 2 to 13 filed petition u/s. 482 of Cr.P.C. for quashing FIR –
High Court quashed the FIR on the grounds that the appellant had
withdrawn an earlier complaint without assigning reasons, the
transaction being commercial in nature, the ingredients of the
offences alleged were absent; and that the remedy lay in filing a
civil suit – Propriety of – Held: Where the accused seeks quashing
of the FIR, invoking inherent jurisdiction of the High Court, it is
wholly impermissible for the High Court to enter into the factual
arena to adjudge the correctness of the allegations in the complaint
– Furthermore, it was not a case of breach of contract simplicitor
but there were serious allegations of forgery of documents, use of
blank letter-head, papers and cheque leaves of the appellant – In
instant case, there were
allegations which prima facie constituted
ingredients of offences u/ss. 420, 409 and 34 of IPC in complaint –
The correctness of the allegations could be adjudged only at the
trial when evidence is adduced – Also, mentioning of reasons for
withdrawal of an earlier complaint is also not a condition precedent
for maintaining a second complaint – Thus, High Court erred in
law in dismissing the complaint which certainly disclosed an offence
prima facie.
[2018] 14 S.C.R. 828
828
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Allowing the appeal, the Court
HELD: 1. Where the accused seeks quashing of the FIR,
invoking inherent jurisdiction of the High Court, it is wholly
impermissible for the High Court to enter into  the  factual  arena
to  adjudge the correctness of the allegations in the  complaint.
[Para 32][837-F-G]
2. Every breach of contract does not give rise to an offence
of cheating. The language and tenor of Vesa Holdings (P) Ltd.,
particularly, the observation that breach of contract would give
rise to an offence of cheating only in those cases where there
was any deception played at the very inception, is to be
understood in the context of the facts of that case and accordingly
construed.  The phrase “in those cases where there was any
deception played at the very inception” cannot be read out of
context.  This is not a case of breach of contract simplicitor but
there are serious allegations of forgery of documents, use of
blank letter-head, papers and cheque leaves of the appellant.
[Para 36][838-E-G]
3. In this case, there were clear allegations of fraud and
cheating which prima facie constitute offences under Section 420
of the Indian Penal Code. The correctness of the allegations can
be adjudged only at the trial when evidence is adduced.  At this
stage,  it was not for the High Court to enter into factual arena
and decide whether the allegations were correct or whether the
same were a counter-blast to any proceedings initiated by the
respondents. [Para
37][838-H; 839-A-B]
4.  In Jatinder Singh, this Court clearly held that if dismissal
of the complaint was not on merit, but on default of the
complainant, moving the Magistrate again with a second complaint
on the same facts is maintainable. But if the dismissal of the
complaint under Section 203 of the Code was on merits, the
position could be different. [Para 38][839-B-C]
5. The failure to mention the first complaint in the
subsequent one is also inconsequential as held, in effect, in
Jatinder Singh.  Mentioning of reasons for withdrawal of an earlier
complaint is also not a condition precedent for maintaining a
second complaint. The High Court clearly erred in law in
dismissing the complaint, which certainly disclosed an offence
prima facie. [Para 39][839-D]
V. RAVI KUMAR v. STATE, REP. BY INSPECTOR OF POLICE,
DISTT. CRIME BRANCH, SALEM, T.N.
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830                    SUPREME COURT REPORTS            [2018] 14 S.C.R.
Jatinder Singh and Others v. Ranjit Kaur 2001 (2) SCC
570 : [2001] 1 SCR 707 ; Vesa Holdings (P) Ltd. and
Anr. v. State of Kerala and Ors. (2015) 8 SCC 293 –
relied on.
Shiv Shankar Singh v. State of Bihar and Anr. (2012) 1
SCC 130 : [2011] 13 SCR 247 ; Pramatha Nath
Talukdar and Anr. v. Saroj Ranjan Sarkar AIR 1962
SC 876 : [1962] Suppl. SCR 297 ; Poonam Chand Jain
and Anr. v. Fazru (2010) 2 SCC 631 : [2010] 2 SCR
109 ; M/s. Jayant Vitamins Ltd. v. Chaitanyakumar and
Another (1992) 4 SCC 15 ; Zandu Pharmaceutical
Works Limited and Ors v. Mohd. Sharaful Haque and
Another 2005 (1) SCC 122 : [2004] 5 Suppl. SCR 790 ;
State of Haryana and Ors. v. Bhajan Lal and Ors. (1992)
Supp. 1 SCC 335 : [1991] 1 Suppl. SCR 387 ; Mridaya
Ranjan Prasad Verma and Ors. v. State of Bihar and
Anr. (2000) 4 SCC 168 : [2000] 2 SCR 859 ; State of
Punjab v. Subhash Kumar and Ors. (2004) 13 SCC
437 ;  Janata Dal v. H.S. Chowdhary and Ors. (1992)
4 SCC 305 : [1992] 1 Suppl. SCR 226 – referred to.
Case Law Reference
[2011] 13 SCR 247
referred to
Para 22
[2001] 1 SCR 707
relied on
Para 23
[1962] Suppl. SCR 297
referred to
Para 24
[2010] 2 SCR 109
referred to
Para 25
(1992) 4 SCC 15
referred to
Para 27
[2004] 5 Suppl. SCR 790
referred to
Para 28
[1991] 1 Suppl. SCR 387
referred to
Para 28
[2000] 2 SCR 859
referred to
Para 28
(2004) 13 SCC 437
referred to
Para 32
[1992] 1 Suppl.Scr 226
referred to
Para 32
(2015) 8 SCC
293
relied on
Para 33
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831
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal
No. 111 of 2011.
From the Judgment and Order dated 20.03.2005 of the High Court
of Judicature at Madras in Crl. O.P. No. 27039 of 2005.
V. Kanagaraj, Sr. Adv., M. Vijaya Bhaskar Adv. for the Appellant.
M. Yogesh Kanna, S. Partha Sarathi, Kaustubh Shukla,
Abhay Singh, Rahul Shyam Bhandari, Konark Tyagi,  Advs. for the
Respondents.
The Judgment of the Court was delivered by
INDIRA BANERJEE, J.
1. This appeal is against the final judgment and order dated 20-
03-2006 passed by the High Court of Judicature at Madras, inter alia,
allowing Criminal Original Petition No.27039 of 2005 filed under Section
482 Cr.P.C. and quashing the criminal proceedings being Crime No.54
of 2005 against the petitioners before the High Court and also against
the first accused company, which was not party before the High Court.
2. The appellant, Shri Ravi Kumar carries on business of cotton
ginning and conversion of cotton into yarn at Salem, Tamil Nadu as
proprietor of “SARAVANA YARN TRADERS”.
3. The appellant as proprietor of “SARAVANA YARN
TRADERS” entered into transactions with Sri. Rajendran Mills Ltd.,
Salem (hereinafter referred to as “the Mill”).  The respondent No.2/
accused No.2 is the Managing Director of the Mill and the respondent
No.3/accused No.3 Sri Sundaram is its Chairman, respondent No. 4/
accused No.4 Sri Sundar is the son of the Managing Director being the
respondent No.2/accused No.2 and is in charge of the
affairs of the
Mill. The respondents/ accused Nos.5 to 13 are also responsible for
administering the Mill.
4. In December 2001, the Mill requested the appellant to supply
cotton lint to the Mill for conversion of the same into yarn.  The appellant
and the respondents entered into transactions in 2001.  Later, in January
2002, a Memorandum of Understanding in writing was executed between
the appellant and the Mill.
V. RAVI KUMAR v. STATE, REP. BY INSPECTOR OF POLICE,
DISTT. CRIME BRANCH, SALEM, T.N.
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832                    SUPREME COURT REPORTS            [2018] 14 S.C.R.
5. The appellant has alleged that pursuant to the Memorandum of
Understanding, the appellant supplied 1,03,920 Kgs of cotton lint to the
Mill for conversion into yarn. The appellant has further alleged that
respondent No.2/accused No.2 Shri Chokalingam had, from out of the
said quantity of cotton lint, purchased lint weighing about 47,164 kgs of
the value of Rs.26,93,289/- on credit basis and the balance which was
worth Rs.35,26,561.69 had been entrusted to the Mill for conversion into
yarn.
6. According to the appellant, the Mill did not take any step to
convert the lint into yarn in spite of repeated requests.  The appellant
later came to know that all the accused had connived with each other
and in criminal breach of trust sold the entire cotton lint weighing about
1,08,920/- kgs of the value of about Rs.62,19,850.50 and appropriated
the sale proceeds thereof.
7. On 20-05-2004, the appellant lodged a complaint at the Edapadi
Police Station, Salem district against respondents for offences under
Sections 420 and 409  read with Section 34 of the Indian Penal Code.
8. As the Police failed to register any case, the appellant invoked
Section 156(3) of the Cr.P.C. to seek orders of the learned Judicial
Magistrate II, Sankagiri for registration of the complaint.
9. Even after orders under Section 156(3) of the Cr.P.C., the Police
did not register any complaint.  Thereafter, the appellant
filed a petition
being Crl. O.P. No.7715 of 2005 praying for direction on the Inspector
of Police to register a case on the basis of the complaint made by the
appellant.
10. It is stated that since the amount involved exceeded  the limit
for invocation of the pecuniary jurisdiction of the local Police Station, the
Superintendent of Police transferred the investigation to the District Crime
Branch and the same was registered as Crime No.54/2005  under Sections
420, 409 and 34 IPC on 22-06-2005.
11. According to the appellant, since the police did not conduct
the investigation properly, the appellant was constrained to file Crl. O.P.
No.23354 of 2005 in the High Court of Madras for direction on the
Investigation Officer of Crime No.54 of 2005 to arrest the accused
mentioned in the FIR, complete the investigation and file a final report.
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 12. By an order dated 29-08-2005, the High Court disposed of
the criminal original petition by directing the respondent to file a final
Report within three months from  the date of receipt of a copy of the
said order.
13. It is pleaded that as the Police could not complete the
investigation within three months as directed, it filed Criminal
Miscellaneous Petition being Crl.M.P. No.9149 of 2005 in Crl. O.P.
No.23354 of 2005 for extension of time, by a further period of six months,
for completion of investigation in Crime No.54 of 2005.
14. On 22-09-2005 respondent Nos.2 to 13 filed Crl. O.P. 27039
of 2005 under Section 482 Cr.P.C. in the High Court for quashing FIR
No. 54 of 2005 alleging that the allegations in the complaint did not prima
facie make out the offences for which the respondents had been charged.
15. The respondent State filed its counter affidavit to the aforesaid
application under Section 482 Cr.P.C. and prayed that the said application
be dismissed. In the affidavit in opposition, it was contended that
investigation revealed that the accused persons had forged documents
using blank letter head,  papers and cheque leaves of the appellant given
to him before entering into business transactions. As such ingredients of
Sections 468, 471, 420, 409 and 120 (b) IPC were to be found.
Furthermore, there was evidence that one of the accused mentioned in
the FIR namely Prasanna Chakravarthy had deposed about the forged
letter prepared by him on the
instruction of Kasi Viswanathan, Meiyappan,
Rajarathinam, and Jayapal.
16. On 18-10-2005, the appellant, as a de facto complainant, filed
an application numbered Crl.M.P. No.8370 of 2005 for intervention in
Crl. O. P. No.27039/2005.
17. By an order dated 24-11-2005, the High Court granted the
police six months’ time for completing the investigation in FIR No.54 of
2005 and for filing final report therein.
18. On 30-11-2005, the High Court referred the matter to the
Conciliation and Mediation Centre for resolution of the dispute between
the parties, in the absence of the appellant, being the complainant.
19. The appellant opposed  the conciliation proceedings contending
that the offences were non-compoundable whereupon the case was
again referred back to the High Court for decision on merits.
V. RAVI KUMAR v. STATE, REP. BY INSPECTOR OF POLICE,
DISTT. CRIME BRANCH, SALEM, T.N. [INDIRA BANERJEE, J.]
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834                    SUPREME COURT REPORTS            [2018] 14 S.C.R.
20. By the impugned order dated 20-03-2006, the High Court
allowed the application under Section 482 Cr.P.C. observing that the
complainant had, without assigning any reason, withdrawn the first
complaint and launched prosecution by filing a fresh complaint; that the
complaint arose out of a commercial transaction; and that the complainant
would have to approach the Civil Court for recovering dues if at all
arising out of commercial transaction.
21. The short question in this appeal is whether the High Court
should have quashed the criminal proceedings being Crime No.54 of
2005 on the grounds that the appellant had withdrawn an earlier complaint
without assigning reasons; the transactions being commercial in nature,
the ingredients of an offence under the Sections referred to above were
absent; and that the remedy of the appellant lay in filing a civil suit.
22. There is no provision in the Criminal Procedure Code or any
other statute which debars a complainant from making a second complaint
on the same allegations, when the first complaint did not lead to conviction,
acquittal or discharge. In Shiv Shankar Singh v. State of Bihar and
Anr.1, this Court held:
“18. Thus, it is evident that the law does not prohibit filing or
entertaining of the second complaint even on the same facts
provided the earlier complaint has been decided on the basis of
insufficient material or the order has been
passed without
understanding the nature of the complaint or the complete facts
could not be placed before the court or where the complainant
came to know certain facts after disposal of the first complaint
which could have tilted the balance in his favour.  However, the
second complaint would not be maintainable wherein the earlier
complaint has been disposed of on full consideration of the case
of the complainant on merit.”
23. As held by this Court in Jatinder Singh and Others v. Ranjit
Kaur2, it is only when a complaint is dismissed on merits after an inquiry,
that a second complaint cannot be made on the same facts.  Maybe, as
contended by the respondents, the first complaint was withdrawn without
assigning any reason.   However, that in itself is no ground to quash a
second complaint.
1(2012) 1 SCC 130
22001 (2) SCC 570
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24. In Pramatha Nath Talukdar and Anr. v. Saroj Ranjan
Sarkar3, this Court dealt with the question whether the second complaint
by the respondent should have been entertained when the previous
complaint had been withdrawn.  The application under Section 482 Cr.P.C.
was allowed and the complaint dismissed by the majority Judges observing
that an order of dismissal under Section 203 Cr.P.C. was no bar to the
entertainment of second complaint on the same facts, but it could be
entertained only in exceptional circumstances, for example, where the
previous order was passed on an incomplete record or a misunderstanding
of the nature of the complaint or the order passed was manifestly absurd,
unjust or foolish or where there were new facts, which could not, with
reasonable diligence, have been brought on record in previous
proceedings.
25. In Poonam Chand Jain and Anr. v. Fazru4, this Court relied
upon its earlier decision in Pramatha Nath (supra) and held that an
order of dismissal of a complaint was no bar to the entertainment of
second complaint on the same facts, but it could be entertained only in
exceptional circumstances, such as, where the previous order was passed
on incomplete record, or on a misunderstanding of the nature of the
complaint or was manifestly absurd, unjust or foolish or where there
were new facts which could not, with reasonable diligence, have been
brought on the record in the previous proceedings.
26. In Poonam Chand Jain (supra) this
Court further held that:-
“...this question again came up for consideration before this Court
in Jatinder Singh v. Ranjit Kaur.  There also this Court by relying
on the principle in Pramatha Nath held that there is no provisions
in the Code or in any other statute which debars a complainant
from filing a second complaint on the same allegation as in the
first complaint.  But this Court added when a Magistrate conducts
an enquiry under Section 202 of the Code and dismisses a complaint
on merits a second complaint on the same facts could not be
made unless there are “exceptional cirumstances”.   This Court
held in para 12, if the dismissal of the first complainant then there
is no bar in filing a second complaint on the same facts.  However,
if the dismissal of the complaint under Section 203 of the Code
was on merit the position will be different.”
3AIR 1962 SC 876
4(2010) 2 SCC 631
V. RAVI KUMAR v. STATE, REP. BY INSPECTOR OF POLICE,
DISTT. CRIME BRANCH, SALEM, T.N. [INDIRA BANERJEE, J.]
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836                    SUPREME COURT REPORTS            [2018] 14 S.C.R.
27. In M/s Jayant Vitamins Ltd. v. Chaitanyakumar and
Another5 this Court held that in the absence of compelling and
justifiable reasons, it was not permissible for the Court to stop
investigation by quashing an FIR.
28. In Zandu Pharmaceutical Works Limited and Ors v. Mohd.
Sharaful Haque and Another6 this Court referred to State of Haryana
and Ors. v. Bhajan Lal and Ors.7 and summarized and illustrated the
category of cases in which power under Section 482 of the Criminal
Procedure Code could be exercised.  This court observed and held:-
“(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 entirety do not prima facie constitute any offence
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
offence, 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 offence and make out a case
against the accused.
(4) Where the allegations in the FIR do not constitute a cognizable
offence but constitute only a
non-cognizable offence, 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
5(1992) 4 SCC 15
62005 (1) SCC 122
7(1992) Supp. 1 SCC 335
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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.
(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.”
29. There can be no doubt that a mere breach of contract is not in
itself a criminal offence, and gives rise to the civil liability of damages.
However, as held by this Court in Mridaya Ranjan Prasad Verma
and Ors. v. State of Bihar and Anr.8, the distinction between mere
breach of contract and cheating, which is a criminal offence, is a fine
one.  While breach of contract cannot give rise to criminal prosecution
for cheating, fraudulent or dishonest intention is the basis of the offence
of cheating.  In this case, in the FIR, there were allegations of fraudulent
and dishonest intention including allegations of fabrication of documents,
the correctness or otherwise whereof can be determined only during
trial when evidence is adduced.
30. Exercise of the inherent power of the High Court under Section
482 of the Criminal Procedure Code would depend on the facts and
circumstances of each case.  It is neither proper nor permissible for the
Court to lay down any straitjacket formula for regulating the inherent
power of the High Court under Section 482
of the Cr.P.C.
31. Power under Section 482 Cr.P.C. might be exercised to prevent
abuse of the process of law, but only when, the allegations, even if true,
would not constitute an offence and/or were frivolous and vexatious on
their face.
32. Where the accused seeks quashing of the FIR, invoking inherent
jurisdiction of the High Court, it is wholly impermissible for the High
Court to enter into the factual arena to adjudge the correctness of the
allegations in the complaint.   Reference may be made to the decision of
this Court, inter alia, in State of Punjab v. Subhash Kumar and Ors.9
and Janata Dal v. H.S. Chowdhary and Ors.10
8(2000) 4 SCC 168
9(2004) 13 SCC 437
10(1992) 4  SCC 305
V. RAVI KUMAR v. STATE, REP. BY INSPECTOR OF POLICE,
DISTT. CRIME BRANCH, SALEM, T.N. [INDIRA BANERJEE, J.]
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838                    SUPREME COURT REPORTS            [2018] 14 S.C.R.
33. In Vesa Holdings (P) Ltd. and Anr. v. State of Kerala and
Ors.11, this Court observed:
“12. The settled proposition of law is that every breach of contract
would not give rise to an offence of cheating and only in those
cases breach of contract would amount to cheating where there
was any deception played at the very inception.”
13. It is true that a given set of facts may make out a civil wrong
as also a criminal offence and only because a civil remedy may
be available to the complainant that itself cannot be a ground to
quash a criminal proceeding.   The real test is whether the
allegations in the complaint disclose the criminal offence of cheating
or not.”
34. In Vesa Holding (P) Ltd. (supra), this Court found that there
was nothing to show that at the very inception there was any intention
on behalf of the accused persons to cheat, which was a condition
precedent for an offence under Section 420 IPC.  The complaint was
found not to disclose any criminal offence at all.
35. It is well settled that a judgment is a precedent for the issue of
law which is raised and decided.  Phrases and sentences in a judgment
are to be understood in the context of the facts and circumstances of the
case and the same cannot be read in isolation.
36. As observed above, every breach of contract does not give
rise to an offence of cheating. The language and tenor of Vesa Holdings
(P) Ltd. (supra),
particularly, the observation that breach of contract
would give rise to an offence of cheating only in those cases where
there was any deception played at the very inception, is to be understood
in the context of the facts of that case and accordingly construed.  The
phrase “in those cases where there was any deception played at the
very inception” cannot be read out of context.  This is not a case of
breach of contract simplicitor but there are serious allegations of forgery
of documents, use of blank letter-head, papers and cheque leaves of the
appellant.
37. In this case, it cannot be said that there were no allegations
which prima facie constitute ingredients of offences under Sections
420, 409 and 34 of the Indian Penal Code in complaint.   There were
11(2015) 8 SCC 293
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clear allegations of fraud and cheating which prima facie constitute
offences under Section 420 of the Indian Penal Code. The correctness
of the allegations can be adjudged only at the trial when evidence is
adduced.  At this stage,  it was not for the High Court to enter into
factual arena and decide whether the allegations were correct or whether
the same were a counter-blast to any proceedings initiated by the
respondents.
38. In Jatinder Singh (supra), this Court clearly held that if
dismissal of the complaint was not on merit, but on default of the
complainant, moving the Magistrate again with a second complaint on
the same facts is maintainable. But if the dismissal of the complaint
under Section 203 of the Code was on merits, the position could be
different.
39. The failure to mention the first complaint in the subsequent
one is also inconsequential as held, in effect, in Jatinder Singh (supra).
Mentioning of reasons for withdrawal of an earlier complaint is also not
a condition precedent for maintaining a second complaint.   In our
considered opinion, the High Court clearly erred in law in dismissing the
complaint, which certainly disclosed an offence prima facie.   At the
cost of repetition, it is reiterated that it was not for the High Court to
enter the factual arena and adjudicate  the merits of the allegations.
40. The appeal is, therefore, allowed and the impugned order of
the High Court quashing the complaint is set aside.  The first
respondent
shall proceed with further investigation in accordance with law.
Ankit Gyan
Appeal allowed.
V. RAVI KUMAR v. STATE, REP. BY INSPECTOR OF POLICE,
DISTT. CRIME BRANCH, SALEM, T.N. [INDIRA BANERJEE, J.]