Case: International Advanced Research Centre for Powder Metallurgy and New Materials and Ors Vs. Nimra Cerglass Technics Ltd. and Ors

2. Brief facts which led to the filing of this case are as under:- The respondent-complainant is a private limited company engaged in the manufacturing and marketing of scientific devices and equipments. The respondent filed complaint against appellant-International Advanced Research Centre for Powder Metallurgy and New Materials (for shortand its officers i.e. appellant No.2-S.V.Joshi, Associate Director and appellant No.3-G.Sunderarajan, Director alleging that the appellants have represented that ARCI possessed of technology for manufacture of extruded ceramic honeycombs which is used in manufacturing of catalytic converters which are used in automobiles for controlling emission. On that representation, the respondent entered into an agreement dated 18.06.1999 with ARCI for transfer of technology for the manufacturing process of extruded ceramic honeycombs inclusive of transfer of extrusion die fabrication technology which is an integral part of the manufacturing process for a consideration of rupees ten lakhs in instalments exclusive of royalty amount on the sales which would have been generated on the basis of products manufactured and marketed by the respondent on the basis of technology. The respondent had alleged that in pursuance of the agreement, the respondent was permitted to establish its industrial unit within the campus of ARCI at Balapur, Hyderabad for the purpose of installing and commissioning production of preferred technology and for which respondent spent around rupees one crore thirty lakhs for purchasing and installing the comprehensive machinery. The respondent alleged that after having taken number of trial runs for testing the efficacy of the extruded ceramic honeycombs in the function organized by ARCI in May 2003, attended by higher officials, the technology was handed over to the respondent and accordingly the respondent was induced into remitting the third instalment of rupees two lakhs in addition to the amount already paid. Respondent states that he was informed that the initial trial runs conducted by the Scientists of ARCI succeeded and the appellants thus, handed over a few samples of the final product which were subsequently displayed at a joint programme launched at Hyderabad. As a result, respondent spent an amount of rupees fifteen lakhs for procuring raw materials in anticipation of commencing commercial production in the belief that the final perfected technology is in its hands. The respondent further alleged that after three years, the respondent was informed vide letter bearing No.ARCI/AD/2006-2007 dated 23.10.2006 addressed to Technology Information, Forecasting and Assessment Council (TIFAC) that the targeted specification of the end product could not be achieved. The respondent alleged that scientists working in ARCI had not perfected the honeycomb technology sufficient for commencing commercial production and by their false representations induced the respondent to spend huge amount and thus appellants have committed an offence of cheating.3. The respondent lodged a criminal complaint on 06.11.2007 before the court of the II Metropolitan Magistrate Cyberabad seeking prosecution of the appellants for the offences punishable under Sections 405, 415, 418, 420 IPC read with Sections 34 and 120B IPC. After investigation, the investigating officer submitted final report dated 28.01.2008 stating that the dispute is purely of civil nature and that no offence was made out against the appellants and the same may be accepted and the case be treated as closed. On protest petition filed by the respondent, the Magistrate took cognizance of the case for offences under Sections 419 and 420 IPC read with Section 34 IPC vide order dated 11.11.2008. Aggrieved by the summoning order issued by the II Metropolitan Magistrate, Cyberabad, the appellants filed petition under Section 482 Cr.P.C. before the High Court to quash the proceedings in CC No. 840 of 2008 and the same was dismissed, which is under challenge in this appeal.

Court's reasoning:
25. As per the terms of the technology transfer agreement, ARCI has to conduct performance guarantee tests and in those tests when ARCI was unsuccessful in achieving the targeted specifications, ARCI cannot be said to have acted with dishonest intention to cheat the respondent. Appellants-ARCI is a structure of Scientists, Team Leader and Associate Director and it is the team leader who actually executes the project, the job of Associate Director and Director is to monitor/review progress of the project. Appellants No.2 and 3 who were the Associate Director and Director of ARCI respectively were only monitoring the progress of the project cannot be said to have committed the offence of cheating. In the facts of the present case, in our view, the allegations in the complaint do not constitute the offence alleged and continuation of the criminal proceeding is not just and proper and in the interest of the justice, the same is liable to be quashed.