Case: Suneet Gupta Vs. Anil Triloknath Sharma

3. Short facts giving rise to the present proceedings are that in 1998, appellant Suneet Gupta entered into a registered Partnership Firm with one Shashi Kant Mangla in the name and style of M/s K.M. Agencies. The said Firm was the stockist and distributor of consumer goods of M/s Johnson & Johnson, a Limited Multinational Company (M/s Johnson & Johnson Ltd. for short). According to the appellant, partnership of M/s K.M. Agencies had certain claims over M/s Johnson & Johnson Ltd. on account of freight, octroi paid for goods returned, display of goods of the company, etc. It is the case of the appellant that the above claims were duly verified by the officials of M/s Johnson & Johnson Ltd.4. In or about March, 2001, differences arose between the two partners of M/s K.M. Agencies, i.e. between the appellant herein and Shashi Kant Mangla, the other partner. The latter, therefore, joined another partnership firm of M/s Mangla Agencies with Ravi Kant Mangla, Atul Gupta and two others. It is the allegation of the appellant that Shashi Kant Mangla who was a partner along with the appellant of M/s K.M. Agencies falsely, dishonestly and with a view to cheat and defraud the appellant-complainant, mis-represented before M/s Johnson & Johnson Ltd. that the name of partnership firm of M/s K.M. Agencies was changed to M/s Mangla Agencies. On the basis of such representation Shashi Kant Mangla informed M/s Johnson & Johnson Ltd. that payment which was required to be made by the Company (M/s Johnson & Johnson Ltd.) to M/s K.M. Agencies should now be made to M/s Mangla Agencies. According to the appellant, M/s Johnson & Johnson Ltd. was aware of the fact that M/s K.M. Agencies and M/s Mangla Agencies were different; M/s K.M. Agencies, a partnership firm was never dissolved; Suneet Gupta who was one of the partners of M/s K.M. Agencies continued to remain partner of the said firm and Mr. Shashi Kant Mangla, one of the partners of M/s K.M. Agencies had joined another partnership firm of M/s Mangla Agencies and as such payment which was required to be made by M/s Johnson & Johnson Ltd. to M/s K.M. Agencies could not be made to M/s Mangla Agencies and yet such payment was made with a view to deprive M/s K.M. Agencies and particularly appellant-Suneet Gupta. The appellant-complainant, in the circumstances, was constrained to issue legal notice on March 4, 2003 to the respondents herein which was received by them on March 10, 2003. In the said notice, the complainant stated that M/s Johnson & Johnson Ltd. was required to pay Rs.2,73,189.70 to M/s K.M. Agencies but no such payment was made to M/s K.M. Agencies. It also came to the notice of the complainant that the amount has been misappropriated by partners of M/s Mangla Agencies and officials of M/s Johnson & Johnson Ltd. colluded with the partners of M/s Mangla Agencies and all of them had thus played fraud upon the complainant. The appellant also filed a complaint before the Director General of Police, Chandigarh on May 2, 2003 and requested him to direct the police authorities to enquire into the matter. It appears that necessary inquiry was made, the respondents submitted their replies, but nothing further was done in the matter. The appellant, therefore, was constrained to lodge First Information Report (FIR) No. 266 of 2003 on September 16, 2003, against all the accused for offences punishable under Sections 468, 406 read with 120B, IPC at Police Station, Sarabha Nagar, Ludhiana. Police arrested respondent No. 3 Devinder Sabharwal, Anil Triloki Nath Sharma and Vivek Bhatnagar. Respondent Nos. 1 and 2 herein as also Surrinder Mohan, proprietor of M/s Key Ess Associates obtained anticipatory bail from the Sessions Court. Other three accused persons, namely, Shashi Kant Mangla, Ravi Kant Mangla and Atul Gupta, all partners of M/s Mangla Agencies were denied anticipatory bail by the learned Additional Sessions Judge. During the pendency of their bail applications before the High Court, however, the prosecution made a statement that the presence of those three accused was not required in the case and consequently their bail petitions became infructuous. Meanwhile, the respondents herein filed Criminal Miscellaneous Nos. 49200/2003 and 30393/2004 in the High Court of Punjab & Haryana under Section 482 of the Code for quashing FIR registered against them.5. The appellant also stated that a detailed inquiry was made by the Police. It collected the entire evidence and found that prima facie case was made out against the accused persons and accordingly charge-sheet was submitted on May 13, 2004 against accused persons, namely, Devinder Sabharwal, Vivek Bhatnagar, Anil Triloki Nath Sharma and Swami Raote. Swami Raote evaded arrest and hence proceedings under Section 82 of the Code were initiated against him. The prosecution put Shashi Kant Mangla, Ravi Kant Mangla and Atul Gupta, partners of M/s Mangla Agencies in Column No.2 while Surrinder Mohan was made a prosecution witness. The prosecution then moved an application under Section 190 read with Sections 239 and 240 of the Code for summoning Shashi Kant Mangla, Ravi Kant Mangla and Atul Gupta as accused persons for trial.6. The High Court vide the impugned order dated August 1, 2006, allowed both the petitions and quashed FIR lodged by the appellant. It is this order which is challenged by the appellant in the present appeals.7. Notice was issued by this Court on April 27, 2007, counter-affidavit and affidavit-in-rejoinder were thereafter filed and the matters were ordered to be posted for final disposal. That is how the matters are before us.

Court's reasoning:
12. Having heard the learned counsel for the parties and having considered the rival contentions, in our opinion, it cannot be said that the High Court was wrong in quashing criminal proceedings. It is clear from the case put forward by the appellant himself that virtually the proceedings were civil in nature. There were two partnership firms, one M/s K.M. Agencies, consisting of appellant and Shashi Kant Mangla and the other of M/s Mangla Agencies wherein Ravi Kant Mangla (one of the partners of M/s K.M. Agencies) was a partner. It was the case of Shashi Kant Mangla that M/s K.M. Agencies was no more in existence and it had changed its name from M/s K.M. Agencies to M/s Mangla Agencies and all the transactions of M/s K.M. Agencies would thereafter be dealt with by M/s Mangla Agencies. Obviously, therefore, payments which were to be made to M/s K.M. Agencies should be made to M/s Mangla Agencies. It also appears that M/s Johnson & Johnson Ltd. was informed which changed the Code from M/s K.M. Agencies to M/s Mangla Agencies. It is further clear that though payments were made in June-July, 2001 by M/s Johnson & Johnson Ltd. to M/s Mangla Agencies, a notice through an advocate was issued by the complainant only on March 4, 2003, i.e. after substantial period about two years. A complaint was made to Director General of Police, Chandigarh by the complainant in May, 2003. The record further reveals, as stated by respondent Nos. 1, 2 and 3 in the counter-affidavit, that it was contended by the accused that the matter was civil in nature and based on commercial transactions and there was a dispute between the parties and as such there was no element of mens rea. It was also submitted by the accused that the complainant, with an ulterior motive and mala fide intention, used pressure tactics and was harassing them in connivance with local police and filed a complaint on May 2, 2003. The police authorities were convinced about the nature of dispute and after seeking legal opinion from District Attorney closed the proceedings. Subsequently, however, the complainant after making cosmetic changes in the earlier complaint and using undue influence filed FIR No. 266 of 2003 on September 16, 2003 for commission of offences punishable under Sections 468, 406 read with 120B, IPC. According to the accused, it was motivated and the police authorities obliged the complainant by helping him.13. The High Court, in our opinion, rightly considered the facts in their proper perspective and observed that the dispute related to settlement of accounts between principal and its agent; the principal being M/s Johnson & Johnson Ltd. and the agent being M/s K.M. Agencies (earlier) and M/s Mangla Agencies (later). The High Court also noted that it was M/s K.M. Agencies which informed the principal i.e. M/s Johnson & Johnson Ltd. that M/s K.M. Agencies had closed its business and the business was thereafter continued by M/s Mangla Agencies and all drafts be issued in favour of M/s Mangla Agencies. The High Court took note of the fact that even the complainant had informed the principal that there was dispute between the partners of M/s K.M. Agencies and hence no payment should be made to M/s Mangla Agencies till the dispute was finally resolved between the parties. That, however, does not give rise to criminal liability and entitle the complainant to initiate criminal proceedings, particularly when M/s Johnson & Johnson Ltd. substituted in the Company record name of M/s Mangla Agencies in place of M/s K.M. Agencies. The resultant effect of substitution of name was that whatever sums were due to M/s K.M. Agencies were considered to be due to M/s Mangla Agencies.The High Court, therefore, concluded that the steps taken by the complainant Suneet Gupta were in clear abuse of process of law and accordingly allowed both the petitions.17. By passing the impugned order and quashing criminal proceedings, in our opinion, the High Court has neither committed any error of law nor of jurisdiction which deserves interference in exercise of power under Article 136 of the Constitution.18. Our attention has been invited by the learned counsel for the accused to several decisions of this Court. In our opinion, however, it is not necessary to refer to those decisions since we are of the view that the High Court was right in quashing criminal proceedings.proceedings.22. In the case on hand, the High Court was right in coming to the conclusion that a civil dispute - pure and simple - between the parties was sought to be converted into a criminal offence only by resorting to pressure tactics and by taking police help which was indeed abuse of process of law and has been rightly prevented by the High Court.