Case: M/s. Kunstocom Electronics (I) Pvt. Ltd Vs. Gilt Pack Ltd. &amp; Another

The respondent herein filed a private complaint in the court of Chief Judicial Magistrate, Indore, alleging that the appellant committed a offence of cheating in relation to a transaction of supply of 1500 mt. tons ofch is a raw material required for manufacture of HDPE/PP bags. In January 1994 the respondent-Company placed orders on a German Company named M/s. Kuntoplast Chemic GMBH for the supply of 1500 mt. tons of polypropylene brastec through the media of the appellant in accordance with the price and terms specified in two indents. According to the appellant, it is a business agent of the German Company, though according to the respondent, the appellant claimed to be a representative and associate of the German Company. Pursuant to the deal, an irrevocable letter of credit was opened to favour of the German Company covering the value of entire quantity of 1500 mt. tons. Out of that quantity, only 50 MTs. were shipped on 9.3.1994 and the letter of credit was encashed to that extent. The remaining quantity which was expected to be supplied as per the contract was not shipped and the correspondence and personal talks with the appellant did not evoke and positive response. Finally, on 29.4.1994, the appellant-company informed the respondent that the remaining 1450 mt. tons cannot be shipped due to some unforeseen circumstances. The appellant requested that the L.C. may be treated as cancelled. As a result of non-fulfillment of obligation under the contract, it is claimed by the respondent that it suffered a loss of $2,36,250/- on account of escalation of prices. It is the case of the complainant that on account of rise in prices during the interregnum, the appellant and the German company deliberately failed to honour the commitment in order of to profit themselves at the expense of the respondent. It is alleged that the deceptive intention of the accused from the beginning could be gathered from the initial representations and the subsequent conduct. According to the respondent-complainant, the appellant was trying to gain time on one pretext or the other right from the date of opening the letter of credit in furtherance of its criminal intention to cheat. The complainant also alleged that it was induced to believe by the representation of the appellant that the entire quantity would be supplied within the stipulated period on receipt of irrevocable letter of credit and on the strength of this representation, the contract was entered into.3. Thecase is that even going by the contents of the complaint and the statements of the witnesses recorded by the learned Magistrate, no offence of cheating is made out and it is purely a case of breach of contract arising out of non-supply of remaining quantity of goods. According to the appellant, there was no fraudulent or dishonest intention at the time of entering into the contract nor any deception practised on the contracting party (complainant). It is also averred that the police before whom the complaint was referred to under Section 156(3) Cr.P.C. submitted a report that no offence of cheating was made out.4. Challenging the legality of the summoning order dated 2.9.1995, the appellant filed an application under Section 482 Cr.P.C. in the High Court. The petition was disposed of with the following observations onto the contentions as advanced by the counsel for the petitioner, at this stage, it is not a fit case to entertain this petition. However, it is directed that the learned C.J.M. Indore, where the matter is pending for disposal in accordance with law on merits, shall consider all the objections raised by petitioner in this petition and shall pass a reasoned order on the same. The petitioner, if aggrieved, by any adverse orders passed against it, shall have right to challenge the same in accordance with law. With these observations, this petition is finally disposed of in limini, without notice to the other side".The appellant then filed objections before the C.J.M., Indore, and sought for dropping the proceedings. By a reasoned order dated 3.10.1996, the C.J.M., Indore, rejected the application. The learned C.J.M., held that there were substantial grounds to make out a prima facie case under Section 420 IPC and it will not be proper to drop the proceedings at this stage. The C.J.M., Indore, accordingly re-affirmed the order of his predecessor in issuing the summons to the accused. Aggrieved thereby, the appellant once again moved the High Court under Section 482 Cr.P.C. The High Court disposed of the petition asmatter is pending from 1996. This is a petition u/s 482 Cr.P.C. for dropping the proceedings of the private complaint. The appellant has come up against the issue of the process. This petition is disposed of with the observation that the applicant shall have right to raise all the grounds at the time of framing charge".It is against this order that the present SLP has been filed.

Court's reasoning:
The High Court, in our opinion, was not justified in declining to exercise its jurisdiction and adjudicating the matter on merits. On an earlier occasion when the appellant moved the High Court, the High Court directed the C.J.M., Indore, to consider the objections raised by the appellant and to pass a reasoned order. Thereafter, the C.J.M., Indore, passed an order overruling the objections and decided to proceed with the case. When the appellant approached the High Court again against the speaking order passed by the C.J.M., the High Court once again declined to decide the petition on merits, but left it to be raised before the trial court at the time of framing the charge. Raising the very same objections at the time of framing the charge would practically be an empty formality as the trial court had already taken a definite view in the matter. The High Court in passing the impugned order has virtually ignored the spirit behind the direction given and observations made in the earlier order. There is no hard and fast rule that the objection as to cognizability of offence and maintainability of the complaint should be allowed to be raised only at the time of framing the charge. Such was not the intention of the High Court in passing the order datedare, therefore, inclined to set aside the impugned order of the High Court and remit the matter back of the High Court for fresh disposal of the petition - M.Cr.C. No. 4193 of 1998 for a decision on merits expeditiously. As the High Court declined to express any view on the crucial question whether the alleged offence has been made out, we do not consider it appropriate and proper to undertake the task of deciding the question which the High Court ought to have decided.