Case: Srinivas Gundluri and Ors Vs. SEPCO Electric Power Construction Corporation and Ors

a) M/s SEPCO Electric Power Construction Corporation (in short "SEPCO") was engaged in erection of power plant at village Nariyara in Akaltara District Janjgir-Champa. SEPCO awarded constructional work to M/s SSVG Engineering Projects Private Limited (in short "SSVG") the appellants in appeal arising out of SLP (Crl.) No. 3267 of 2010 as per the terms and conditions of the contract settled between SEPCO and SSVG. The contract value of the work was Rs. 42,92,19,800/- and the work was to be completed within a period of two months. As per the terms, 50% of the value of the contract was to be paid in advance. SSVG was required to go ahead with the project work immediately. The work order was issued by SEPCO on 16.06.2009. A cheque for a sum of Rs. 20,97,46,840/- towards payment of 50% advance was issued to SSVG on 25.06.2009. SSVG wrote a letter on 28.06.2009 to the Dy. General Manager, SEPCO complaining that despite repeated requests, SEPCO has not handed over the site for commencing the work and requested to hand over the site so as to enable it to complete the work within two months. However, SEPCO vide letter dated 29.06.2009 cancelled the work order dated 16.06.2009 on the ground that the company has failed to mobilize requisite manpower, machinery and equipment by that date but diverted the amount for some other purpose than the one as agreed, hence demanded refund of advance money.b) On 03.07.2009, SSVG received a letter from the Union Bank of India whereby it was apprised that the Bank has received a letter on 02.07.2009 from the Police Station Balco Nagar requesting to freeze their current account with immediate effect on the complaint of SEPCO. Subsequently, SSVG came to know that on 04.07.2009, SEPCO has filed a criminal complaint against them in the Court of Chief Judicial Magistrate, Class I Korba. The Chief Judicial Magistrate, by his order dated 04.07.2009, allowed the application of SEPCO filed under Section 156 (3) of the Code of Criminal Procedure (hereinafter referred to as `the Code) and forwarded the original complaint along with documents to the concerned Station House Officer (SHO) directing him to register FIR, after due enquiry, and to submit a chargesheet after investigation. Mr. Srinivas Gundluri, Managing Director & Principal Officer, SSVG also received a memo from Police Station, Balco Nagar, for recording his statement. In this background, the Managing Director and Principal Officer, Director and Promoter as well as the Company – SSVG Engineering Projects Pvt. Ltd. filed Writ Petition No. 3647 of 2009 before the High Court of Chhattisgarh praying for quashing and setting aside the order dated 04.07.2009 passed by the Chief Judicial Magistrate, Class I, Korba and the proceedings drawn by the Magistrate on the complaint of SEPCO. They also prayed for issuance of writ of prohibition in order to prohibit further proceedings pending in the Court of Magistrate, Class I, Korba in connection with the complaint lodged by SEPCO and quashing the communication dated 03.07.2009 by the bank relating to freezing of the SSVGs account.c) The learned single Judge, by order dated 03.09.2009, dismissed writ petition No. 3647 of 2009 and held that the Magistrate passed an order under Section 156 (3) of the Code after perusing the complaint which discloses commission of cognizable offence and has not committed any illegality by directing the police to register FIR. The learned single Judge further held that since the police authorities are investigating into the matter after registering FIR and final report is yet to be filed, therefore, challenge at this stage by SSVG is premature.d) Questioning the order of the learned single Judge, SSVG preferred W.A. No 281 of 2009 before the Division Bench of the same High Court. The Division Bench, entirely agreeing with the reasons assigned by the learned single Judge, by order dated 01.04.2010, dismissed their writ appeal and permitted the Magistrate to proceed in accordance with law. Against the decision of the Division Bench, SSVG preferred appeal arising out of SLP (Crl.) 3267 of 2010 before this Court.(e) On 09.04.2010, Chhatisgrarh Police had taken Srinivas Gundluri, Managing Director and Principal Officer of SSVG into custody in Crime No. 272 of 2009 and produced him for transit warrant before CMM at Hyderabad and on the same day he applied for transit bail and the same was granted directing him to appear before Magistrate Class-I, Korba on or before 19.04.2010. On 19.04.2010, Srinivas Gundluri moved an application before the CMM, Hyderabad, for extension of the period of transit bail on the ground of his illness and of his wife and another application before the Judicial Magistrate Ist class, Korba, Chhattisgarh seeking extension of time on the ground that the S.L.P. filed against the order of the writ appeal is listed before this Court on 20.04.2010 and as such, the time to surrender be extended by a week. On 22.04.2010, when the matter was taken up for hearing before CMM, Hyderabad, none appeared for Srinivas Gundluri, therefore, the Magistrate took cognizance of such fact and in view of the fraud played upon the court rejected the application for extension of time and issued non-bailable warrant against him for his arrest and production before the JMFC Korba, Chhattisgarh. Before this Court, on 26.04.2010, counsel for the appellant herein offered to pay a sum of Rs. 5 crores to SEPCO of which 2 crores to be paid within two days and sought four weeks time to pay another Rs. 3 crores and this Court granted an order of interim protection of stay of arrest till 14.05.2010. On 26.04.2010, Srinivas Gundluri filed a petition before the High court of Andhra Pradesh, under Section 397 read with Section 401 read with Section 482 of the Code challenging the order dated 22.04.2010 passed by the CMM, Hyderabad. In the said petition, State of Andhra Pradesh and State of Chhattisgarh were arrayed as parties and represented through their Public Prosecutors. SEPCO was not made a party as required under Section 397 read with Section 401. The High Court of Andhra Pradesh, on 27.04.2010, passed an interim order staying the order dated 22.04.2010 passed by the CMM Hyderabad. Aggrieved by the said order, SEPCO filed appeal @ S.L.P.(Crl.) 5095 of 2010 before this Court. On 14.05.2010, this Court after issuing notice tagged this S.L.P. along with S.L.P.(Crl.)No. 3267 of 2010. For convenience, we refer the parties as described in SLP (Crl.) 3267 of 2010.

Court's reasoning:
From the above, it is clear that the Magistrate only ordered investigation under Section 156 (3) of the Code. It also shows that the Magistrate perused the complaint without examining the merits of the claim that there is sufficient ground for proceeding or not, directed the police officer concerned for investigation under Section 156 (3) of the Code. As rightly observed by the learned single Judge of the High Court, the Magistrate did not bring into motion the machinery of Chapter XV of the Code. He did not examine the complainant or his witnesses under Section 200 of the Code which is the first step in the procedure prescribed under the said Chapter. The question of taking next step of the procedure envisaged in Section 202 did not arise. As rightly pointed out by Mr. Sundaram, instead of taking cognizance of the offence, the learned Magistrate has merely allowed the application filed by the complainant/SEPCO under Section 156(3) of the Code and sent the same along with its annexure for investigation by the police officer concerned under Section 156 (3) of the Code. To make it clear and in respect of doubt raised by Mr. Singhvi to proceed under Section 156 (3) of the Code, what is required is a bare reading of the complaint and if it discloses a cognizable offence, then the Magistrate instead of applying his mind to the complaint for deciding whether or not there is sufficient ground for proceeding, may direct the police for investigation. In the case on hand, the learned single Judge and Division Bench of the High Court rightly pointed out that the Magistrate did not apply his mind to the complaint for deciding whether or not there is sufficient ground for proceeding and, therefore, we are of the view that the Magistrate has not committed any illegality in directing the police for investigation. In the facts and circumstances, it cannot be said that while directing the police to register FIR, the Magistrate has committed any illegality. As a matter of fact, even after receipt of such report, the Magistrate under Section 190 (1) (b) may or may not take cognizance of offence. In other words, he is not bound to take cognizance upon submission of the police report by the Investigating Officer, hence, by directing the police to file chargesheet or final report and to hold investigation with a particular result cannot be construed that the Magistrate has exceeded his power as provided in3 of Section 156.14) Neither the chargesheet nor the final report has been defined in the Code. The chargesheet or final report whatever may be the nomenclature, it only means a report under Section 173 of the Code which has to be filed by the police officer on completion of his investigation. In view of our discussion, in the case on hand, we are satisfied that the Magistrate in passing the impugned order has not committed any illegality leading to manifest injustice warranting interference by the High Court in exercise of extraordinary jurisdiction conferred under Article 226 of the Constitution of India. We are also satisfied that learned single Judge as well as the Division Bench rightly refused to interfere with the limited order passed by the Magistrate. We also hold that challenge at this stage by the appellants isand the High Court rightly rejected their request.15) It is true that Dr. Singhvi, learned senior counsel for the appellants, highlighted that out of the claim of Rs. 21 crores, Rs. 10 crores have already been paid, the appellants have also laid counter claim for Rs. 10 crores and in such a factual scenario, there is no need to continue the criminal proceedings and prayed for deferment of the same till the outcome of the civil proceedings. However, Mr. Sundaram for SEPCO, by taking us through various allegations in the complaint highlighted that SSVG by misappropriating the advance money for the purpose other than for which it was granted submitted that the Magistrate correctly exercised his jurisdiction under Section 156 (3) and referred the matter for investigation. He also submitted that the complaint very much discloses cognizable offence under Sections 405, 406, 418, 420, 427, 503, 504, 506/34 and 120B of IPC. Whatever may be, we are not here to find out the truth or otherwise of those allegations but the Magistrate is justified in asking to register FIR, conduct investigation on the facts mentioned in the complaint and after completion of the investigation submit a report in the Court. We do not find any illegality either in the course adopted by the Magistrate or in ultimate direction to the police.16) Dr. Singhvi has also brought to our notice that the respondentSEPCO has made another complaint in respect of the same issue before the Chief Metropolitan Magistrate, Hyderabad. According to him, the same is not permissible and the stay granted by the High Court in Crl. M.P. 1307 of 2010 in Crl. R.C. No. 893 of 2010 is justifiable. However, we are not expressing anything on the said complaint and it is for the appropriate Court to consider about the merits of the claim made by both the parties.17) In the light of what has been stated above, we are in agreement with the order dated 20.07.2009 passed by the learned single Judge of the High Court of Chhattisgarh in W.P. No. 3647 of 2009 as well as the order dated 01.04.2010 passed by the Division Bench of the High Court of Chhattisgarh in WA No. 281 of 2009. As on date there is no impediment for the police to investigate and submit report as directed in the order dated 04.07.2009 by Chief Judicial Magistrate, Korba District, Chhattisgarh. Interim orders in respect of all the proceedings including the order dated 27.04.2010 passed by the High Court of Andhra Pradesh in Crl. M.P. No. 1307 of 2010 in Crl. R.C. No. 893 of 2010 are vacated and both parties are at liberty to pursue their remedy in the pending proceedings in accordance with law.