2020 (2) TMI 675 - HC - Indian Laws

Court dismisses petition to quash criminal proceedings, emphasizes exceptions to prevent abuse of court processes

Sprite Investment Private Limited & Others Versus The State of West Bengal & Another

The court dismissed the petition seeking to quash criminal proceedings under Sections 420, 406, and 120B of the Indian Penal Code. It held that the ... Dishonor of Cheque - alleged offences punishable under Section 420/406 of the Indian Penal Code - It is the specific contention of the petitioners that the continuance of the criminal proceedings pending against the present petitioners would be an abuse of the process of the Court - HELD THAT:- Initiation of proceedings under Section 138 of the Negotiable Instruments Act, against the complainant prior to filing of the complaint against the present petitioners/accused persons does not ipso facto prove or establish that the subsequent proceedings is a counterblast to the earlier proceedings initiated under Section 138 of the Negotiable Instruments Act. Each case has to be judged on its own merit. In the present case, the opposite party/complainant has described how the complainant company was cheated and suffered loss. The essential elements of the alleged offences under Sections 420/406 of the Indian Penal Code are prima facie present in the allegations contained in the petition of complaint - While dealing with an application under Section 482 of the Code of Criminal Procedure, the High Courts should not assume the jurisdiction and function of the Trial Court and delve deep into the disputed facts. It cannot be denied that the offence of cheating may take place in the course of commercial and civil transaction. Nature of transaction and the intention of the person against whom the allegation is made that he induced the victim/complainant are to be construed to see whether there was alleged commission of the offence of the cheating or not. In the instant case, there are specific averments in the petition of complaint which prima facie indicate that the commission of the alleged offences. As such the contention of the Learned Advocate for the petitioners that the averments of the petition of complaint reveal the factum of loan transaction which is purely civil in nature cannot be accepted at this stage. Territorial Jurisdiction - HELD THAT:- It appears that the petitioners are residing outside the territorial jurisdiction of the Learned Magistrate who issued the process. It is true that at the time of issuance of process under Section 204 of the Code of Criminal Procedure, Learned Magistrate did not make necessary inquiry as contained in sub-Section (1) of Section 202 of the Code of Criminal Procedure. The petitioners raised that ground at the earliest by way of preferring the present revisional application - Non-compliance with the mandatory provisions as contained in Section 202(1) of the Code of Criminal Procedure cannot be considered to be a ground for quashing the proceedings pending against the petitioners. However, at the same time it cannot be ignored that the process under Section 204 Cr.P.C. was issued without taking care of that provisions. The criminal revisional application is disposed of. Issues Involved:1. Quashing of the criminal proceedings under Sections 420, 406, and 120B of the Indian Penal Code.2. Allegations of cheating and criminal breach of trust.3. Compliance with Section 202(1) of the Code of Criminal Procedure for accused residing outside the territorial jurisdiction.4. Vicarious liability of the Directors of the accused company.Detailed Analysis:Issue 1: Quashing of the criminal proceedings under Sections 420, 406, and 120B of the Indian Penal CodeThe petitioners sought to quash the proceedings of Complaint Case No.C/4906 of 2013 under Sections 420, 406, and 120B of the Indian Penal Code. The petitioners argued that the allegations in the complaint do not prima facie disclose the commission of any offense and that the proceedings are a counterblast to the criminal action initiated by the petitioners for dishonor of cheques. They contended that the dispute is of a civil and commercial nature and does not constitute the alleged offenses. The court, however, held that the complaint, when read as a whole, reveals allegations that prima facie constitute the offenses under Sections 420 and 406 IPC. The court emphasized that quashing of criminal proceedings under Section 482 Cr.P.C. is an exception and should only be exercised to prevent abuse of the process of the court.Issue 2: Allegations of cheating and criminal breach of trustThe complainant alleged that the accused had a dishonest and fraudulent intention from the inception of the loan agreement and misappropriated the pledged shares of Dunlop India Limited, causing wrongful loss to the complainant. The accused allegedly invoked the pledged shares without prior knowledge, consent, or approval of the complainant and misappropriated the proceeds. The court noted that the essential elements of the alleged offenses under Sections 420 and 406 IPC are prima facie present in the allegations contained in the complaint. The court stated that the nature of the transaction and the intention of the accused are crucial to determine the commission of the offense of cheating.Issue 3: Compliance with Section 202(1) of the Code of Criminal Procedure for accused residing outside the territorial jurisdictionThe petitioners argued that the Learned Magistrate issued process against them without complying with the mandatory provisions of Section 202(1) Cr.P.C., as the accused reside outside the territorial jurisdiction. The court recognized that non-compliance with Section 202(1) Cr.P.C. is significant but not a ground for quashing the proceedings. The court remitted the case to the Learned Magistrate to pass a fresh order after complying with the mandatory provisions of Section 202(1) Cr.P.C.Issue 4: Vicarious liability of the Directors of the accused companyThe petitioners contended that the Directors of the accused company cannot be held vicariously liable for the alleged offenses committed by the company. The court acknowledged that in the absence of specific averments in the complaint demonstrating the role of the Directors in the commission of the alleged offenses, the Directors cannot be prosecuted. However, the court found specific averments in the complaint indicating the involvement of the Directors in the alleged offenses. Thus, the court did not find merit in the petitioners' contention regarding the quashment of proceedings against the Directors.Conclusion:The court disposed of the criminal revisional application by remitting the case to the Learned Magistrate for passing a fresh order after complying with the mandatory provisions of Section 202(1) Cr.P.C. The court clarified that the observations made in the judgment should not be taken as an expression of any opinion regarding the merit of the criminal proceedings pending before the Learned Magistrate, who shall proceed with the case and dispose of the same in accordance with the law.