2021 (12) TMI 236 - HC - Indian Laws

Dismissal of Petition to Quash FIR Upheld, Allegations Support Fraud, Deception

The court dismissed the petition to quash the FIR, as the allegations prima facie indicated elements of deception and fraud, justifying the continuation ... Dishonor of Cheque - breach of contract - offence of cheating - contention of the learned counsel appearing for the petitioner is that absolutely there is no intention whatsoever to deceive the 2nd Respondent/defacto complainant - HELD THAT:- The Courts have quashed the proceedings when the companies were not arrayed as accused and the allegations primarily targeted the company. In such a situation the company not being made a party and the Directors of the company prosecuted in their individual capacity were relieved from the criminal prosecution. It is not the case in the present FIR. The very allegation of false assurance on payment of money made against the A1 and A2 in their individual capacity. Therefore, this Court is of the view that merely the company is not made as a party, it will not absolve the petitioners when the allegation prima facie made against them. Though, it is the contention of the learned counsel for the Petitioner that there is no evidence to show that there is a deception from the inception, it is relevant to note that whether the deception was present from the inception or developed later is the matter of evidence. What has to be seen in the FIR stage is, whether the allegation attracts the offence or not. The evidentiary value of the statements or ingredients cannot be gone into while exercising power under Section 138 of the Negotiable Instruments Act. It is very clear that merely because the commercial transaction it cannot be generally concluded that no criminal prosecution is maintainable. If the allegation in the FIR prima facie show the implication of the offence, the court cannot interfere the investigation at that stage. On looking of the allegations in the present FIR, as indicated, the allegations are made against both husband and wife on false promise and assurance given from the very inception. It is also indicated that six cheques have been issued on the promise of repayment, however the same was dishonoured. Thereafter, wife also assured and given other cheques. It is also alleged that the very supply itself were made on the promises and assurances by both the parties. Petition dismissed. Issues Involved:1. Whether the FIR can be quashed based on the contention that the dispute is of a civil nature and lacks the elements of criminal deception or fraud.2. Whether the absence of the company as an accused affects the validity of the FIR against the individuals.3. Whether the prima facie allegations in the FIR justify the continuation of criminal proceedings.Detailed Analysis:Issue 1: Nature of Dispute - Civil vs. CriminalThe petitioner argued that the dispute arises from a commercial transaction and does not involve criminal intent, thus should be treated as a civil matter. The petitioner emphasized that mere breach of contract does not constitute an offense under Section 420 IPC unless deception was present from the inception. The petitioner cited several judgments, including Alpic Finance Ltd. vs. P. Sadasivan and Inder Mohan Goswami vs. State of Uttaranchal, to support the claim that criminal proceedings should not be initiated for civil disputes.In contrast, the respondent contended that the FIR clearly indicates false representation and deception from the beginning. The respondent argued that the allegations in the FIR, including the issuance and dishonor of multiple cheques, substantiate the claim of deception. The respondent cited judgments such as Vijayander Kumar vs. State of Rajasthan and Rajesh Bajaj vs. State NCT of Delhi, which held that commercial transactions could involve elements of cheating and fraud, justifying criminal proceedings.The court noted that the power under Section 482 Cr.P.C. to quash FIRs should be exercised sparingly. It referred to Uma Shankar Gopalika vs. State of Bihar, where the Supreme Court held that FIRs could only be quashed if there was no material indicating deception from the inception. The court found that the allegations in the FIR prima facie suggest elements of deception and fraud, thus warranting further investigation.Issue 2: Absence of the Company as an AccusedThe petitioner argued that the FIR is invalid as the company involved in the transaction was not made an accused. The petitioner cited Sharad Kumar Sanghi vs. Sangita Rane and Kashish Gupta vs. City Public Prosecutor, where the courts quashed proceedings against individuals when the company was not made a party.The court distinguished the present case by noting that the allegations were made against the individuals (husband and wife) in their personal capacities, not merely as representatives of the company. The court held that the absence of the company as an accused does not absolve the individuals if the allegations are directed at them personally.Issue 3: Prima Facie Allegations and Continuation of ProceedingsThe court examined whether the prima facie allegations in the FIR justify the continuation of criminal proceedings. It referred to Rajesh Bajaj vs. State NCT of Delhi, which held that the factual foundation for the offense in the complaint should not be hastily dismissed during the investigation stage. The court found that the allegations of false promises and the issuance of dishonored cheques by the petitioners indicate a prima facie case of deception.The court also referred to Lakshman vs. State of Karnataka, which held that the presence of civil remedies does not preclude criminal prosecution if there are elements of cheating and fraud. The court concluded that the FIR's allegations warrant further investigation and that quashing the FIR at this stage would be premature.Conclusion:The court dismissed the petition to quash the FIR, stating that the allegations in the FIR prima facie indicate elements of deception and fraud, justifying the continuation of criminal proceedings. The court emphasized that the absence of the company as an accused does not invalidate the FIR against the individuals, and the matter of deception from the inception is a question of evidence to be determined during the investigation.