TaxTMI 
TaxTMI 
TaxTMI 
2017 (7) TMI 1090
X X X X Extracts X X X X
X X X X Extracts X X X X
....pondent No.1 being Order No. 260062 for designing and manufacturing two numbers of stationary L.P.G. Storage Tanks and Order Nos. 260063 and 260064 were for the supply of consumables and other accessories to the said Tanks. On 01.06.1995, M/s Unique Engineering Services, the Consultants of the appellant Company addressed a letter specifying that they had assessed the companies of the Respondent No. 1 and in their opinion even though they have not made any static bullets and have made quite a few mobile L.P.G. Tanks, however, they were capable of manufacturing the same, but needed design help. (c) On 20.06.1995, Respondent No. 1 informed the appellant-Company their inability to procure the material (steel) and requested to supply the same and to deduct the material cost from the final bill. On 04.08.1995, the Respondent No. 1 was provided with the necessary steel of the technical specification. On 06.08.1995, an Engineer of the appellant-Company visited the company of the Respondent No. 1 and submitted a report stating that Respondent No. 1 had carried out certain work using the material purchased from the appellant-Company. It was also pointed out in the report that Respondent No.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eing RCC No. 12 of 2002 and by order dated 30.05.2002, the Judicial Magistrate issued a direction under Section 156(3) of the Code of Criminal Procedure, 1973 (in short `the Code') and referred the same to Crime Branch, Pune, Respondent No. 2 herein, for investigation. Pursuant to the same, Respondent No.2 registered an offence being C.R. No.91/2002 and initiated proceedings thereunder against the appellant-Company. (f) Aggrieved by the said order, the appellant-Company filed two separate Criminal Writ Petitions being Nos. 209 and 443 of 2003 before the Bombay High Court for quashing and setting aside the order dated 30.05.2002 passed by the Judicial Magistrate, First Class, Pimpri. Vide order dated 10.06.2003, the High Court set aside the order dated 30.05.2002 and remitted the matter back to the Judicial Magistrate for reconsideration of the entire prayer and to decide the case afresh, after giving adequate opportunity of hearing to both the sides. Pursuant to the same, the appellant Company preferred an application dated 16.07.2003 under Section 91 of the Code before the Judicial Magistrate praying that the Assistant Commissioner of Police, Crime Branch, Pune City be direct....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ther submitted that the High Court ought to have intervened and quashed the same. According to him, the complaint and the allegations made therein do not disclose any offence and, therefore, the direction under Section 156(3) of the Code is untenable. He further pointed out that the essential ingredients for an offence under Sections 405 and 420 of the Indian Penal Code, 1860 (in short `IPC') have not been made out, no such dishonest intention can be seen or even inferred inasmuch as the entire dispute pertains to contractual obligations between the parties. In any event, according to him, in view of long delay, namely, filing of the complaint in the year 2002 with reference to the alleged disputes which pertain to the period from 1993-1995, that is, after nine years, cannot be maintained as it amounts to abuse of process of law. He finally submitted that roping in of appellant Nos. 2-8 in the alleged offence on the hidden principle of vicarious liability is untenable. Mr. C.S. Vaidyanathan, learned senior counsel for the appellant also reiterated the same contentions. 6) On the other hand, Mr. K.T.S. Tulsi, learned senior counsel for the Respondent No.1/complainant submitted ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....31.07.1995 drawn on the Sadguru Jangli Maharaj Bank, Chinchwad. The Company issued material after receipt of pay order, vide excise gate Pass No.1328 and 175713 dated 04.08.1995. The complainant received the material and was surprised to see that the accused had supplied scrap material for the manufacturing of LPG Storage Tanks and same was useless for the job. The complainant immediately contacted the accused and informed about the same. The complainant requested the accused to take the scrap material back and issue genuine material. However, accused refused to do so, the complaint has spent the amount of Rs. 60,000/- for drawing and approval etc. and Rs. 1,14,098/- by pay order for the material to the accused. Thus, the accused have cheated the complainant and there by caused wrongful loss to the complainant. c) The accused placed Purchase Order No.240307 dated 22.03.1993 for Rs. 8,00,000/- for the fabrication and erection of Tower Support Structural etc. for the Mehasana (Gujarat) Project. The accused also represented that they will hire the machinery of the complainant for the said job at the rate of Rs. 2,400/- per day. Believing the same, the complainant purchased brand new ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ver, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or willfully suffers any other person so to do, commits "criminal breach of trust". 406. Punishment for criminal breach of trust.- Whoever commits criminal breach of trust shall be punished with imprisonment of either description for a term which may extend to three years, or with fine, or with both. 420. Cheating and dishonestly inducing delivery of property.- Whoever cheats and thereby dishonestly induces the person deceived to deliver any property to any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and which is capable of being converted into a valuable security, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d offence under Section 190(1)(b) of the Code and issued summons to the accused-appellant therein. Aggrieved by the aforesaid process order dated 04.08.2000 passed by the Magistrate, the appellant-accused preferred the criminal revision which was dismissed by the High Court. The order of the High Court was under challenge in that appeal. It was contended that as per the averments in the complaint, even as per the police report, no offence is made out against Accused Nos. 2-4 therein. Despite this, the Magistrate issued process against Accused Nos. 2-4 as well which clearly shows the non-application of mind by the Magistrate. It was further pointed out that a perusal of the complaint would only reveal that the allegations as contained in the complaint are of civil nature and do not prima facie disclose commission of alleged criminal offence under Section 420 IPC. After finding that inasmuch as the police has given a clean chit to Accused Nos. 2-4, this Court concluded that the Magistrate ought not to have taken cognizance of the alleged offence against Accused No.1 and that the complaint has been made to harass him to come to terms by resorting to criminal process. Regarding the d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Trust runs a dental college by name Rajiv Gandhi Dental College. The respondents therein entered into an agreement with the appellant-Company therein whereby the appellant agreed to finance the purchase of 100 hydraulically-operated dental chairs. The total cost of the chairs was around Rs. 92,50,000/-. The appellant-Company agreed to finance the respondents for the purchase of these chairs through a lease agreement and as per the agreement, the respondents were liable to pay rentals quarterly. The respondents agreed to pay quarterly a sum of Rs. 7,50,000/- for the first year; Rs. 12,50,000/- for the second year; Rs. 8,00,000/- for the third year and Rs. 6,25,000/- for the fourth year. As per the agreement, the appellant-Company, the lessors would have sole and exclusive right, title and interest in the dental chairs supplied till the entire hire-purchase amount was paid. In accordance with the agreement, the appellant made payments to M/s United Medico Dental Equipments and they delivered the dental chairs to the respondents. The appellant-Company alleged that the respondents were not regular in making the payments and committed default in payment of the instalments and that the b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ppropriation or cheating. The respondents also denied having removed any of the items of the disputed property clandestinely to defeat the interest of the appellant. After considering the power under Section 482 of the Code and adverting to series of decisions including Nagawwa Vs. Veeranna Shivalingappa Konjalgi, (1976) 3 SCC 736 and State of Haryana Vs. Bhajan Lal, 1992 Supp (1) SCC 335, this Court concluded thus: "7. In a few cases, the question arose whether a criminal prosecution could be permitted when the dispute between the parties is of predominantly civil nature and the appropriate remedy would be a civil suit. In one case reported in Madhavrao Jiwajirao Scindia v. Sambhajirao Chandrojirao Angre this Court held that if the allegations in the complaint are both of a civil wrong and a criminal offence, there would be certain situations where it would predominantly be a civil wrong and may or may not amount to a criminal offence. That was a case relating to a trust. There were three trustees including the settlor. A large house constituted part of the trust property. The respondent and the complainant were acting as Secretary and Manager of the Trust and the house owned by ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h the person practising the deceit knows or believes to be false. It must also be shown that there existed a fraudulent and dishonest intention at the time of commission of the offence. There is no allegation that the respondents made any wilful misrepresentation. Even according to the appellant, the parties entered into a valid lease agreement and the grievance of the appellant is that the respondents failed to discharge their contractual obligations. In the complaint, there is no allegation that there was fraud or dishonest inducement on the part of the respondents and thereby the respondents parted with the property. It is trite law and common sense that an honest man entering into a contract is deemed to represent that he has the present intention of carrying it out but if, having accepted the pecuniary advantage involved in the transaction, he fails to pay his debt, he does not necessarily evade the debt by deception." After finding so, this Court concluded that the learned Judge of the High Court was perfectly justified in quashing the proceedings and disinclined to interfere in such matters dismissed the appeal. 13) In Anil Mahajan Vs. Bhor Industries Ltd. & Anr., (2005) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....agistrate while issuing process should satisfy himself as to whether the allegations in the complaint, if proved, would ultimately end in the conviction of the accused, and the circumstances under which the process issued by the Magistrate could be quashed, the contours of the powers of the High Court under Section 482 CrPC were laid down and it was held: (SCC p. 520, paras 10-11) "10. The facts in the present case have to be appreciated in the light of the various decisions of this Court. When somebody suffers injury to his person, property or reputation, he may have remedies both under civil and criminal law. The injury alleged may form the basis of civil claim and may also constitute the ingredients of some crime punishable under criminal law. When there is dispute between the parties arising out of a transaction involving passing of valuable properties between them, the aggrieved person may have a right to sue for damages or compensation and at the same time, law permits the victim to proceed against the wrongdoer for having committed an offence of criminal breach of trust or cheating. Here the main offence alleged by the appellant is that the respondents committed the offence ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Sections 405 and 406 IPC - Criminal breach of trust and vicarious liability. In the said decision, after finding that the complaint petition did not disclose necessary ingredients of criminal breach of trust as mentioned in Section 405 IPC and also pointing out the ingredients of offence under Section 406 IPC, interfered with the order passed by the High Court. 15) In Maharashtra State Electricity Distribution Company Limited & Anr. Vs. Datar Switchgear Limited & Ors., (2010) 10 SCC 479, after perusal of the complaint, allegations therein, role of the directors mentioned therein and applicability of Section 34 IPC, this Court in paragraph 35 concluded as under: "35. It is manifest that common intention refers to a prior concert or meeting of minds, and though it is not necessary that the existence of a distinct previous plan must be proved, as such common intention may develop on the spur of the moment, yet the meeting of minds must be prior to the commission of offence suggesting the existence of a prearranged plan. Therefore, in order to attract Section 34 IPC, the complaint must, prima facie, reflect a common prior concert or planning amongst all the accused." After saying ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....laint preferred by Respondent No.1 registered at Crime Register No. 11/2000 was filed as being civil in nature. Even if we accept that the records were destroyed and notwithstanding such destruction, it was a matter of record that the complaint preferred by Respondent No.1 was indeed investigated and categorized as civil in nature. This aspect has not been considered either by the Magistrate or by the High Court. 19) It is settled law that the essential ingredients for an offence under Section 420, which we have already extracted, is that there has to be dishonest intention to deceive another person. We have already quoted the relevant allegations in the complaint and perusal of the same clearly shows that no such dishonest intention can be seen or even inferred inasmuch as the entire dispute pertains to contractual obligations between the parties. Since the very ingredients of Section 420 are not attracted, the prosecution initiated is wholly untenable. Even if we admit that allegations in the complaint do make out a dispute, still it ought to be considered that the same is merely a breach of contract and the same cannot give rise to criminal prosecution for cheating unless fraud....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed on the officers of the company, if the alleged offence is by the Company. In the absence of specific details about the same, no person other than appellant No.1-Company can be prosecuted under the alleged complaint. 23) The Courts below failed to appreciate an important aspect that the complaint came to be filed in the year 2002 when the alleged disputes pertain to the period from 1993-1995. As rightly pointed out, the Courts below ought to have appreciated that respondent No.1 was trying to circumvent the jurisdiction of the Civil Courts which estopped him from proceeding on account of the law of limitation. 24) We have already pointed out that respondent No.1 had previously filed three complaints which were concluded after exhaustive enquiry with the respective police authorities. The first complaint was on 06.05.2000 being Javak No.974/2000 with the Crime Branch-II, Pune which registered the same in its Criminal Register No.11/2000. Pursuant thereto, the appellants were summoned and exhaustive enquiry was conducted by the Crime Branch-II and after recording the statements and perusal of documents and after undertaking an extensive interrogation, the Crime Branch-II closed t....