TaxTMI 
TaxTMI 
2018 (9) TMI 2024
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....ng with the FIR being Jang P.S. Case No.05/2004, dated 26.09.2000. 3. The petitioners' case, in a nutshell, is that the petitioner No.1 is the Managing Director of the M/s SPML Infra Ltd., previously known as Subhash Project Marketing Ltd. and the petitioner No.2 is the Director of the said M/s SPML Infra Ltd. and both of them are brothers. It is a public limited company, incorporated under the Companies Act, 1956 and having its registered Office at New Delhi. A contract was signed, on 18.03.1993, between the M/s SPML Infra Ltd. and the Government of Arunachal Pradesh for construction, supply and commissioning of the Nuranang Hydel Power Project at a cost of Rs. 24,96,05,690/-, and the project was due to be completed by 15.04.1996. 4. The petitioners have contended that there was no dispute being raised by the respondent No.3, the Department of Power, Govt. of Arunachal Pradesh (for short 'DOP') with regard to completion and commissioning of the project including commissioning of the 3(three) Power Generating Units. The Chief Engineer of the respondent No. 3 issued a certificate, dated 30.09.1997, to the petitioners certifying satisfaction over the execution of the said project a....
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.... of course, after almost 18 months since the second certificate, dated 21.09.1998 was issued and almost 4(four) years from the date of commissioning of the project. 7. The petitioners have also contended that the respondents, in spite of being aware of all these facts and circumstances and even appreciating that the entire matter of disputes pertained to contractual disputes and as such, civil in nature, which the petitioners were trying to resolve the disputes by way of arbitration, deliberately made effort to convert the same into a criminal liability by way of filing a complaint, at a belated stage, before the Deputy Commissioner, Tawang district, which was subsequently registered as an FIR, dated 26.06.2000, and thereupon, Jang P.S. Case No.05/2000, under Section 420 of the IPC, dated 26.06.2000 was registered, without the knowledge of the petitioners and after purported investigation submitted charge-sheet No.03/2004, dated 28.05.2004, which also remained not known to them till the year 2017. 8. The petitioners have further contended that the contractual disputes between the parties were adjudicated by the learned Arbitral Tribunal and the Tribunal passed an award, dated 05.....
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....ed the petition, on the grounds, inter alia, that in the Nuranang Project as per the terms of the agreement in respect of the equipments testing at precommissioning stage, series of testings were made since June 1996, but various components failed in the trial operations, for which the plant was never ready for final commissioning test and therefore, the respondents/DOP physically inspected the plant. In course of physical inspection of the plant, the DOP found that three Runner buckets viz., Units 1, 2 and 3 were cracked and damaged. Pursuant thereto, the damaged components were sent for testing to the National Test House, Kolkata. After testing, the National Test House submitted its report. In the aforesaid report, the chemical composition of the broken runner was found containing 5.28% Nickel and 7.54% Chromium, which composition was contrary to the specification, as per agreement. As per terms of the agreement, the composition ought to have been Nickel 4% and Chromium 14%. The respondents/DOP, therefore, have taken the stand that the petitioners' company supplied substandard runner buckets (turbines) containing components of material which were not upto the specification provid....
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....ons made in the FIR and after completion of the investigation in the charge-sheet are related to contractual disputes and civil in nature, on which two different sets of Arbitration proceedings are pending. 13. According to Mr. Deb, learned Sr. counsel, the whole matter pertains to the contract which was signed between the company and the Govt. of Arunachal Pradesh for construction, supply and commissioning of Nuranang Hydel Project in Arunachal Pradesh, involving three Power Generating Units. Mr. Deb submitted that there was no dispute or whisper from the side of the respondent No.3/DOP over successful completion and commissioning of the project including commissioning of the three Power Generating Units. The Chief Engineer (Power) of the respondent No.3/DOP issued two certificates in regard to satisfactory completion and commissioning of the project by the company. However, after handing over of the project to the authority on 01.04.2000, disputes arose between the company and the Government officials over non-payment of dues payable on account of maintenance of the project and therefore, in a diabolical manner, criminal charges have been brought against the petitioners, who are....
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.... below:- "15. There exists a distinction between pure contractual dispute of civil nature and an offence of cheating. Although breach of contract per se would not come in the way of initiation of a criminal proceeding, there cannot be any doubt whatsoever that in absence of the averments made in the complaint petition wherefrom the ingredients of an offence can be found out, the court should not hesitate to exercise its jurisdiction under Section 482 of the Code of Criminal Procedure. We may reiterate that one of the ingredients of cheating as defined in Section 415 of the Indian Penal Code is existence of an intention of making initial promise or existence thereof from the very beginning of formation of contract. Section 482 of the Code of Criminal Procedure, saves the inherent power of the court. It serves a salutary purpose viz. a person should not undergo harassment of litigation for a number of years although no case has been made out against him. It is one thing to say that a case has been made out for trial and as such the criminal proceedings should not be quashed but it is another thing to say that a person should undergo a criminal trial despite the fact that no ....
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....e of the judicial process. 17. Recently, in Vir Prakash Sharma v. Anil Kumar Agarwal [(2007) 7 SCC 373], noticing, inter alia, the aforementioned decisions, this Court held: 3. The ingredients of Section 420 of the Penal Code are as follows: (i) Deception of any persons; (ii) Fraudulently or dishonestly inducing a person to deliver any property; or (iii) To consent that any person shall retain any property and finally intentionally inducing that person to do or omit to do anything which he would not do or omit. No act of inducement on the part of the appellant has been alleged by the respondent. No allegation has been made that he had an intention to cheat the respondent from the very inception. 18. A matter which essentially involves dispute of a civil nature should not be allowed to be the subject matter of a criminal offence, the latter being not a shortcut of executing a decree which is non-existent. The Superior Courts, with a view to maintain purity in the administration of justice, should not allow abuse of the process of court. It has a duty in terms of Section 483 of the Code of Criminal Procedure to supervise the functionings of the trial courts. 19.....
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.... it may fairly be said to think and act through him so that his action and intent are the actions of the company itself. All these factors depend on all the related facts and circumstances of an individual case. When quality of product supplied does not conform to the product specification in the contract agreement, the prosecution is to show the specific role attributed to the accused and that the accused was in any way responsible or in charge of the affairs of the company to be made vicariously liable. 19. In the instant petition, it is noticed that the charge-sheet is submitted against the accused persons namely, 1. Sri S. K. Sethi, Managing Director, M/s SPML, Kolkata 2. Sri Anil Sethi, Director, M/s SPML, Kokata, 3. Sri Pulok Deb, the then Chief Engineer(Power), Itanagar, 4. Sri Tomi Ete, the then Superintending Engineer (Civil), Itanagar, 5. Sri K. Kumaravel, Director of M/s Beacon Neyrpic, Chennai, 6. Sri S. R. Krishnan, Director of M/s Kartik Steels, Chennai and 7. Dr. J.D. Sharma, Director AHEC, Roorke, Uttaranchal. The aforesaid list of the accused persons mentioned in the charge-sheet shows that not only the persons connected to the affairs of the M/s SPML Infra ltd., ....