TaxTMI 
TaxTMI 
2018 (8) TMI 2067
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....s registered on 19.07.2012 under Sections 406 and 420 of the Indian Penal Code, 1860 (for short "IPC‟) and Section 138 of the Negotiable Instruments Act, 1881 (for short "NI Act‟) on the basis of a written report submitted by one Akhilesh Kumar to the Officer-in-Charge of the Patliputra Police Station on 19.07.2012. The facts stated by the informant in his written report are as under:- (a) That on 28.07.2009, he was appointed by the petitioner no.1, the Managing Director of the Natural Dairy Pvt. Ltd. as a Supervisor of the company. After his appointment, he collected milk from various villages in Jandaha in the district of Vaishali and the various villages in the district of Samastipur with the help of milk suppliers and supplied the same to the milk collection centre of the company from 28.07.2009 to 03.11.2011 vide vehicles bearing Registration No.BR 06/445 and BR 9D/7368. (b) That the company did not make appropriate payment of the milk to the milk suppliers and slowly siphoned off huge sums of money, i.e. an amount of Rs. 30,00,000/- due to farmers, Rs. 80,000/- due to milk van, Rs. 55000/- due to him on account of his salary and an amount of Rs. 10,000/- due t....
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....h it under Section 173 of the CrPC, it would be apparent that the charge against the petitioners was groundless. 9. After hearing the parties on the application preferred under Section 239 of the CrPC, the learned Magistrate rejected the same vide impugned order dated 25.08.2017 holding therein that the witnesses examined in course of investigation have supported the allegations made in the FIR. 10. Mr. Nikhil Kumar Agarwal, learned Advocate appearing for the petitioners submitted that the FIR has been registered against the directors of the Natural Dairy Pvt. Ltd., a company, by an employee of the company claiming defaults in payment made by the company to certain milk suppliers and other persons but the company has not been made an accused in the instant proceeding. He submitted that in absence of the company being made an accused, the petitioners cannot be prosecuted for the offences either under the IPC or under the NI Act. 11. Mr. Agrawal further contended that the informant was appointed in the company on a temporary basis for a period of three months on a salary of Rs. 6,000/- per month. Since his service was not found satisfactory by the company after completion of the p....
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....nal breach of trust‟ as defined in Section 405 of the IPC. 18. Admittedly, the company has not been made an accused in the instant case. 19. Section 405 IPC, which defines the offence of "criminal breach of trust‟ reads as under:- "405. Criminal breach of trust -Whoever, 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 wilfully suffers any other person so to do, commits "criminal breach of trust"." 20. From a reading of Section 405 of the IPC, it would be manifest that the ingredients of the offence are as under:- (a) a person should have been entrusted with property or with any dominion over property; (b) that person should dishonestly misappropriate or convert that property to his own use; or dishonestly uses or disposes of that property or willfully suffers any other person so to do; (c) that such misapprop....
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....thus dishonestly induces Z to let him have on credit goods for which he does not mean to pay. A cheats. (b) A, by putting a counterfeit mark on an article, intentionally deceives Z into a belief that this article was made by a certain celebrated manufacturer, and thus dishonestly induces Z to buy and pay for the article. A cheats. (c) A, by exhibiting to Z a false sample of an article, intentionally deceives Z into believing that the article corresponds with the sample, and thereby dishonestly induces Z to buy and pay for the articles. A cheats. (d) A, by tendering in payment for an article a bill on a house with which A keeps no money, and by which A expects that the bill will be dishonoured, intentionally deceives Z, and thereby dishonestly induces Z to deliver the article, intending not to pay for it. A cheats. (e) A, by pledging as diamonds article which he knows are not diamonds, intentionally deceives Z, and thereby dishonestly induces Z to lend money. A cheats. (f) A intentionally deceives Z into a belief that A means to repay any money that Z may lend to him and thereby dishonestly induces Z to lend him money. A not intending to repay it. A cheats. (g) A intenti....
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....ent. 31. It is well settled position in law that in order to attract the provisions of Section 420 IPC, the guilty intent at the time of making the promise is a prerequisite and an essential ingredient thereto, and subsequent failure to fulfil the promise by itself would not attract the provisions of Section 420 IPC. 32. As a matter of fact illustration (g) of Section 415 makes the position clear enough to indicate that mere failure to deliver in breach of an agreement would not amount to cheating but is liable only to a civil action for breach of contract. 33. In Dalip Kaur & Ors. Vs. Jagnar Singh & Anr. [(2009) 14 SCC 696], the question for determination before the Supreme Court was whether breach of contract of an agreement for sale would constitute an offence under Section 406 or Section 420 of the IPC. After examining the fact of the case and relevant Sections of the IPC, the Supreme Court held that an offence of "cheating‟ would be constituted when the accused has fraudulent or dishonest intention at the time of making of promise or representation. A pure and simple breach of contract does not constitute the offence of "cheating‟. It further held that if the di....
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....ection 190 of the CrPC and issued summons to the respondents. The order taking cognizance was challenged by the respondents by filing an application under Section 482 of the CrPC before the Karnataka High Court. The High Court quashed the entire proceedings. Being aggrieved, the appellant company preferred an appeal before the Supreme Court. It was contended on behalf of the appellant in that case that the High Court had seriously erred in quashing the proceedings under Section 482 of the CrPC. It was also contended that allegation in the complaint clearly made out offences punishable under Sections 420, 406, 423, 424 read with Section 120-B of the IPC. It was contended on behalf of the respondents that the complaint was filed only to harass the respondents and it was motivated by mala fide intention. It was argued that the entire transaction was of civil nature and that the respondents have made a substantial payment as per the hire-purchase agreement and the default, if any, was not willful and there was no element of misappropriation or cheating. 35. After considering the powers under Section 482 of the CrPC and the facts and law involved in the case, the Supreme Court dismisse....
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....ons 418 and 420 of the IPC. On the basis of the allegations made in the complaint, the Magistrate issued the process against the accused. The order of Magistrate would demonstrate that the complainant had filed documents on record to show that the accused promised to pay the amount, but he did not pay the same with the intent to deceive the complainant. Therefore, the Magistrate held that the complainant had been able to make out a case to issue process against the accused under Sections 415, 418 and 420 of the IPC. 37. The said order of the Magistrate was challenged before the court of sessions. The learned Additional Sessions Judge, who heard the matter, set aside the order of Magistrate issuing process. The order of the learned Additional Sessions Judge was set aside by the High Court. 38. The order of the High Court was challenged by the appellant before the Supreme Court. After analyzing the provisions of the IPC under which the complaint was filed and the allegation made in the complaint, the Court observed that it was a simple case of civil dispute between the parties. It held that requisite averments so as to make out a case of "cheating‟ are absolutely absent. It f....
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....e been the milk suppliers. 44. In view of the ratio laid down by the Supreme Court in the cases discussed above, as also the allegation made by the informant in the FIR, I have no hesitation in holding that even if the entire allegations are believed to be true at their face value, the ingredients of the offences punishable under Sections 406 and 420 IPC are not attracted in the present case. 45. Apart from the fact that the allegations made in the FIR lacks necessary ingredients of sections 406 and 420 of the IPC, concept of vicarious liability is unknown to criminal law. The IPC does not provide for vicarious liability upon the directors of the comapny for any offences alleged to be committed by a company. 46. In S.K. Alagh vs. State of U.P. and Ors.[(2008) 5 SCC 662], the Supreme Court observed:- "Indian Penal Code, save and except some provisions specifically providing therefor, does not contemplate any vicarious liability on the part of a party who is not charged directly for commission of an offence". 47. In Maksud Saiyed vs. State of Gujarat [(2008) 5 SCC 668], the Supreme Court held as under:- "Indian Penal Code does not contain any provision for attaching vicariou....
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.... under Sections 138, 141 and 142 of the NI Act hereunder:- "138. Dishonor of cheque for insufficiency, etc., of funds in the account. - Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a term which may be extended to two years, or with fine which may extend to twice the amount of the cheque, or with both. Provided that nothing contained in this section shall apply unless- (a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier. (b) the payee or the holder in due course of the chequ....
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....on arises under clause (c) of the proviso to section 138: (c) no court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of the first class shall try any offence punishable under section 138." 52. From perusal of Section 138 of the NI Act, it would be evident that the same mandates for filing a complaint case after issuance of a statutory notice. 53. In the present case, no cause of action had arisen, as no statutory notice as mentioned under the provisions of Section 138 of the NI Act was served upon the petitioners or the company by the aggrieved persons. 54. Further, the informant is not an aggrieved person within the meaning of provisions of Section 138 of the NI Act. 55. Furthermore, the cognizance of an offence under Section 138 of the NI Act is forbidden under Section 142 of the NI Act except upon a complaint in writing by the payee or the holder of the cheque in due course within a period of one month from the date the cause of the cheque. 56. I further find that the alleged cheques dated 25.04.2011 and 25.05.2011 for an amount of Rs. 45,000/- each drawn on Bank of India, Rajiv Nagar, Patna issued in favour of Shashi Bhushan Rai, which were dish....
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....iled only against Harihara Krishnan as an accused. Later on, the prosecution sought to summon Dakshin Granites Pvt. Ltd. as an accused invoking powers under Section 319 of the CrPC. The court of Magistrate allowed the application under Section 319 CrPC. The challenge to the order before the High Court in revision also failed. The reasoning of the High Court was that cognizance is taken of the offence and not the offender and, thus, there was no impediment in adding an additional accused once the cognizance was already taken. However, the Supreme Court held that the reasoning was erroneous. While relying on Aneeta Hada vs. Godfather Travels and Tours Private Limited (2012) 5 SCC 661], the Supreme Court held that complaint against a director was not maintainable without arraying the company as an accused. It was further stated that the offence under Section 138 of the NI Act unlike other offences under IPC was person specific. It held as under:- "By the nature of the offence under Section 138 of the Act, the first ingredient constituting the offence is the fact that a person drew a cheque. The identity of the drawer of the cheque is necessarily required to be known to the complaina....
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.... except upon a complaint in writing made by the payee or, as the case may be, the holder in due course of the cheque. 66. Though, the word "complaint‟ has not been defined under the NI Act, the NI Act states that after dishonour of cheque a notice within thirty days of information received from the banker complaint be instituted before Magistrate of the first clas having jurisdiction to try the case. 67. However, Section 2(d) of the CrPC defines "complaint‟ as under:- "2(d) "Complaint‟ means any allegation made orally or in writing to a Magistrate, with a view to his taking action under this Code, that some person, whether known or unknown, has committed an offence, but does not include a police report". Explanation- A report made by a police officer in a case which discloses, after investigation, the commission of a non-cognizable offence shall be deemed to be a complaint; and the police officer by whom such report is made shall be deemed to be the complainant. 68. From the definition of the term "complaint‟, as noted above, it would be apparent that it does not include a police report. As per explanation to Section 2(d) of the CrPC report of police ....