TaxTMI 
TaxTMI 
2018 (8) TMI 2067
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....3;) of Patliputra P.S. Case No.160 of 2012 was 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 o....
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....ge from the case on the ground that upon considering the police report and the documents sent with 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....
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.... the offences punishable under Sections 406 and 420 of the IPC. 17. Section 406 prescribes punishment for "criminal 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 proper....
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....son in body, mind, reputation or property, is said to "cheat"." Illustrations (a) A, by falsely pretending to be in the Civil Service, intentionally deceives Z, and 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....
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....person in body, mind, reputation or property. 30. It would also be evident from combined reading of Sections 415 and 420 of the IPC that one of the essential ingredients of Section 420 IPC is mens rea of the accused at the time of making the inducement. 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 "cheati....
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....r Section 200 of the CrPC before the Chief Metropolitan Magistrate, Bangalore alleging that the respondents had committed offences under Sections 420, 406 and 423 read with Section 120-B of the IPC. The Magistrate took cognizance of the alleged offence under Section 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 t....
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....tions 415, 418 and 420 of the IPC. In that case also, the Bench analyzed the difference between "breach of contract‟ and "cheating'. The appellant therein was the accused in complaint filed against him by the respondent company for the offence punishable under Sections 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 o....
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....ny. 43. In view of the allegation made by the informant, the agreement, if any, was between the milk suppliers and the company and the informant had got no concern with such agreement. In the event, the company failed to fulfill its liability under the agreement, the aggrieved persons would have 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 providin....
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....fences punishable under the IPC. 51. As far as the offence punishable under Section 138 of the NI Act is concerned, I am of the opinion that the petitioners cannot be charged for the said offence due to various legal flaws. However, before highlighting those legal flaws, firstly, I would like to extract the provisions prescribed 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....
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....rtner in the firm. 142. Cognizance of offences.- Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974),- (a) no court shall take cognizance of any offence punishable under section 138 except upon a complaint, in writing, made by the payee or, as the case may be, the holder in due course of the cheque; (b) such complaint is made within one month of the date on which the cause of action 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 cognizan....
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....tion under the NI Act. 62. In that case, the complainant was issued a cheque, which was signed by one Harihara Krishnan. The cheque was drawn allegedly in discharge of balance sale consideration by M/s Norton Granites and Spinners Pvt. Ltd. However, the cheque was in fact drawn on account of another private limited company, M/s Dakshin Granites Pvt. Ltd. in which also Harihara Krishnan was a director. The cheque got dishonoured for insufficiency of funds. The complaint was filed 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 th....
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....ffence punishable under Section 138 of the NI Act. 64. Apart from the ground on which prosecution of the petitioners would be bad, as stated above, there is yet another reason as to why the petitioners can not be tried for the offence under Section 138 of the NI Act. 65. The present case is based on an FIR whereas Section 142(a) provides that notwithstanding anything contained in the Code of Criminal Procedure, no court shall take cognizance of any offence punishable under Section 138 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 offenc....