TaxTMI 
TaxTMI 
2023 (1) TMI 1355
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....l Code, 1860, pending before the Court of the Ld. Metropolitan Magistrate, 9th Court, Calcutta. 2. The petitioner's case is that in the year 2012 One Mr. Deepak Gupta, director of the respondent/complainant company along with other executives approached the senior executives of petitioner no. 1 company and expressed eagerness to enter into a business relationship with the petitioner No. 1 company for distribution, sale and marketing of their mobile phones and accessories in India, under the 'HTC' brand. The respondent company represented that they were one of the leading distribution companies in Kolkata, India with a business history spanning more than 110 years. 3. On December 01, 2012, after extensive discussions and negotiations, a business relationship was formalized by the signing of a Distributor Agreement (hereinafter "Agreement"), which became effective on December 01, 2012. Under the Agreement, the respondent company agreed to act as a national distributor for petitioner no. 1 company for Eastern and North-Eastern regions, comprising the states of West Bengal, Orissa, Bihar, Jharkhand, Assam and six other North-Eastern states. 4. Clause 6.5 of the agr....
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.... the reminder email messages of May 25, 2016, June 16, 2016, June 30, 2016 and April 27, 2017, several verbal reminders had also been given to the respondent company by the executives of the petitioner no. 2 company. This email message of June 14, 2017 also clearly conveyed to the respondent company that some claims could no longer be accepted because they were time barred under the terms of the agreement. 13. On July 05, 2017 the petitioner no. 2 company was again constrained to send another email to the respondent company questioning its 'claim discipline'. In this message, once again it was communicated to the respondent company that claims related to many DOA units were time barred in terms of the agreement executed between the parties, in terms of the agreement executed between the parties. 14. During year 2015, the Indian mobile handset industry was beset with various new challenges. The adoption of the 4G network, the onslaught of Chinese competition with their cut-throat pricing, led to the shrinkage of profits and market share for all existing mobile headset vendors in India. In such challenging business conditions, it was imperative that business needed to b....
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....8190/2019 was listed before the Ld. Metropolitan Magistrate. On this date the Ld. Magistrate, in light of the order dated 13.01.2020 issued warrants of arrest against the petitioners and other accused persons in the complaint case. 23. On 22.03.2022 the complaint case was again listed before the Ld. Metropolitan Magistrate. On this date, the order dated 14.12.2021 passed by the Ld. Magistrate was recalled and fresh warrants of arrest were issued against your petitioners along with other accused persons. 24. Hence the present revisional petition seeking recall, quashing of proceedings and setting aside of orders dated 22.03.2022, 25.04.2022 and 11.05.2022. 25. Mr. Manjit Singh, learned Counsel for the petitioners has submitted that the impugned orders dated 22.03.2022, 25.04.2022 and 11.05.2022 being against the weight of materials of record is bad in law and liable to be quashed along with the proceedings. The learned Magistrate erred in law in refusing to consider the applications for grant of exemption from personal attendance on the ground that the petitioners have to appear before him first. There is nothing in Section 205 of the Code of Criminal Procedure which mandat....
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....the summons and had appeared before the learned Magistrate through their counsels without being actually served, on the first date itself. 31. The petitioners have been duly represented by their counsels on each date of hearing before the Ld. Trial Court in the complaint case no. C/28190/2019. 32. That orders dated 22.03.2022, 25.04.2022 and 11.05.2022 are clearly an abuse of the process of Court and are liable to be set aside and quashed along with the proceedings in C/28190/2019 as there are no ingredients as required to constitute the offences as alleged in the complaint. 33. That to insist upon the personal attendance of the petitioners would tantamount to an abuse of the process of court as the issue involved in the present set of circumstances is purely civil and not criminal. The process of court ought not to be permitted to degenerate into a weapon of oppression and persecution. 34. The impugned orders dated 22.03.2022, 25.04.2022 and 11.05.2022 are otherwise bad in law and are liable to be quashed along with the proceedings in C/28190/19. 35. Mr. Ayan Bhattacharya, learned Counsel for the Opposite Party has argued that it is clear that the conduct of the pet....
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....ile the Apex Court laid down aforestated principle in dealing with a summons case, it has thereafter applied the same principles in the warrant case of Puneet Dalmia v. CBI 2019:INSC:1379 : (2020) 12 SCC 695." "Section 205 gives discretion to the court to exempt a person from personal appearance right from the stage of commencement of the proceedings; Section 317 covers the stage after commencement of the inquiry of trial. Thus effectively, an accused is entitled to seek exemption from personal appearance right from the initial stages including the first appearance, after satisfying the court with proper reasons. Further, the accused need not appear personally to seek exemption. Section 205(1) states that even at the stage of issuing summons, the Magistrate may, if he sees reasons so to do, dispense with the personal attendance of the accused and permit him to appear through his pleader. This discretion may be exercised by the Magistrate even in the absence of any prayer by the accused for exemption from personal attendance." (Sushila Devi vs. Sharda Devi (1961) 1 CriLJ 819. 40. From the said view of the Supreme Court it is clear that the Magistrate was wrong i....
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....9. Considering the nature of dispute between the parties based on a distributor agreement, the following judgment of the Supreme Court need to be read and if applicable to the present case shall be applied to arrive at a just decision. 50. In M/s. Indian Oil Corporation vs. M/s Nepc India Ltd. & Ors., Appeal (crl.) 834 of 2002 decided on 20.07.2006, the court considered the following point among the two points decided. 8. The High Court by common judgment dated 23.3.2001 allowed both the petitions and quashed the two complaints. It accepted the second ground urged by the Respondents herein, but rejected the first ground. The said order of the High Court is under challenge in these appeals. On the rival contentions urged, the following points arise for consideration : (i) Whether existence or availment of civil remedy in respect of disputes arising from breach of contract, bars remedy under criminal law? (ii) Whether the allegations in the complaint, if accepted on face value, constitute any offence under sections 378, 403, 405, 415 or 425 IPC ? Re : Point No. (i) : 9. The principles relating to exercise of jurisdiction under Section 4....
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....ing of the complaint is warranted only where the complaint is so bereft of even the basic facts which are absolutely necessary for making out the offence. (v) A given set of facts may make out : (a) purely a civil wrong; or (b) purely a criminal offence; or (c) a civil wrong as also a criminal offence. A commercial transaction or a contractual dispute, apart from furnishing a cause of action for seeking remedy in civil law, may also involve a criminal offence. As the nature and scope of a civil proceedings are different from a criminal proceeding, the mere fact that the complaint relates to a commercial transaction or breach of contract, for which a civil remedy is available or has been availed, is not by itself a ground to quash the criminal proceedings. The test is whether the allegations in the complaint disclose a criminal offence or not. 10. While on this issue, it is necessary to take notice of a growing tendency in business circles to convert purely civil disputes into criminal cases. This is obviously on account of a prevalent impression that civil law remedies are time consuming and do not adequately protect the interests of lenders/creditors. Such a tend....
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....s:- (1) There must be an entrustment, there must be misappropriation or conversion to one's own use, or use in violation of a legal direction or of any legal contract. (2) The accused was entrusted with the property or domain over it. (3) He dishonestly misappropriated or converted to his own use such property; (4) He dishonestly used or disposed of that property or willfully suffered any other person to do so in failure of- (a) Any direction of law prescribing the mode in which such trust is to be discharged, or (b) Any legal contract made touching upon the discharge of such trust." 53. Section 405 Indian Penal Code defines :- "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, comm....
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....f law). The creditor may also have the right to claim payment from the sale proceeds (if such proceeds are identifiable and available). The following definitions of the term 'hypothecation' in P. Ramanatha Aiyar's Advanced Law Lexicon (Third (2005) Edition, Vol.2, Pages 2179 and 2180) are relevant : "Hypothecation : It is the act of pledging an asset as security for borrowing, without parting with its possession or ownership. The borrower enters into an agreement with the lender to hand over the possession of the hypothecated asset whenever called upon to do so. The charge of hypothecation is then converted into that of a pledge and the lender enjoys the rights of a pledgee." 'Hypothecation' means a charge in or upon any movable property, existing in future, created by a borrower in favour of a secured creditor, without delivery of possession of the movable property to such creditor, as a security for financial assistance and includes floating charge and crystallization of such charge into fixed charge on movable property. (Borrowed from section 2(n) of Securitisation and Reconstruction of Financial Assets & Enforcement of Security Interest Act....
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....oners are admittedly the owners of the products and as such there was no "entrustment" in favour the petitioners. Clause 10.4 of the distributor agreement clearly states about the ownership. 56. As such the offence of criminal breach of trust by the petitioners has not been committed and the cognizance taken by the Magistrate is bad in law. 57. Section 420 IPC lays down:- "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. Ingredients of offence.--The essential ingredients of the offence under Sec. 420 are as follows:- (1) There should be fraudulent or dishonest inducement of a person by deceiving him; (2) (a) The person so induced should be intentionally induced to deliver any property to any person or to consent t....
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....ss entered into the said agreement. From the petition of complaint, no such materials has been produced to prima facie show that the petitioners intentionally with knowledge cheated the complaint. The dispute between the parties is regarding defective products and their replacements (within time). As such the ingredient required to constitute the said offence under Section 418 IPC is also absent against the petitioners. 61. The Supreme Court in Mitesh Kumar J. Sha vs. The State of Karnataka & Ors. (Criminal Appeal no. 1285 of 2021) while considering an appeal against an judgment and order of the High Court of Karnataka in an application under Section 482 of the Cr.P.C. wherein the prayer of the petitioners for quashing of proceedings of offence punishable under Section 406, 419, 420 read with Section 34 of the IPC was dismissed, held:- "26. Having perused the relevant facts and contentions made by the Appellants and Respondents herein in our considered opinion, the following three key issues require determination in the instant case: - Whether the necessary ingredients of offences punishable under Sections 406, 419 and 420 are prima facie made out? - W....
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....t of a prevalent impression that civil law remedies are time consuming and do not adequately protect the interests of lenders/creditors.....There is also an impression that if a person could somehow be entangled in a criminal prosecution, there is a likelihood of imminent settlement. Any effort to settle civil disputes and claims, which do not involve any criminal offence, by applying pressure though criminal prosecution should be deprecated and discouraged." 43. On an earlier occasion, in case of G. Sagar Suri and Anr. Vs. State of UP and Ors. 2000:INSC:34 : (2000) 2 SCC 636, this Court has also observed:- "8. Jurisdiction under Section 482 of the Code has to be exercised with a great care. In exercise of its jurisdiction High Court is not to examine the matter superficially. It is to be seen if a matter, which is essentially of civil nature, has been given a cloak of criminal offence. Criminal proceedings are not a short cut of other remedies available in law. Before issuing process a criminal court has to exercise a great deal of caution. For the accused it is a serious matter. This Court has laid certain principles on the basis of which High Court is to exerci....
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....the accused and with a view to spite him due to private and personal grudge." 45. Applying this dictum to the instant factual matrix, it can be safely concluded that the present case clearly falls within the ambit of first, third and fifth category of the seven categories enlisted in the above said judgment. The case therefore warrants intervention by this Court, and the High Court has erred in dismissing the petition filed by the Appellants under section 482 CrPC. We find that there has been attempt to stretch the contours of a civil dispute and thereby essentially impart a criminal color to it. 46. Recently, this Court in case of Randheer Singh Vs. The State of U.P. & Ors. Criminal Appeal No. 932 of 2021, has again reiterated the long standing principle that criminal proceedings must not be used as instruments of harassment. The court observed as under:- "33. .....There can be no doubt that jurisdiction under Section 482 of the Cr.P.C. should be used sparingly for the purpose of preventing abuse of the process of any court or otherwise to secure the ends of justice. Whether a complaint (decided on 02.09.2021) discloses criminal offence or not depends on....
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....round for proceeding against the accused. For that limited purpose, the Court can evaluate material and documents on records but it cannot appreciate evidence. The court is not required to appreciate evidence to conclude whether the materials produced are sufficient or not for convicting the accused..........." (ii) In Ravindra Kumar Madhanlal Goenka & Anr. Vs. M/s. Rugmini Ram Raghav Spinners P. Ltd., 2009 AIR SCW 3211. "14............While entertaining a petition under Section 482 Cr.P.C.. the materials furnished by the defence cannot be looked into and the defence materials can be entertained only at the time of trial. It is well settled position of law that when there are prima facie materials available, a petition for quashing the criminal proceedings cannot be entertained. The investigating agency should have had the freedom to go into the whole gamut of the allegations and to reach a conclusion of its own. Pre-emption of such investigation would be justified only in very extreme cases." (iii) In S.P. Gupta vs. Ashutosh Gupta, 2010 AIR SCW 3683. "13................However the aforesaid provision clearly indicates that if at the very initiat....
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....s initiated at the instance of the appellants, that does not by itself clothe the court to come to a conclusion that civil remedy is the only remedy, and the initiation of criminal proceedings, in any manner, will be an abuse of the process of the court for exercising inherent powers of the High Court under Section 482 CrPC for quashing such proceedings." 67. This Court relies upon the judgment of the Supreme Court in Birla Corporation Ltd. vs. Adventz Investments and holdings, Criminal Appeal no. 877 of 2019, wherein the court held:- "86. In Indian Oil Corpn. v. NEPC India Ltd. and Others 2006:INSC:452 : (2006) 6 SCC 736, the Supreme Court after observing that there is a growing tendency in business circles to convert powerful civil disputes in criminal cases held as under:- "14. While no one with a legitimate cause or grievance should be prevented from seeking remedies available in criminal law, a complainant who initiates or persists with a prosecution, being fully aware that the criminal proceedings are unwarranted and his remedy lies only in civil law, should himself be made accountable, at the end of such misconceived criminal proceedings, in accordance w....
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....accused can be quashed or set aside: (1) where the allegations made in the complaint or the statements of the witnesses recorded in support of the same taken at their face value make out absolutely no case against the accused or the complaint does not disclose the essential ingredients of an offence which is alleged against the accused; (2) where the allegations made in the complaint are patently absurd and inherently improbable so that no prudent person can ever reach a conclusion that there is sufficient ground for proceeding against the accused; (3) where the discretion exercised by the Magistrate in issuing process is capricious and arbitrary having been based either on no evidence or on materials which are wholly irrelevant or inadmissible; and (4) where the complaint suffers from fundamental legal defects, such as, want of sanction, or absence of a complaint by legally competent authority and the like. The cases mentioned by us are purely illustrative and provide sufficient guidelines to indicate contingencies where the High Court can quash proceedings." 84. In State of Haryana and Others v. Bhajan Lal and Others 1990:INSC....
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....meters of quashing and the self-restraint imposed by law, more particularly the parameters laid down by this Court in the cases of R.P. Kapur (supra) and Bhajan Lal (supra), has the jurisdiction to quash the FIR/complaint; * * * * * *" 71. In Ranveer Upadhyay & Anr. Vs State of Uttar Pradesh & Anr., Special Leave petition (CRL.) No. 2953 of 2022, the Supreme Court held :- "39. In our considered opinion criminal proceedings cannot be nipped in the bud by exercise of jurisdiction under Section 482 of the Cr.P.C. only because the complaint has been lodged by a political rival. It is possible that a false complaint may have been lodged at the behest of a political opponent. However, such possibility would not justify interference under Section 482 of the Cr.P.C. to quash the criminal proceedings. As observed above, the possibility of retaliation on the part of the petitioners by the acts alleged, after closure of the earlier criminal case cannot be ruled out. The allegations in the complaint constitute offence under the Attrocities Act. Whether the allegations are true or untrue, would have to be decided in the trial. In exercise of power under Section 482 of the C....
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....going paragraphs, we would delineate the following steps to determine the veracity of a prayer for quashment raised by an accused by invoking the power vested in the High Court under Section 482 of the Code of Criminal Procedure: 30.1 Step one : Whether the material relied upon by the accused is sound, reasonable and indubitable i.e. the material is of sterling and impeccable quality? 30.2 Step two : Whether the material relied upon by the accused would rule out the assertions contained in the charges levelled against the accused i.e. the material is sufficient to reject and overrule the factual assertions contained in the complaint i.e. the material is such as would persuade a reasonable person to dismiss and condemn the factual basis of the accusations as false? 30.3 Step three : Whether the material relied upon by the accused has not been refuted by the prosecution/complainant; and/or the material is such that it cannot be justifiably refuted by the prosecution/complainant? 30.4 Step four : Whether proceeding with the trial would result in an abuse of process of the court, and would not serve the ends of justice?" 22. In State of Biha....
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....nda Linga Swamy [2004:INSC:404 : (2004) 6 SCC 522 : 2004 SCC (Cri) 1805 : AIR 2004 SC 3967] this Court held as under : (SCC p. 529, para 8) "8. ... It is the material collected during the investigation and evidence led in court which decides the fate of the accused person. The allegations of mala fides against the informant are of no consequence and cannot by themselves be the basis for quashing the proceeding." (See also K. Karunakaran v. State of Kerala [2006:INSC:964 : (2007) 1 SCC 59 : (2007) 1 SCC (Cri) 251] .) 26. Thus, in view of the above, it becomes evident that in case there is some substance in the allegations and material exists to substantiate the complicity of the applicant, the case is to be examined in its full conspectus and the proceedings should not be quashed only on the ground that the same had been initiated with mala fides to wreak vengeance or to achieve an ulterior goal. 27. The scheme for inquiry/trial provided under CrPC is quite clear. After investigation, report under Section 173(2) CrPC is to be submitted before the competent court i.e. the Magistrate having jurisdiction in the matter and the Magistrate may take cogn....