TaxTMI 
TaxTMI 
2023 (1) TMI 1355
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....he 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 agreement defines "Dead on Arrival" (DOA) products a....
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.... 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 be conducted with utmost efficiency. However, the respondent company d....
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....istrate, 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 mandates that the petitioners must first personally appear before the learned Magistrate before t....
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....lly 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 petitioners and the materials on record make out a prima facie case of cognizable offences against all the petitio....
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....19: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 in his findings/reasons that as the accuseds had not entered their appearance (meaning personal appearance) before the court, the application under Section 205 Cr.P.C. be dismissed. 41. As di....
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....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 482 of the Code of Criminal Procedure to quash complaints and criminal proceedings have been stated and reiterated by this Court in several decisions. To mention a few - Madhavrao Jiwaji Rao Scindia v. Sambhajirao Chandrojirao Angre [1988:INSC:36 ....
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....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 tendency is seen in several family disputes also, leading to irretrievable break down of marriages/families. 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 claim....
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....) 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, commits "criminal breach of trust"." 54. In M/s. Indian Oil Corporation vs. M/s Nepc India Ltd. & Ors. (supra) the Supreme Court held:- 18. In Chelloor Mankkal Narayan Ittiravi Nambudiri v. State of Travancore, Cochin [AIR 1953 SC 478], this Court held : " to constitute an offence of criminal breach of trust, it is essential that the prosecution must prove first of all that ....
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....ssion 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, 2002)" But there is no 'entrustment of the property' or 'entrustment of dominion over the property' by the hypothecatee (creditor) to the hypothecator (debtor) in an hypothecation. When possession has remained with the debtor/owner and when the creditor has neither ownership nor beneficial interest, obviously there cannot be any entrustment by the creditor. 20. The question directly arose for consideration in Cen....
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....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 that any person shall retain any property, or (a) the person so induced to do anything which he would not do or omit if he were not so deceived, and (b) in cases covered by second part of clause (a), the act or omission should be one which caused or was likely to cause damage or harm to the person induced in body, mind or property. The two essential ingredients of the offence under this section are - (A) Deceit, that is to say dishonest or fraudulent misrepresentation, and (B) In....
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....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? - Whether sale of excess flats, even if made, amounts to a mere breach of contract or constitutes an offence of cheating? - Whether the dispute is one of entirely civil nature and therefore liable to be quashed? Whether the necessary ingredients of offences punishable under Sections 406, 419 and 420 are prima facie made out? 37. Although, there is perhaps not even an iota of doubt that a singular factual premise can give rise to a dispute which is both, of a civil as well as criminal nature, each of which could be pursued regardless of the other. In the instant case, the actual question whic....
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....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 exercise its jurisdiction under Section 482 of the Code. Jurisdiction under this Section has to be exercised to prevent abuse of the process of any court or otherwise to secure the ends of justice." 44. Furthermore, in the landmark judgment of State of Haryana & Ors. Vs. Ch. Bhajan Lal and Ors. (1992) SCC (Cri) 426 regarding exercise of inherent powers under section 482 of CrPC, this Court has laid down following categories of instances wherein inherent powers of the can be exercised in order to secure the ends of justice. These are:- "(1) where the allegations made in the First Information Report or the complaint, even if they are taken at their face value and acc....
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....ain 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 the nature of the allegation and whether the essential ingredients of a criminal offence are present or not has to be judged by the High Court. There can be no doubt that a complaint disclosing civil transactions may also have a criminal texture. The High Court has, however, to see whether the dispute of a civil nature has been given colour of criminal offence. In such a situation, the High Court should not hesitate to quash the criminal proceedings as held by this Court in Paramjeet Batra (supra) extracted above." 47. Moreover, this Court has at innumerable instances expressed its disapproval for imparting criminal color to a civil dispute, made merely to take advantage of a relatively quick relief granted in a criminal case in contra....
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....g 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 initiation of the negotiations it was evident that there was no intention to cheat, the dispute would be of a civil nature. But such a conclusion would depend on the evidence to be led at the time of trial. In the instant case, the complaint does make out a prima facie case to go to trial." 65. The said observation supports the case of the petitioners as admittedly (from notice and petition of complaint), at the very initiation (from 2012 to 2017 (5years) of the negotiations it is evident that there was no intention to cheat. Such a dispute would be of civil nature (which would depend on the evidence to be led at the time of trial). And in the present case the complaint as discussed earlier also does not make out a prima facie case to go to trial. (iv) In Alka Bapu Gund vs. Prakash Kanhaiyalal Kankaria, AIR 2017 SC 724. "5. The ....
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....ng 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 with law. One positive step that can be taken by the courts, to curb unnecessary prosecutions and harassment of innocent parties, is to exercise their power under Section 250 CrPC more frequently, where they discern malice or frivolousness or ulterior motives on the part of the complainant. Be that as it may." (Medmeme LLC & Ors. vs. M/s. Ihorse BPO Solutions Pvt. Ltd. (2018)13 SCC 374). 68. The judgment in Birla Corporation Ltd. vs Adventz Investments and holdings (supra) has already been discussed earlier. 69. In the said judgment the Supreme Court also observed:- "82. Exercise of power under Section 482 Cr.P.C. envisages three circumstances in which the inherent jurisdiction may be exercised namely:- (i) to give effect to an order under the Code; (ii) to prevent abuse of the process of court; and (iii) to otherwise secure the ends of justice. Inherent jurisdiction un....
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....ioned 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:363 : 1992 Supp (1) SCC 335, the Supreme Court considered the scope of inherent powers of the Court and after referring to earlier decisions, the Supreme Court enumerated categories of cases by way of illustration where the extraordinary jurisdiction under Article 226 of the Constitution of India can be exercised by the High Court to prevent abuse of process of Court or otherwise to secure ends of justice. It was held that "where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused." 87. In Madhavrao Jiwajirao Scindia and Others v. Sambhajirao Chandrojirao Angre and Others 1988:INSC:36 : (1988) 1 SCC 692, it was held that "when a prosecution at the initial stage is asked to be quashed, the test to be applied by the court is as to whether the uncontroverted allegations as made prima-facie establish the offence." It was further held....
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....es 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 Cr.P.C., the Court does not examine the correctness of the allegations in a complaint except in exceptionally rare cases where it is patently clear that the allegations are frivolous or do not disclose any offence." 72. In Umesh Kumar Vs State of Andhra Pradesh and Anr. (Supra) the Supreme Court also held :- "20. The scope of Section 482 CrPC is well defined and inherent powers could be exercised by the High Court to give effect to an order under CrPC; to prevent abuse of the process of court; and to otherwise secure the ends of justice. This extraordinary power is to be exercised ex debito justitiae. However, in exercise of such powers, it is not permissible for the High Court to appreciate the evidence as it can only evaluate material documents on record to the extent of its prima facie satisfaction about the existence of sufficient ground for proceedings against the accused and the Court cannot look into materials, the acceptability of which is essentially a matter for trial. Any document filed along with the petition labelled as evidence wi....
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....s of the court, and would not serve the ends of justice?" 22. In State of Bihar v. P.P. Sharma 1991:INSC:84 : [1992 Supp (1) SCC 222 : 1992 SCC (Cri) 192 : AIR 1991 SC 1260] this Court dealt with an issue of whether an application under Section 482 CrPC for quashing the charge-sheet should be entertained before cognizance is taken by a criminal court and held as under : (SCC pp. 269-70, para 68) "68. ... Quashing the charge-sheet even before cognizance is taken by a criminal court amounts to 'killing a stillborn child'. Till the criminal court takes cognizance of the offence there is no criminal proceedings pending. I am not allowing the appeals on the ground that alternative remedies provided by the Code as a bar. It may be relevant in an appropriate case. My view is that entertaining the writ petitions against charge-sheet and considering the matter on merit in the guise of prima facie evidence to stand an accused for trial amounts to pre-trial of a criminal trial.... It is not to suggest that under no circumstances a writ petition should be entertained. ... The charge- sheet and the evidence placed in support thereof form the base to take or refuse to take cognizance....
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....ake cognizance under Section190 CrPC. However, it is still open to the Magistrate to direct further investigation under the provisions of Section173(8) CrPC. If the case is triable by the Court of Session, the Magistrate would commit the case to the said court under Section 209 CrPC. It is for the court to examine whether there is sufficient material collected during investigation and filed along with the charge-sheet that a prima facie view can be taken to proceed against the accused and in view thereof, frame charges under Section 228 CrPC. At this stage the remedy available to the accused is to ask for discharge under Section 227 CrPC. In case charges are framed the accused has to face the trial, charges can be added/altered at any stage of the trial, before the pronouncement of the judgment to suit the evidence adduced before the court, under the provisions of Section 216 CrPC. The only legal requirement is that a witness has to be recalled as provided under Section 217 CrPC when a charge is altered or added by the court." 73. In the instant case, cognizance has been taken and process has been issued (including attachment and warrant of arrest) by the Magistrate concerned. 74....