Allahabad High Court
Lourenco D" Souza vs State Of U.P. And Another on 6 October, 2016
Equivalent citations: 2017 (2) ALJ 156, (2017) 170 ALLINDCAS 903 (ALL), (2016) 10 ADJ 49 (ALL), (2016) 97 ALLCRIC 853, (2016) 3 ALLCRIR 3373
Author: Vijay Lakshmi
Bench: Vijay Lakshmi
HIGH COURT OF JUDICATURE AT ALLAHABAD
Reserved
A.F.R.
Case :- APPLICATION U/S 482 No. - 24290 of 2012
Applicant :- Lourenco D" Souza
Opposite Party :- State Of U.P. And Another
Counsel for Applicant :- Samit Gopal,Ravindra Singh
Counsel for Opposite Party :- Govt. Advocate,Priyanka Midha
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Hon'ble Mrs. Vijay Lakshmi, J.
The applicant by means of this application under Section 482 Cr.P.C., has invoked the inherent jurisdiction of this Court with prayer to quash the summoning order dated 1.5.2012 passed by Chief Judicial Magistrate, Gautam Budh Nagar in Criminal Case No. 3921 of 2012 ( State of U.P. Vs. Lourenco D' Souza) under Sections 420, 406, 504 and 506 I.P.C., Police Station 58 Noida, district Gautambudh Nagar arising out of Case Crime No. 1085 of 2011.
As no one appeared on behalf of opposite party no. 2 despite personal service of notice on him as long back as on 30.9.2012 and no counter affidavit was filed on behalf of opposite party no. 2. I heard Sri Dilip Kumar, learned counsel appearing for the applicant and Sri L.D. Rajbhar, learned A.G.A. representing the State. Perused the record.
Some background facts, in brief, are that the opposite party no. 2 used to deal in the business of manufacture and export of garments from its factory situated at Noida, namely M/s. Valencia Apparels through the applicant who worked as agent between opposite party no. 2 and the buyer companies, mostly foreign companies. On 8.3.2008 the opposite party no. 2 received a purchase order from United Kingdom (England) for a total price of £ 19890 (pounds) which was at that time equivalent to ₹ 15 lacs. The opposite party no. 2 prepared the goods in time and thereafter, the Quality Audit Manager (Q.A. Manager) inspected the goods and the goods were sent abroad to be delivered to the buyer doing business in the name of Design Archives at U.K. On 27.5.2008 the opposite party no. 2 presented the bill of exchange in the bank. However, when even after the expiry of the fixed period, the bill was not paid, the opposite party no. 2 contacted the applicant, who was the agent, through whom the entire business transaction had been made. The applicant assured him about the payment. But, the payment was not made by the U.K. company. The opposite party no. 2 waited till August, 2008. When the amount still remained unpaid, he again contacted the applicant and asked him to take legal action against the U.K. company. Thereafter, the buyer company credited only £ 6399 (pounds) into his account. Meanwhile, the opposite party no. 2 also applied for the claim through E.C.G.C. (Export Credit Guarantee Corporation of India Ltd.). In pursuance of which ₹ 8,37,363/- were paid to him by E.C.G.C. on 18.12.2008. The entire business transaction being made through the applicant (agent), the opposite party no. 2 lodged an F.I.R. against the applicant on 2.11.2011 at P.S. Sector-58 Noida, Gautambudh Nagar, under Sections 420, 467, 468, 406, 504 and 506 I.P.C. alleging that when the money was not paid by the U.K. company to him and he asked the agent (applicant) for payment of remaining amount, the applicant misbehaved with him shouting with the words "TERA MAAL KHARAB THAA IS SE ZYADA PAISE NAHI BANTE HAI" and thereafter using abusive language, the applicant pushed him out uttering "SAALE TERE SE JO KIYA JAYE, KARE LE, TUJHE ISKE ALAWA EK RUPIYA BHI NAHI MILEGA"
The case was registered and investigated and after investigation the I.O. submitted charge-sheet against the applicants under Sections 420, 406, 504 and 506 I.P.C on 6.2.2012. On 1.5.2012 the learned C.J.M., Gautambudh Nagar took cognizance on the said charge-sheet and summoned the applicant to face trial under the aforesaid sections. The aforesaid order dated 1.5.2012 is under challenge before this Court.
Sri Dileep Kumar, learned counsel for the applicant has contended that the applicant is innocent and he has not committed any offence. Neither the allegations made in the F.I.R. nor the material collected during investigation, disclose any offence against the applicant. The dispute is purely of civil in nature between two private parties over the unpaid part of price of goods supplied by M/s. Valencia Apparels to the buyer company situated at U.K. The applicant has no concern with it. It has further been contended that there is inordinate delay of about 3 years in lodging the F.I.R. which has been lodged by the opposite party no. 2, only to put pressure on the applicant and for the purpose of tarnishing his image and goodwill so that his work, as an agent, may be badly affected. Learned counsel for the applicant drawn the attention of this Court to annexure - 14, which are copies of e-mail dated 19.3.2008, 5.10.2008 and 31.10.2008 exchanged between the opposite party no. 2 and the buyer company, a perusal of which clearly shows that the buyer actually accepted only 581 units, for which he paid the price. The balance 1127 units were asked to be taken back by the buyer, as they were found to be of bad quality. Learned counsel has further contended that the opposite party no. 2, in the F.I.R., has concealed the fact that he has already received an amount of ₹ 8,37,363/- from E.C.G.C. Moreover, the buyer company, who is the ultimate beneficiary, has not been made a party, which clearly shows that the intention of the opposite party no. 2, is only to pressurize the applicant, who neither has induced the opposite party no. 2 to execute the purchase order, nor is the ultimate beneficiary of this transaction.
Sri Dileep Kumar has vehemently argued that it is a trite law as per decisions of Hon'ble Supreme Court that to constitute the offence of cheating, the intention to deceive, should be in existence at the time when the inducement was made by the accused, whereas in the present case, the circumstances clearly show that there was absolutely no intention on the part of the applicant to cheat the opposite party no. 2. It is an admitted position that the opposite party no. 2 was doing the export business through the applicant since long and it was only this time, it happened that in any order, placed by a foreign buyer through the applicant, the payment was not received. Learned counsel has argued that the buyer did not make the full payment to opposite party no. 2 due to the reason that he accepted only 521 pieces of garments i.e. less than the number ordered and because the remaining items, were not of good quality. This fact clearly shows that there was no dishonest inducement on the part of the applicant at any point of time i.e. at the time of starting, during and after execution of the transaction. Learned counsel has further contended that moreover, no explanation has been given by opposite party no. 2 as to why no action was taken by him during the past 3 years for recovery of amount ? The further submission of learned counsel for the applicant is that non appearance of opposite no. 2 in Court, despite sufficient service of notice on him and his not filing any counter affidavit despite having a considerable time since 30.9.2012 when he personally received the notice, is a clear indication that opposite party no. 2 has absolutely no objection against this application. Learned counsel has further submitted that even otherwise, looking into the legal aspect of the matter no offence under Section 420 I.P.C. is made out against the applicant in view of the well settled legal position, that to constitute the offence of cheating, mensrea or dishonest intention should be shown to have existed at the beginning of the transaction and mere inability to pay on the part of a party does not entitle, any person, to launch a criminal prosecution. Learned counsel has submitted that in the present case there existed a smooth transaction of business between the parties in terms of applicant procuring purchase orders and opposite party no. 2 executing the same by sending goods to foreign buyers. However, if for any reason the payment was not made by the foreign buyer to opposite party no. 2, it cannot be said that the applicant had any dishonest intention to cheat the opposite party no. 2 when the transaction was being entered into. Therefore, the offence under Section 420 I.P.C. is not made out against the applicant.
Learned counsel has next submitted that in so far as Section 406 I.P.C. is concerned, even if the facts narrated in the F.I.R. are assumed to be true for the sake of argument, it is clearly evident that the applicant was never entrusted with the goods or with any dominion over it. It is also not evident as to how the applicant dishonestly misappropriated or converted those goods for his own use. The delivery of the goods from India was done by opposite party no. 2 to U.K. i.e. to the buyer company and the goods were never entrusted to the applicant.
It has lastly been submitted that the opposite party no. 2 despite having received claim of ₹ 8,37,366/- from E.C.G.C. and £ 6399 from the buyer company way back in the year 2008, has initiated the criminal proceedings after a long gap of 3 years against the applicant even without any plausible explanation for the delay, with malafide intention which should not have been entertained. However, the learned Magistrate mechanically, and without taking into consideration all these facts and having failed to recognize the well settled distinction between the failure to discharge contractual obligation and fraudulent inducement, took cognizance on the said charge-sheet by the impugned order, which is liable to be set aside.
On the aforesaid grounds learned counsel for the applicant has prayed that the order impugned, taking cognizance and the entire proceedings of the case, be quashed.
The opposite party no. 2 despite having a considerable time after personal service of notice on him way back in the year 2008 neither appeared or engaged any counsel, nor filed any counter affidavit. Only State has filed counter affidavit contesting the application mainly on the ground that at he stage of taking cognizance, only prima facie case is to be seen, and as all the submissions made by learned counsel for the applicants, relate to the disputed question of facts, which cannot be adjudicated upon by this Court under Section 482 Cr.P.C., no interference is required in the impugned order.
Considered the rival submissions made by learned counsel for the parties.
By the impugned order, the Magistrate has taken cognizance under Sections 420, 405, 504 and 506 I.P.C.
The essential ingredients to constitute the offence of 'cheating' as defined under Section 415 of I.P.C. and punishable under Section 420 I.P.C. are as follows :
(I) Deceiving or making of false representation.
(II) dishonest inducement to deliver property or to make, alter or destroy any valuable security or anything which is sealed or signed or is capable of being converted into a valuable security and (III) "mensrea" or fraudulent or dishonest intention of the accused at the time of making the inducement or false representation.
From the perusal of record it is evident that the opposite party no. 2 was doing business through the applicant since long and in a routine manner the instant business transaction was also made. Therefore, it cannot be said that there was any dishonest intention on the part of accused/applicant at the time when the parties entered into the transaction. 'Mensrea' or the guilty mind, at the time of making inducement, being necessary ingredient of the offence of cheating. It cannot be said that Section 420 of I.P.C. is attracted in the present case.
The Hon'ble Apex Court in the case of A.R.C.I. Vs. Nimra Cerglass Technics (P) Ltd. (2016) 1 SCC 348 while interpreting the definition of cheating has laid down the law as under :-
"The making of a false representation is one of the essential ingredients to constitute the offence of cheating under Section 420 I.P.C.. In order to bring a case for the offence of cheating it is not merely sufficient to prove that a false representation had been made. It is further necessary to prove that the representation was false to the knowledge of the accused and was made in order to deceive the complainant. If it is established that the intention of the accused was dishonest at the very time when he made a promise and entered into a transaction with the complainant to part with his property or money, then the liability is criminal and the accused is guilty of the offence of cheating but further that established that a representation was made by the accused has subsequently not been kept, criminal liability cannot be foisted on the accused and the only right which the complainant acquires is the remedy for breach of contract in a civil court. Mere breach of contract cannot give rise to criminal prosecution for cheating and criminal liability should not be produced in disobedience of civil nature."
In Anil Mahajan vs. Bhor Industries Ltd. & Anr. (2005) 10 SCC 228, the Hon'ble Supreme Court has drawn a distinction between a breach of contract and cheating by holding as under:-
"6. ........A distinction has to be kept in mind between mere breach of contract and the offence of cheating. It depends upon the intention of the accused at the time of inducement. The subsequent conduct is not the sole test. Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent, dishonest intention is shown at the beginning of the transaction.
According to the Hon'ble Apex Court :-
8. The substance of the complaint is to be seen. Mere use of the expression "cheating" in the complaint is of no consequence. Except mention of the words "deceive" and "cheat" in the complaint filed before the Magistrate and "cheating" in the complaint filed before the police, there is no averment about the deceit, cheating or fraudulent intention of the accused at the time of entering into MOU wherefrom it can be inferred that the accused had the intention to deceive the complainant to pay.... We need not go into the question of the difference of the amounts mentioned in the complaint which is much more than what is mentioned in the notice and also the defence of the accused and the stand taken in reply to notice because the complainant's own case is that over rupees three crores was paid and for balance, the accused was giving reasons as above-noticed. The additional reason for not going into these aspects is that a civil suit is pending inter se the parties for the amounts in question."
In so far as the offence under Section 406 of I.P.C. is concerned, it provides for punishment of criminal breach of trust which is defined by Section 405 of I.P.C. According to Section 405 I.P.C. :
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".
In the present case there is no evidence that the applicant was entrusted with any property or he was having dominion over the property. There is no allegation against the applicant that he converted the property to his own use or disposed of the property in violation of any direction or law or wilfully suffered any other person to do so. The applicant is merely an agent, through whom the opposite party no. 2 used to conduct business transactions from the buyer companies mostly foreign companies. The price was to be paid by the buyers after receiving the goods supplied by opposite party no. 2. In the present case, due to the reason that the goods were found inferior in quality by the buyer company, it denied to make full payment to the opposite party no. 2. The opposite party no. 2 recovered the amount from the buyer in part and claimed the rest amount from E.C.G.C. However, even after receiving some part of the amount from the buyer and the remaining from E.C.G.C. the opposite party no. 2 lodged the F.I.R. against the applicant, after 3 years without explaining about the delay of 3 years in lodging the F.I.R. and without even making the buyer a party who was the real beneficiary in the case.
In view of the above, the ingredients of Section 406 I.P.C. are found missing in this case.
So far as the third offence under which the applicant has been summoned i.e. Section 504 of I.P.C. is concerned, Section 504 I.P.C. provides for punishment of intentional insult with intent to provoke breach of piece.
The Hon'ble Apex Court in the case of Fiona Shrikhande Vs. State of Maharashtra, AIR 2014 SC 957, the Hon'ble Apex Court has laid down the law relating to essential ingredient of Section 504 I.P.C. as under :
"Section 504 IPC comprises of the following ingredients, viz., (a) intentional insult, (b) the insult must be such as to give provocation to the person insulted, and (c) the accused must intend or know that such provocation would cause another to break the public peace or to commit any other offence. The intentional insult must be of such a degree that should provoke a person to break the public peace or to commit any other offence. The person who intentionally insults intending or knowing it to be likely that it will give provocation to any other person and such provocation will cause to break the public peace or to commit any other offence, in such a situation, the ingredients of Section 504 are satisfied. One of the essential elements constituting the offence is that there should have been an act or conduct amounting to intentional insult and the mere fact that the accused abused the complainant, as such, is not sufficient by itself to warrant a conviction under Section 504 PC."
Considering the fact of the present case, in wake of the aforesaid interpretation of Section 504 I.P.C. by Hon'ble Apex Court, it cannot be said that the ingredients of Section 504 I.P.C. are present in this case.
The last section in which the applicant has been summoned is Section 506 of I.P.C. which provides for punishment for criminal intimidation. The criminal intimidation is defined under Section 503 of I.P.C. which is reproduced below :
"503. Criminal intimidation.--Whoever threatens another with any injury to his person, reputation or property, or to the person or reputation of any one in whom that person is interested, with intent to cause alarm to that person, or to cause that person to do any act which he is not legally bound to do, or to omit to do any act which that person is legally entitled to do, as the means of avoiding the execution of such threat, commits criminal intimidation."
There is no such allegation against the applicant that he threatened the opposite party no. 2 with injury to his person, reputation or property or of any one in whom that person is interested. Even assuming that during verbal altercation between the parties some words like "SAALE JO KARNI HO KAR LE" etc. were used by the applicant, it cannot be said that the applicant had threatened the opposite party no. 2 with intent to cause injury to his person, reputation or property.
Therefore, this Court is of the considered view that the important igredients of all the setions i.e. 420, 406, 504 and 506 of I.P.C., being missing in this case, no offence is made out against the applicant.
The dispute in this case is clearly of civil nature, involving money transaction between two private parties, which should not have been cloaked as criminal case, in view of a catena of judgment of Hon'ble Supreme Court, deprecating this practice.
In M/s. Indian Oil Corporation Vs. NEPC India Ltd. And others, (2006) 6 SCC 736, the Hon'ble Supreme Court, observing that civil liability cannot be converted into criminal liability, has held as under:-
"13. 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 breakdown 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 claims, which do not involve any criminal offence, by applying pressure through criminal prosecution should be deprecated and discouraged."
In G. Sagar Suri Vs. State of U.P. (2000) 2 SCC 636 the Hon'ble Supreme Court observed:
"It is to be seen if a matter, which is essentially of a 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 the 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."
The Hon'ble Apex Court in a number of cases has laiddown the scope and ambit of court's powers under Section 482 Cr.P.C.
In R.P. Kapur Vs. State of Punjab; AIR 1960 SC 866, this court summarized some categories of cases where inherent power can and should be exercised to quash the proceedings:
(i) where it manifestly appears that there is a legal bar against the institution or continuance of the proceedings;
(ii) where the allegations in the first information report or complaint taken at their face value and accepted in their entirety do not constitute the offence alleged;
(iii) where the allegations constitute an offence, but there is no legal evidence adduced or the evidence adduced clearly or manifestly fails to prove the charge.
In State of Haryana Vs. Bhajan Lal; 1992 Supp. (1) SCC 335, the Hon'ble Apex Court in the backdrop of interpretation of various relevant provisions of the Cr.P.C. under Chapter XIV and of the principles of law enunciated by this court in a series of decisions relating to the exercise of the extraordinary power under Article 226 of the Constitution of India or the inherent powers under section 482 Cr.P.C. gave the following categories of cases by way of illustration wherein such power could be exercised either to prevent abuse of the process of the court or otherwise to secure the ends of justice. Thus, this court made it clear that it may not be possible to lay down any precise, clearly defined and sufficiently channelised and inflexible guidelines or rigid formulae and to give an exhaustive list to myriad kinds of cases wherein such power should be exercised:
"(1) Where the allegations made in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused.
(2) Where the allegations in the first information report and other materials, if any, accompanying the FIR do not disclose a cognizable offence, justifying an investigation by police officers under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section 156(2) of the Code.
(3) 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.
(4) Where, the allegations in the FIR do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated under Section 156(2) of the Code.
(5) Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused.
(6) Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party.
(7) Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge.
Considering the facts and circumstances of the present case, this Court is of the considered view that the allegations in the F.I.R., even after taking on their face value and accepted in their entirety do not constitute the offence as alleged and the criminal proceedings lodged by opposite party no. 2 appears to be manifestly malafide and malicious, the dispute being purely of civil nat£ure are liable to be quashed.
Accordingly the application is allowed. The summoning order dated 01.05.2012 passed by Chief Judicial Magistrate, Gautam Budh Nagar in Criminal Case No. 3921 of 2012 (State of U.P. Vs. Lourenco D' Souza) under Sections 420, 406, 504 and 506 I.P.C., Police Station Sector 58 Noida, district Gautam Budh Nagar arising out of Case Crime No. 1085 of 2011 and the entire proceedings of the aforesaid criminal case are hereby quashed.
Dated : 06.10.2016 S.B.