Madhya Pradesh High Court
Chevron Inc. vs The State Of Madhya Pradesh on 3 March, 2025
Author: Vivek Agarwal
Bench: Vivek Agarwal
NEUTRAL CITATION NO. 2025:MPHC-JBP:13246
1 WP-12601-2021
IN THE HIGH COURT OF MADHYA PRADESH
AT JABALPUR
BEFORE
HON'BLE SHRI JUSTICE VIVEK AGARWAL
ON THE 3 rd OF MARCH, 2025
WRIT PETITION No. 12601 of 2021
CHEVRON INC.
Versus
THE STATE OF MADHYA PRADESH AND OTHERS
Appearance:
Shri Sanjay Ram Tamrakar - Senior Advocate assisted by Shri Ankit Choupra -
Advocate for the petitioner.
Shri V.P. Tiwari - Government Advocate for the State.
Shri Sanjay K. Agrawal - Senior Advocate assisted by Shri Rohan Harne -
Advocate for the respondent No.4.
ORDER
This writ petition is filed by the complainant being aggrieved of the order dated 09.02.2021 whereby he is directed to appear on 09.04.2021 before learned JMFC, Jabalpur in complaint case No.558/2019 on the ground that a purely civil dispute has been converted by the respondent No.4 into a criminal case with ulterior motive and, therefore, a prayer is made to set aside the criminal case instituted by the respondent with a further prayer to discharge the petitioner.
2. Brief facts, leading to the present case, are that the petitioner is a Firm based at Mumbai, Maharashtra. They had forwarded their offer vide quotation against the requirement for supply of 100 number of smart dustbin with data sheet along with terms and conditions to the respondent No.4.
3. It is submitted that the said smart dustbins are manufactured by one of Signature Not Verified Signed by: KOUSHALENDRA SHARAN SHUKLA Signing time: 3/20/2025 4:58:42 PM NEUTRAL CITATION NO. 2025:MPHC-JBP:13246 2 WP-12601-2021 the Chinese company and the petitioner firm is importer of the same. A promise was made by respondent No.4 to purchase 100 smart dustbins in three lots. In the first lot, purchase order for only 31 dustbins was given after which 21 dustbins were delivered and 10 were to be delivered. Prior to the transaction taking place, the petitioner had sent one sample smart dustbin and being satisfied with the functioning of the smart dustbin, purchase order was released. It is submitted that another set of 10 dustbins was also delivered to the respondent No.4 but the respondent No.4 without following the guidelines, started functioning of the dustbins through local electrician despite the fact that the software application which operates a smart dustbin is customised and can be started by Chinese company only. It is further submitted that since unauthorised operation was initiated by technician of respondent No.4, with a view to sort out the dispute, the petitioner deputed his technician who on his visit observed that smart dustbins were kept in bad condition and installation was done by local electrician messing up the wiring which led non-working of smart dustbin. Thus, it is alleged that non- functioning of the smart dustbins occurred due to negligence of the respondent No.4. It is further submitted that since supply was to be made in first lot of 35 numbers therefore, only after completing the placement of purchase order of 35 number of smart dustbins and completion of its supply, the principal vender with their technician were to visit the site to install the same. Since the procedure for installation of smart dustbin was not followed by the respondent No.4 and that resulted in some issues in regard to payment of balance amount, the petitioner had approached the Maharashtra State Signature Not Verified Signed by: KOUSHALENDRA SHARAN SHUKLA Signing time: 3/20/2025 4:58:42 PM NEUTRAL CITATION NO. 2025:MPHC-JBP:13246 3 WP-12601-2021 Micro and Small Enterprises Facilitation Council, Mumbai by lodging a complaint as contained in Annexure P-1.
4. It is submitted that the complaint is pending in terms of the provisions contained in the Micro Small and Medium Enterprises Development Act, 2006, as was filed on 02.04.2019, when the respondent No.4 issued a notice on 04.04.2019, to the petitioner demanding compensation for loss suffered by respondent No.4. This complaint was properly replied to by the petitioner through his counsel on 19.04.2019 vide Annexure P-5. Then a civil suit for recovery was filed by the respondent No.4 on 02.07.2019 before the 11th Civil Judge, Class I, Jabalpur. Copy of the plaint is annexed as Annexure P-6, which registered the case as RCS A 804/2019 which is pending adjudication before the trial Court. When the petitioner had received notice for appearance, then they had appeared and filed an application under Order 7 Rule 11 of the CPC on 19.03.2020, stating that since a dispute is already pending before Maharashtra State Micro and Small Enterprises Facilitation Council, Mumbai, therefore, plaint is not maintainable and thus, prayed for dismissal of the suit.
5. During pendency of the suit RCS A No.840/2019 before the Civil Court at Jabalpur, a notice was issued on 10.06.2021 for appearance of the petitioner on 09.04.2021. A copy of this notice issued by Shri Sourabh Goswami, Judicial Magistrate First Class in RCT 0000766/2020 ( Rajedev Sharma Proprietor S.S. Communication v. Kiranmal Chand Jain) is enclosed as Annexure P-9 and copy of the complaint under Section 200 of the Cr.P.C.
as Annexure P-10. It is submitted that purely a civil dispute arising out of Signature Not Verified Signed by: KOUSHALENDRA SHARAN SHUKLA Signing time: 3/20/2025 4:58:42 PM NEUTRAL CITATION NO. 2025:MPHC-JBP:13246 4 WP-12601-2021 purchase and sale, has been converted into a case having criminal dimensions which is arbitrary and illegal and contrary to law laid down by the Supreme Court in the cases of Anil Mahajan v. Bhor Industries and Another, (2005) 10 SCC 228; Binod Kumar and Others v. State of Bihar and Another, (2014) 10 SCC 663; Rashmi Jain v. State of Uttar Pradesh and Another, (2014) 13 SCC 553; Vinod Natesan v. State of Kerala, (2019) 2 SCC 401; Prof. R.K. Vijaysarathy v. Sudha Seetharam and Another, (2019) 16 SCC 739; Vijay Kumar Ghai and Others v. State of West Bengal, (2022) 7 SCC 124; Mitesh Kumar v. State of Karnataka (2022) 14 SCC 572; Sarabjit Kaur v. State of Punjab , (2023) 5 SCC 360; Sachin Garg v. State of UP, 2024 SCC OnLine SC 82; Kunti and Another v. State of UP , (2023) 6 SCC 109; State of Haryana and Others v. Bhajanlal and Others, 1992 Supp (1) SCC 335; Pepsi Foods Ltd. and Another v. Special Judicial Magistrate and Others, (1998) 5 SCC 749; Varla Bharath Kumar and Another v. State of Telangana and Another, (2017) 9 SCC 413; Kapil Agrawal and Others v. Sanjay Sharma and Others, (2021) 5 SCC 524; and Kim Wansoo v. State of U.P. and Others, 2025 SCC OnLine SC 17.
6. On the other hand, Shri Sanjay K. Agrawal, learned Senior Counsel appearing for the private respondent submits that both civil and criminal cases can go side by side inasmuch as there are different cause of action for filing Civil and Criminal cases. Reliance is placed on the judgments of Supreme Court in the case of Shankar Finance and Investments v. State of Andhra Pradesh and others, (2008) 8 SCC 536. Similarly reliance is also placed in the cases of V. Ravi Kumar v. State represented by Inspector of Signature Not Verified Signed by: KOUSHALENDRA SHARAN SHUKLA Signing time: 3/20/2025 4:58:42 PM NEUTRAL CITATION NO. 2025:MPHC-JBP:13246 5 WP-12601-2021 Police, District Crime Branch, Salem, Tamil Nadu and Others, (2019) 14 SCC 568; K. Jagadish v. Uday Kumar G.S. and Another, (2020) 14 SCC 552; P. Swaroopa v. M. Hari Narayana @ hari Babu, (2008) 5 SCC 765; Syed Askari Hadi Ali Augustine Imam and Another v. State (Delhi Administration) and Another, (2009) 5 SCC 528 and also in the judgment of Delhi High Court in the case of Svapn Constructions v. IDPL Employees Cooperative Group Housing Society and Others, 2005 SCC OnLine Del 1392 and placing reliance on paragraphs 16 to 18, it is submitted that ratio in that case is that if the sole proprietorship firm is not a legal entity, then the petition should be filed by the sole proprietor in his name on behalf of his sole proprietorship firm and not in the name of sole proprietorship firm. It is thus submitted that complaint contained in Annexure P-10 having been filed by Rajdev Sharma as proprietor of M/s S.S. Communication against Kiranchandmal Jain proprietor of Chevron Inc. cannot be faulted with and since both the proceedings are admissible side by side, the petition needs to be dismissed.
7. After hearing learned counsel for the parties and going through the record, it is evident that the Supreme Court in the case of Vinod Kumar v. State of Bihar, (2014) 10 SCC 663 has held that civil liability cannot be converted to criminal liability and it will amount to abuse of process of Court. Criminal proceeding is not a short cut and since no case of criminal breach of trust, essential ingredients of Sections 405 and 420 are made out, prosecution against the appellant under Sections 406/120B of the IPC is liable to be quashed.
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8. The Supreme Court in the case of Indian Oil Corporation v. NTPC Ltd. (2006) 6 SCC 736 noted that there is 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. 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. The same is the ratio of judgment in the case of G. Sagar Suri v. State of U.P. [(2000) 2 SCC 636.
9. In the case of Rashmi Jain (supra) it is held by the Supreme Court that a purely civil dispute cannot be allowed to be converted into a criminal case when such case falls within the ambit of propositions 5 and 7 of Bhajan Lal's case (supra), then such tendency to convert civil dispute into criminal case should be deprecated and such proceedings should be quashed.
10. In the case of Anil Mahajan (supra) the Supreme Court has held that in case there is no allegation that the accused made unlawful representation, even according to them, they entered into memorandum of understanding, then grievances seem to be that the accused failed to discharge obligation under the MoU then under such facts and circumstances, mere failure of a person to keep up promise subsequently, a culpable intention right at the beginning, that is, when he made the promises cannot be presumed. A distinction has to be kept in mind between mere breach of contract and the Signature Not Verified Signed by: KOUSHALENDRA SHARAN SHUKLA Signing time: 3/20/2025 4:58:42 PM NEUTRAL CITATION NO. 2025:MPHC-JBP:13246 7 WP-12601-2021 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.
11. In the case of Bhajanlal (supra) the Supreme Court enumerated the categories of cases by way of illustration wherein the High Court would be justified in exercising its inherent power under Section 482 of the Cr.P.C. or Article 226 of the Constitution of India to prevent abuse of process of Court or otherwise to secure the ends of justice. In Bhajanlal (supra) it is noted that proposition (5) is that 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; and also in proposition (7) it is held that 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, then criminal proceedings are not maintainable.
12. In the present case, a perusal of the complaint as contained in Annexure P-10, reveals that in paragraph 4 it is admitted that the petitioner had given a demonstration of solar smart dustbin in front of concerned officers of Jabalpur Smart Limited. It was promised that solar smart dustbin will have some specific functions as are mentioned in the data sheet. In paragraph 8 there is an allegation that complainant had made payment of GST at the time of purchase of machine but since the petitioner had not paid Signature Not Verified Signed by: KOUSHALENDRA SHARAN SHUKLA Signing time: 3/20/2025 4:58:42 PM NEUTRAL CITATION NO. 2025:MPHC-JBP:13246 8 WP-12601-2021 the GST, the complainant had not received the input credit of GST amount. In paragraph 11, it is admitted that dustbin was not properly installed for which correspondence was made followed by reminders for rectification of mistake. Thereafter allegation is that engineer of the petitioner had visited the site on 12.03.2019 and 19.03.2019 and had taken certain parts in the name of replacement and thereafter allegation is that with a view to misappropriate the funds, substandard dustbins were supplied to the complainant.
13. On the other hand, allegation of the petitioner is that payment was not made in time; installation was obtained in the hands of untrained persons; and further that there was dishonest intention from the beginning. Reliance is placed on the judgment of the Supreme Court in the case V. Ravi Kumar (supra) wherein it is held that quashing of the complaint/FIR is not warranted where prima facie it discloses commission of offence under Section 420 and 409 of the IPC. Similarly reliance is placed on the judgment in the case of K. Jagdish (supra) wherein it is held by the Supreme Court that there are large number of cases where criminal law and civil law can run side by side. The two remedies are not mutually exclusive but clearly coextensive and essentially differ in their content and consequence. Object of criminal law is to punish offender, who commits offence against person, property or State, for which, accused, on proof of offence is deprived of his liberty and in some cases even his life. It does not, however, affect the civil remedies at all for suing the wrongdoer in cases like arson, accidents, etc. It is an anathema to suppose that when a civil remedy is available, a criminal Signature Not Verified Signed by: KOUSHALENDRA SHARAN SHUKLA Signing time: 3/20/2025 4:58:42 PM NEUTRAL CITATION NO. 2025:MPHC-JBP:13246 9 WP-12601-2021 prosecution is completely barred. The two types of actions are quite different in content, scope and import.
14. The Supreme Court in the case of R. Kalyani v. Janak C. Mehta, (2009) 1 SCC 516 has enumerated the propositions of law in paragraph 15 as follows:
"15. Propositions of law which emerge from the said decisions are:
(1) The High Court ordinarily would not exercise its inherent jurisdiction to quash a criminal proceeding and, in particular, a first information report unless the allegations contained therein, even if given face value and taken to be correct in their entirety, disclosed no cognizable offence.
(2) For the said purpose the Court, save and except in very exceptional circumstances, would not look to any document relied upon by the defence.
(3) Such a power should be exercised very sparingly. If the allegations made in the FIR disclose commission of an offence, the Court shall not go beyond the same and pass an order in favour of the accused to hold absence of any mens rea or actus reus.
(4) If the allegation discloses a civil dispute, the same by itself may not be a ground to hold that the criminal proceedings should not be allowed to continue."
It is thus, submitted that there is no need to show indulgence to quash the proceedings.
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15. In the case of Prof. R.K. Vijaysarathy (supra) the Supreme Court has held that where prima facie there is absence of ingredients of offence and there is an attempt to cloak a civil dispute with criminal nature despite absence of ingredients necessary to constitute criminal offence, then criminal proceedings should be quashed.
16. In the present case, when gist of the allegations as made in the complaint, are examined, then ingredients of the complaint reveals that smart dustbins were supplied. There was some problem in operation. Some machine parts were taken by the company engineer for replacement. The complainant is seeking registration of offences under Sections 415, 419 and 420 of the IPC.
17. The Supreme Court in Prof. R.K. Vijaysarathy (supra) noted the ingredients of Section 405, 415 and 420 as under:
"12. Section 405 of the Penal Code reads thus:
"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".
13. A careful reading of Section 405 shows that the ingredients of a criminal breach of trust are as follows:
13.1. A person should have been entrusted with property, or entrusted with dominion over property;
13.2. That person should dishonestly misappropriate or convert Signature Not Verified Signed by: KOUSHALENDRA SHARAN SHUKLA Signing time: 3/20/2025 4:58:42 PM NEUTRAL CITATION NO. 2025:MPHC-JBP:13246 11 WP-12601-2021 to their own use that property, or dishonestly use or dispose of that property or wilfully suffer any other person to do so; and 13.3. That such misappropriation, conversion, use or disposal should be in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract which the person has made, touching the discharge of such trust.
14. Entrustment is an essential ingredient of the offence. A person who dishonestly misappropriates property entrusted to them contrary to the terms of an obligation imposed is liable for a criminal breach of trust and is punished under Section 406 of the Penal Code.
15. Section 415 of the Penal Code reads thus:
"415. Cheating.--Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to "cheat".
16. The ingredients to constitute an offence of cheating are as follows 16.1. There should be fraudulent or dishonest inducement of a person by deceiving him:
16.1.1. 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 16.1.2. The person so induced should be intentionally induced to do or to omit to do anything which he would not do or omit if he were not so deceived; and 16.2. In cases covered by 16.1.2. above, the act or omission should be one which caused or is likely to cause damage or harm Signature Not Verified Signed by: KOUSHALENDRA SHARAN SHUKLA Signing time: 3/20/2025 4:58:42 PM NEUTRAL CITATION NO. 2025:MPHC-JBP:13246 12 WP-12601-2021 to the person induced in body, mind, reputation or property.
17. A fraudulent or dishonest inducement is an essential ingredient of the offence. A person who dishonestly induces another person to deliver any property is liable for the offence of cheating.
18. Section 420 of the Penal Code reads thus:
"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."
19. The ingredients to constitute an offence under Section 420 are as follows:
19.1. A person must commit the offence of cheating under Section 415; and 19.2. The person cheated must be dishonestly induced to
(a) deliver property to any person; or
(b) make, alter or destroy valuable security or anything signed or sealed and capable of being converted into valuable security.
20. Cheating is an essential ingredient for an act to constitute an offence under Section 420."
When these ingredients are examined, then it is evident that the averments in the complainant do not constitute, ingredients necessary for offences alleged. Thus, when the ingredients of Section 405, 415 and 420 of the IPC are not made out then continuing the complaint because civil and criminal remedies can coexist as held by the Supreme Court in the case of K. Jagdish (supra) and as suggested by Shri Sanjay K. Agrawal, it will Signature Not Verified Signed by: KOUSHALENDRA SHARAN SHUKLA Signing time: 3/20/2025 4:58:42 PM NEUTRAL CITATION NO. 2025:MPHC-JBP:13246 13 WP-12601-2021 be injustice to the other party.
18. Law laid down in the case of Prof. R.K. Vijaysarathy (supra) to constitute offence under Section 405 of the IPC is that the accused was entrusted with some property or has dominion over the property. Similarly for an act to constitute an offence under Section 415 of the IPC, it is necessary that there was dishonest inducement by the accused.
19. In the present case, it is accepted by the complainant that a demonstration was given by the petitioner in the Office of Smart City Ltd. and being satisfied with the demonstration, orders were placed for smart solar dustbins. Mere malfunctioning of a machine either due to mishandling or improper installation or some defect in the parts of the macwqhine, cannot be said to form ingredients of Section 405 or 415 of the IPC which is punishable under Section 420 of the IPC. Therefore, when tested then impugned order of issuing summons without taking this fact into consideration that there is neither any element of inducement or cheating, continuing with the complaint will cause travesty of justice and, therefore, the complaint filed by the complainant having failed to disclose commission of offences so to constitute ingredients of the aforesaid sections, namely, 405, 415 and 420 cannot be sustained in the eyes of law and deserves to be and is hereby quashed.
20. The petition is allowed. Criminal Case instituted by the respondent Criminal Case No.558/2019 pending before JMFC, Jabalpur is hereby quashed. However, it is made clear that quashing of criminal proceedings will not have any adverse effect on the proceedings before the Maharashtra Signature Not Verified Signed by: KOUSHALENDRA SHARAN SHUKLA Signing time: 3/20/2025 4:58:42 PM NEUTRAL CITATION NO. 2025:MPHC-JBP:13246 14 WP-12601-2021 State Micro and Small Enterprises Facilitation Council, Mumbai or on any other civil proceedings, and they will go on in accordance with law.
(VIVEK AGARWAL) JUDGE ks Signature Not Verified Signed by: KOUSHALENDRA SHARAN SHUKLA Signing time: 3/20/2025 4:58:42 PM