Madras High Court
Y.S. Shah, Managing Partner And Anr. vs Sri G. Srinivasan, Vice ... on 1 January, 1800
Equivalent citations: 2004(5)CTC189
JUDGMENT N. Kannadasan, J.
1. The above petition is filed under Section 482 of the Code of Criminal Procedure to quash the proceedings in C.C.No. 137 of 2002 on the file of the Judicial Magistrate, Tiruchendur.
2. The Respondent/complainant is engaged in production of Caustic Soda, Ilmenite among other heavy chemicals which is in need of several equipments including Graphite Heat Exchangers. To meet the demands of the respondent/complainant, the first accused/first petitioner has submitted a quotation dated 15.11.2000 giving technical specification, price, delivery, payment schedule and other terms and conditions of guarantee clause. The price quoted therein was Rs. 11,30,000. The respondent has accepted the offer and issued purchase order dated 28.2.2001. Later on the equipment was supplied by the accused/petitioner herein and it was commissioned by the technicians of the first accused in the premises of the complainant's company during first week of July 2001. On 15.11.2001, a leakage was found in the equipment which was immediately informed to the accused. Though the first accused visited the complainant's company, he was unable to rectify the defects and left the place. Subsequently, the respondent company engaged one Chartered Engineer, who has submitted an inspection report and it is found therein that the poor performance of the equipment was due to the usage of Fibre Reinforced Plastic (hereinafter called as 'FRP') instead of graphite in assembling the equipment, which is contrary to the specifications and the drawing given by the accused. Since the machinery was not in terms of the specifications as found out in the drawings and the accused knowing fully well, used FRP with the portion of the equipment which resulted in leakage and with a view to make wrongful gain to the extent of Rs. 80,000, has used FRP which is lesser in value and thereby committed the offence under Sections 415, 417 and 420, IPC.
3. The respondent/complainant has preferred a complaint in the light of the facts narrated above on the file of the learned Judicial Magistrate, Tiruchendur in C.C.No. 137 of 2002. The petitioners/accused are aggrieved as against the above said proceedings, have approached this Court by way of the above petition.
4. The above petition is filed contending that the learned Magistrate ought not to have issued the process in the absence of sufficient materials placed before it. Since no document or material evidence had been placed prima facie to satisfy the requirements of law, the complaint is taken on file. The learned Magistrate has not considered the fact that the equipment was accepted by the respondent/complainant and the same was erected as early as during first week of July 2001 and it was found working and only on 15.11.2001, the defect was noticed and all possible steps were taken to rectify the said defect and criminal liability cannot be fastened upon the accused in the case of this nature.
5. The learned counsel for the petitioners contended that the complaint is filed with a view to harass the petitioners herein and no materials exist to proceed as against the accused under Criminal law of jurisprudence and if at all any defect is noticed, at best it could be termed as a breach of contract, for which a civil suit is already filed by the respondent/complainant in O.S.No. 50 of 2003 on the file of Sub Court, Tuticorin, claiming a sum of Rs. 28.23 lakhs. According to the learned counsel, even though the equipment was installed in the presence of the officials of the respondent company and it was allowed to function for quite a long time and after several correspondences, the present complaint is filed at a later date viz., on 20.6.2002. The entire dispute is of civil nature and the ingredients of the offence under which the accused are charged are not at all existing and accordingly prayed for quashing the proceedings on the file of the learned Magistrate, Tiruchendur.
6. Before proceeding with the matter, I am cautious about my limited power under Section 482 of the code as held by the Honourable Supreme Court in its decision in State of Karnataka v. M. Devendrappa, AIR 2002 SC 671, viz., this Court can exercise its inherent jurisdiction for the following reasons:
a) To give effect to an order under the Code
b) To prevent the abuse of process of Court; and
c) To otherwise secure the ends of justice.
Hence, the matter is proceeded with as to whether this Court can exercise its powers in the light of the principles as enunciated by the Apex Court in the decision cited supra.
7. The entire complaint proceeds on the basis that when the petitioners have offered quotation on 15.11.2000, they have enclosed a separate drawing for the ready reference of the respondent and as per the drawing, a portion of the equipment was viz., where graphite tube meets a plate instead of using graphite, FRP was used and thereby the defect has crept in the equipment.
8. According to the learned counsel for the respondent, the FRP is used by the accused knowing fully well that it should not be used and since the price of FRP is lesser than graphite, with a view to gain monetarily, the specification is violated. The learned counsel would further contend that alongwith the said quotation, a drawing is enclosed and the drawing also suggests that the two portions of a particular place in the equipment where graphite cooler is existing, FRP is used, which ought not to have done. According to the learned counsel for the respondent, as per the inspection report obtained from the Chartered Engineer, the above defect was noticed which is contrary to the drawing enclosed along with the quotation dated 15.11.2000 and hence submitted that the accused are liable to be proceeded with for the offences as alleged in the complaint.
9. The appreciate the contents of the quotation dated 15.11.2000, the operative portion of the quotation is extracted hereunder:
"Technical specification:
Shell and tube type Graphite cooler, Shell CS rubber line, tubes Graphite, Gasket PTFE, Nozzel MS Graphite lined with PTFE below, Heat Transfer Area for 15M3/Hr. - 30 M2 and for 20M3/Hr. - 40 M2. Graphite tube ID - 25mm, OD - 38 mm, length of the tubes 4 mts, total length of the cooler 5 mts, with detachable tube sheet arrangement for descaling on service side while using Sea-water. A schematic drawing is enclosed for your ready reference. Cooler shall be FALLING FILM TYPE VERTICAL, all other specification as per your requirements.
Sea water requirement for cooling in 15M3/Hr. - cooler - 90m3/Hr. and for cooling in 20M3/Hr. Cooler - 140M3/Hr.".
In the abovesaid technical specification, the dispute is pertaining to the portion of the equipment viz., Tube Type Graphite Cooler. A drawing which is annexed along with the said quotation makes the description of the Tube Type Graphite Cooler. In the said drawing, in the entire middle portion, graphite is used. Whereas in the upper portion of the said area as well as the lower portion, consist of graphite as well as FRP. According to the respondent, in the said areas, FRP should not have been used and the accused knowing fully well, have used the said material for a wrongful gain.
10. A perusal of the complaint proceeds to the effect that the above said technical specification dated 15.11.2000 is violated inasmuch as there is a deviation in the supply of machinery as set out in the drawings enclosed along with the quotation. The relevant portion of the complaint about the deviation is extracted as hereunder :
"It is submitted that as per the drawing provided by the accused (Document No. 3) the tube plate where the graphite tubes are fixed should be made of steel with graphite lining.
The complainant was shocked to note from the Chartered Engineer's report that in the bottom side of the equipment which should be made solely of steel and graphite, to a large extent FRP had been used instead of graphite.
Graphite is costier than Fibre Reinforced Plastic (FRP). The difference is very high. 1 kg of Graphite cost = Rs. 600. 1 kg FRP cost = Rs. 140. For proper assembling of the equipment the Accused should have used 100 kgs of Graphite but he had used only 20 kg of Graphite and for the remaining 80 kgs of Graphite the Accused used 20 kg of a low quality and also lesser density FRP. The difference of Rs. 80,000 is the unlawful gain made by the accused".
A perusal of the above passages in addition to further reference as contained therein disclose that the complainant is aggrieved about the usage of FRP at a particular place of the equipment. The complaint does not suggest about the fraudulent or dishonest action on the part of the accused. On a reading of the complaint, it is clear that the main offence alleged to have been committed by the petitioners is cheating punishable under Section 420, IPC.
11. Cheating is defined in Section 415 of the Code as, "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 case damage or harm to that person in body, mind, reputation or property, is said to "cheat".
Explanation - A dishonest concealment of facts is a deception within the meaning of this Section."
12. The Section requires -
(1) Deception of any person. (2) (a) Fraudulently or dishonestly inducing that person
(i) to deliver any property to any person; or
(ii) to consent that any person shall retain any property; or
(b) intentionally inducing that person 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.
13. On a reading of the Section it is manifest that in the definition there are set-forth two separate classes of acts which the persons deceived may be induced to do. In the first place he may be induced fraudulently or dishonestly to deliver any property to any person. The second class of acts set-forth in the Section is the doing or omitting to do anything which the person deceived would not do or omit to do if he were not so deceived. In the first class of cases the inducing must be fraudulent or dishonest. In the second class of acts, the inducing must be intentional but not fraudulent or dishonest.
In the light of the above facts, by considering the nature of the complaint and other correspondences, the criminal liability cannot be fastened upon the accused. In fact, even in the inspection report dated 25.3.2002, submitted by the Chartered Engineer, it is observed as follows:
"After removal dish ends on Top and Bottom side of H.E., it was found that the tube sheet on top was made of 2 different Materials (carbon steel and graphite lining) and the Bottom was made of 3 materials (CS, FRP and graphite lining) tubes were of graphite".
Thus, it cannot be suggested that the accused have completely excluded the usage of graphite and made use of FRP only. Merely because, there is a reduction in the quantity of usage of graphite, at any stretch of imagination, the accused could not be proceeded with for the alleged offence as stated in the complaint. There may be a breach of contract or non-compliance of the specification as set out in the drawings in strict sense. That will not hold that the accused have got fraudulent or dishonest intention. In this connection, it would be useful to observe the relevant passage of the Honourable Supreme Court in its decision in Hridaya Ranjan Pd. Verma v. State of Bihar, AIR 2000 SC 2341, which is extracted as below:
"In determining the question it has to be kept in mind that the distinction between mere breach of contract and the offence of cheating is a fine one. It depends upon the intention of the accused at the time of inducement which may be judged by his subsequent conduct but for this subsequent conduct is not the sole test. Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction that is the time when the offence is said to have been committed. Therefore, it is the intention which is the gist of the offence. To hold a person guilty of cheating it is necessary to show that he had fraudulent or dishonest intention at the time of making the promise. From his mere failure to keep up promise subsequently such a culpable intention right at the beginning, that is, when he made the promise cannot be presumed".
14. Similarly, the Apex Court in its decision in S.N. Palantikar v. State of Bihar, AIR 2001 SC 2960, has cautioned against the issuing of process so that it should not be an instrument in the hands of the private complainant as vendetta or harass the person needlessly.
15. It is also useful to refer about the decision of the Apex Court in Haridaya Ranjan Prasad Verma and Ors. v. State of Bihar and Anr., 2000 (4) SCC 168, which proceeds as hereunder:
"Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent, or dishonest intention is shown right at the beginning of the transaction, that is the time when the offence is said to have been committed. Therefore, it is the intention which is the gist of the offence. To hold a person guilty of cheating it is necessary to show that he had fraudulent or dishonest intention at the time of making the promise. From his mere failure to keep up promise subsequently such a culpable intention right at the beginning, that is, when he made the promise cannot be presumed"..
16. Similarly, the Apex Court in its decision in Punjab National Bank v. Surendra Prasad Sinha, 1993 Supp. (1) SCC 499, has observed as follows:
"As that stage the Court would be circumspect and judicious in exercising discretion and should take all the relevant facts and circumstances into consideration before issuing process lest it would be an instrument in the hands of the private complainant as vendetta to harass the persons needlessly. Vindication of majesty of justice and maintenance of law and order in the society are the prima objects of criminal justice but it would not be the means to wreak personal vengeance. Considered from any angle we find that the respondent had abused the process and laid complaint against he appellants without any prima facie case to harass them from vendetta".
17. Though the learned counsel for the respondent has referred to a decision of the Apex Court in Rajesh Bajaj v. State NCT of Delhi, AIR 1999 SC 1216, the Apex Court in its decision in Hridaya Ranjan Pd. Verma v. State of Bihar, AIR 2000 SC 2341, has taken note of the law laid down therein and held in the said decision that the criminal case should not be proceeded with.
18. Similarly, the other decisions referred to by the learned counsel for the respondent viz., in Trisuns Chemical Industry v. Rajesh Agarwal, AIR 1999 SC 2399 and in Medchl Chemical and Pharma Pvt. Ltd. v. Biological E. Ltd., AIR 2000 SC 1869, are concerned, they are also not helpful to the case on hand, more particularly, the above mentioned decisions are also considered by the Apex Court in its decision in S.N. Palanitkar v. State of Bihar, AIR 2001 SC 2960, which was dealt with by me already.
19. In the light of the facts as narrated supra as well as the law laid down by the Apex Court, even a perusal of the complaint does not disclose that the petitioners can be implicated for the alleged offence a stated therein. In the light of the discussions referred to supra, I am of the view that the case on hand, this Court has to necessarily exercise the power under Section 482 of the Code in order to prevent the abuse of process of the Court as well as to secure the ends of justice. Therefore, the proceedings pending on the file of the learned Judicial Magistrate, Tiruchendur in C.C.No. 137 of 2002 dated 20.6.2002 is quashed. The Criminal Original Petition is allowed. Consequently, connected Crl.M.P. is closed.