Delhi District Court
Ca No. 120/2023 "Ekgf Kidskool Llp vs . Neetu Prakash & Ors." on 30 May, 2023
CA No. 120/2023 "EKGF Kidskool LLP Vs. Neetu Prakash & Ors."
IN THE COURT OF SH. GAUTAM MANAN, ASJ-02
SOUTH WEST, DWARKA ,NEW DELHI
Criminal Appeal No. 120/2023
CNR No. DL-SW-01-002002-2023
In the matter of:
1. EKGF Kidskool LLP
RZF-736/38, Kh No-44/1/4
First Floor Back Side,
FF-04 Raj Nagar II, Palam Colony,
Near N R Public School,
New Delhi Delhi-110077
(a) Pratima Pal
(b) Navneet Kumar ... Revisionists
Versus
1. Neetu Prakash
Plot No 22, Galli No - 2,
Bajaj Enclave, Old Palam Road,
Sec 15, Dwarka, Palam Village,
New Delhi - 110077
2. Anand Prakash
RZF-776/17, Gali No. 15,
Near Shiv Mandir, Opp. B-Block,
Dwarka Sector-8, Raj Nagar Part -2,
New Delhi - 110077
3. Amrita Maurya
Plot No 22, Galli No - 2,
Bajaj Enclave, Old Palam Road,
Sec 15, Dwarka, Palam Village,
New Delhi - 110077 ... Respondents
Date of institution of revision : 24.02.2023
Date on which judgment reserved : 15.05.2023
Date on which judgment pronounced : 30.05.2023
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CA No. 120/2023 "EKGF Kidskool LLP Vs. Neetu Prakash & Ors."
ORDER
1. Appeal is directed U/s 397 Cr.P.C. against the order dated 21.11.2022 passed by Ld. MM-01, South-West District, Dwarka Courts, New Delhi, in case bearing CT No. 1949/2022, titled as "EKGF Kidskool LLP Vs. Neetu Prakash & Ors.", wherein the complaint case filed by complainant filed was dismissed.
2. Present petition instituted by the appellant is treated as revision petition.
Brief Facts
3. Appellant filed a complaint case U/s 200 Cr.P.C. on averments that it is a Limited Liability Partnership and operates under the Trade name "The Kidskool Play School' having a tagline 'Khel Khel Me Padhai', a play school designed and developed to cater to the learning needs of toddlers with love and affection.
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4. Appellant has stated that it's partner no.1 was running a creche cum tuition center at home since November 2019 and she was desirous of converting teaching hobby into a full-fledged career started taking steps to establish a play school as a pilot project and later developing it into a full-scale Montessori School.
5. Appellant alleged on 07.02.2022, respondents No. 1 & 2 expressed their interest to be associated with venture of appellant and offered to run the playschool in partnership. It was agreed between them to start kids School "The Kidskool Play School" and in this regard they entered into an oral agreement on 07.02.2022.
6. Appellant alleged that it's partners invested Rs.13,65,348 (Thirteen Lakh Sixty-Five Thousand Three Hundred and Forty-Eight Rupees) in the venture. It was further agreed among the partners, that 75% of initial capital investment will be done and borne by the appellant. Therefore, it was decided that appellant would collectively Criminal Revision Page 3 of 21 CA No. 120/2023 "EKGF Kidskool LLP Vs. Neetu Prakash & Ors."
hold 75% equity in the venture and respondents no. 1 & 2 would hold 25% equity.
7. Appellant alleged that it's partner no. 2 being proficient in management and marketing, single-handedly worked on the advertisement and building a website for the promotion of the firm and supervised the interior decoration of the firm. A logo was created and refined and purchased a domain name "thekidskool.com" from Godaddy.
8. Appellant averred that on 26.02.2022 respondent no.1 uploaded a video on her social media account on her Instagram handle with the caption "opening of my playschool at Dwarka Sec-8", which led to an argument between the other partners of the firm as it sent a misleading message that she was the sole owner of the firm. It is alleged that this message was posted the intent to commit fraud and dishonestly use the appellant's trade name and goodwill.
9. Appellant alleged that rented premises were renovated from 21.02.2022 to 25.02.2022 as per the Criminal Revision Page 4 of 21 CA No. 120/2023 "EKGF Kidskool LLP Vs. Neetu Prakash & Ors."
requirements of the play school and the Vastu Pujan was also done on 27.02.2022. On 01.03.22 first branch of "The KidSkool Play School" came into operation. Partner no.2 of appellant designed School admission form, payment receipt, copy and book name card.
10. On 05.03.22 partners decided curriculum and placed orders for the books. Thereafter receiving the books, partner no.1 cleared the payment. On 31.03.22 partners decided to open another branch on garnering positive reviews and responses from the parents and after maximum intake capacity of the first branch of School was filled.
11. Appellant stated that on 02.04.2022 work on advertisement for the second branch began and subsequently on 19.04.22 a Vastu-Pujan was conducted. However, a dispute arose between appellant's and respondent no. 1 & 2 on 09.06.2022, when appellant asked the respondent for Books of Accounts and split the profits in four parts as per their equity as per verbal agreement. Appellant also pressed for proper documentation of the firm, as the pilot project had Criminal Revision Page 5 of 21 CA No. 120/2023 "EKGF Kidskool LLP Vs. Neetu Prakash & Ors."
evolved. However, the respondent denied it as the respondent was interested in embezzling the investments made by the appellant.
12. It is alleged that appellant pressed their demands of 09.06.2022 on 11.06.2022, however, to their dismay, the situation deteriorated further because of adamant and shrewd nature of the respondent. As better sense prevailed on 13.06.2022, matter was amicably settled the issue and decided to do agreement in a week. Appellant was made to clear bill of Rs 25000/- to "Rajesh Toy Shop" for which necessary articles were purchased for School. It is alleged that respondent did not have any intention to share the profits with the appellant but to defraud the appellant and embezzle their hard-earned money and due profits in the venture. On 28.06.2022, a dispute again arose between the parties when partner no.2 of appellant raised an inquiry regarding the share of profit and documentation of the firm.
13. It is further alleged that to resolve the dispute, on 29.06.2022 at around 9:30 pm respondent colluded with Criminal Revision Page 6 of 21 CA No. 120/2023 "EKGF Kidskool LLP Vs. Neetu Prakash & Ors."
their friend Amrita/respondent No. 3 and called the police and foisted false allegations upon partners of appellant. On 03.07.2022 the appellant made a formal complaint to SHO, Police Station Palam against respondent no. 1 for cheating, criminal intimidation and assault.
14. It is alleged that on 04.07.2022 when the partner no.1 of appellant went to School to execute her responsibilities but she was assaulted and abused by respondent no. 1 and her friend Amrita/respondent no. 3. On 06.07.2022, the partner no.1 of appellant made a formal complaint to Delhi Commission for Women. On 19.07.2022, respondent no. 1 along with her friends wrongfully restrained and made an assault on partner no1. Seeing no way out she made a call on 112.
15. Appellant alleged that respondents have misappropriated the entrusted property and has caused appellant to suffer innumerable mental agony and irretrievable emotional distress. It is alleged that respondents also wrongfully restrained partners of appellant from Criminal Revision Page 7 of 21 CA No. 120/2023 "EKGF Kidskool LLP Vs. Neetu Prakash & Ors."
entering the business premises and defaming and slandering them. It is alleged that respondents have cheated the appellant by making a false and frivolous promise of building a venture and per verbal agreement of 07.02.2022, thereby fraudulently acquiring the services of the Appellant's partners for their benefit and despite complaints made to SHO, ACP and concerned DCP against the respondents no action was taken.
16. In pre-summoning evidence appellant examined partners of appellant as CW1 & CW2 who deposed on the lines of complaint.
17. Ld. Trial Court vide impugned order dated dismissed complaint case instituted by the appellant by holding that allegations did not constitute any criminal offence.
Grounds of Appeal
18. Feeling aggrieved by the said order, appellant filed present petition by stating that impugned order passed by the Criminal Revision Page 8 of 21 CA No. 120/2023 "EKGF Kidskool LLP Vs. Neetu Prakash & Ors."
Ld. Trial Court was without proper consideration of the facts and legal Principles of the Indian Penal Code, 1860. Appellant stated that in M/s Indian Oil Corporation vs M/S Nepc India Ltd, Appeal (Crl) 834 of 2002 Hon'ble Supreme Court held that "A commercial transaction or a contractual dispute, apart from furnishing a cause of action seeking remedy in civil law, may also involve criminal offence, thus in the light of the same the Ld. Trial Court can be stated prima-facie had correctly taken cognizance against the Accused regarding the commission of "Offence of Cheating"
vide order dated 12.03.2021.
19. It is submitted that Ld. Trial Court order is not in accordance with Apex Court observation in Sau. Kamal Shivaji Pokarnekar Vs. State of Maharashtra SLP (Crl.) No. 7513 of 2014 where Hon'ble Supreme Court held that if the ingredients of the offence alleged against the accused are prima-facie made out in the complaint, the criminal proceeding shall not be interdicted. It is submitted that Ld. Trial Court failed to consider the criminal offence also being a civil wrong between the respondent and the Criminal Revision Page 9 of 21 CA No. 120/2023 "EKGF Kidskool LLP Vs. Neetu Prakash & Ors."
appellant while passing the impugned order and Whatsapp Communication between the respondents and the appellant will be considered a contract under Section 10 of the Indian Contract Act, 1872 as it is fulfilling all the essentials of the contract which does not require appellant to have a registered partnership Agreement as Whatsapp communication fulfills all the essentials of valid contract.
20. It is submitted that text messages regarding the discussion of School as per Section-23 of the Indian Contract Act shows Lawful Consideration and Lawful object and it's breach with malafide intention is sufficient to establish a Criminal breach of trust under section 405 and Cheating Under Section 415 of the Indian Penal Code, 1860 on part of the Respondent no. 1 and 2. Hence, when respondent no.1 & 2 abruptly removed partners of appellant in that case, respondents are liable under sections 405 and 415 IPC . It is further argued that Ld Trial Court in the impugned order has failed to take notice that as partner of the Partnership Agreement appellants automatically gain the right to enter the premises and did not take proper notice of Criminal Revision Page 10 of 21 CA No. 120/2023 "EKGF Kidskool LLP Vs. Neetu Prakash & Ors."
the evidence so presented by the appellant's partners, which is well established by the Law of Evidence.
21. I have heard the submissions and perused the record. I have also gone through written submissions filed on behalf of the parties.
Action Taken Report
22. It is a matter of record that an Action Taken Report was called from the investigating agency. In the report dated 11.10.2022 it was revealed that there was no written argument regarding joint venture of Play school. It is stated that appellant had already filed a recovery Suit as well as a Suit for Injunction and Declaration against the respondents. Law
23. At the outset, appellant alleged that the respondents committed an offence punishable under Sections 406/420/339/352/463/506/476/34/120-B IPC and under Section 103 Trade Marks Act.
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24. Let us examine the ingredients of the said offences and whether the allegations made in the complaint, read on their face, attract those offences under the Penal Code.
25. In Vijay Kumar Ghai and Others versus State of West Bengal and Others, (2022) 7 SCC 124, Hon'ble Supreme Court of India held, as under:
27. Section 405 IPC defines "criminal breach of trust" which reads as under:
"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"."
The essential ingredients of the offence of criminal breach of trust are:(1) The accused must be entrusted with the property or with dominion over it, (2) The person so entrusted must use that property, or;
(3) The accused must dishonestly use or dispose of that property or wilfully suffer any other person to do so in violation,
(a) of any direction of law prescribing the mode in which such trust is to be discharged, or;
(b) of any legal contract made touching the discharge of such trust.
28. "Entrustment" of property under Section 405 of the Penal Code, 1860 is pivotal to constitute an offence under this. The words used are, "in any Criminal Revision Page 12 of 21 CA No. 120/2023 "EKGF Kidskool LLP Vs. Neetu Prakash & Ors."
manner entrusted with property". So, it extends to entrustments of all kinds whether to clerks, servants, business partners or other persons, provided they are holding a position of "trust". 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.
29. The definition in the section does not restrict the property to movables or immovable alone. This Court in R.K. Dalmia v. Delhi Admn. [R.K. Dalmia v. Delhi Admn., (1963) 1 SCR 253 : AIR 1962 SC 1821] held that the word "property" is used in the Code in a much wider sense than the expression "movable property". There is no good reason to restrict the meaning of the word "property" to movable property only when it is used without any qualification in Section 405.
30. In Sudhir Shantilal Mehta v. CBI Sudhir Shantilal Mehta v. CBI, (2009) 8 SCC 1 : (2009) 3 SCC (Cri) 646] it was observed that the act of criminal breach of trust would, inter alia mean using or disposing of the property by a person who is entrusted with or has otherwise dominion thereover. Such an act must not only be done dishonestly but also in violation of any direction of law or any contract express or implied relating to carrying out the trust.
26. Section 415 IPC defines the cheating, as under:
"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".
Explanation. - A dishonest concealment of facts is a Criminal Revision Page 13 of 21 CA No. 120/2023 "EKGF Kidskool LLP Vs. Neetu Prakash & Ors."
deception within the meaning of this section."
27. Section 420 IPC is as under:
"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."
Analysis
28. It is settled law of land that Trial Court has jurisdiction to apply its judicial mind to facts and circumstances of the case while dealing with an application seeking registration of FIR. Though the appellant has contended that respondents by committing cheating has misappropriated his money but fact of the matter is that complainant has already instituted a suit for recovery against respondents.
29. Deposition of appellants 1(a) and 1(b) as CW1 & 2 are quite similar. In their pre-summoning evidence, both of them deposed as under:
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We met the accused during house warming ceremony on 26.09 2020We developed cordial relationship due to our children. As the relationship developed further, the accused approached us to venture into a partnership to open a play-school. We entered into an agreement through what's app group named Kidskool P Block, and first branch was opened on 01.03.2022.
I alongwith my husband cum partner not only invested financially but also physical and emotionally. The primary investment of around Rs10 lakh, however the document for Rs.7 lakh are available with us for infrastructure was done through the funds from my husband Navneet Kumar.
The accused took our the operation part and started collecting all the fees and never shared the profit with us, neither allowed as the access to scrutiny the books of account of the play school and neither shared any bank details with us even though we were the primary investors. When the pre school grew, we started scouting for another place to open a new branch.
Since the first was a pilot project, therefore, no hard and fast documentation was done, however, during opening of second branch, we insisted for due documentation but the accused said the same will be done during summer vacation. On 16.05.2022, when we approached the accused for documenting the transaction of the play school, they vehemently denied doing so and said we are just the employee not the stakeholder and partners in the play school. Hence, we have no right to claim any profits or ownership of the trade name On 29.06.2022, on the pretext of amicably settling the dispute, the accused invited us to their home at same locality bearing flat no.201 When we pressed for the same demand for documentation, the accused called their close friend Amrita and implicated us on a false charge of keeping unlicensed gun and reported it to police station Palam. However it was found to be a bogus claim.
On 04.07.2022, I went to the business premise of the play school first branch at near Sanatan Dharam Mandir, P Block, Raj Nagar Part II Palam Colony, Criminal Revision Page 15 of 21 CA No. 120/2023 "EKGF Kidskool LLP Vs. Neetu Prakash & Ors."
however I was denied entry stating that we have no claim whatsoever in the said business. I also tried to visit the same on 07.07.2022 and got the same response from the accused. Seeing on way out I called police for help and police asked us to visit police station to lodge a formal complaint. When police left, the accused along with their accomplices, threatened me and defame me.
After coming home, I also lodged a complaint with women helpline Seeing no way out, I lodged a formal complaint with police through counsel Ex.CW1/1 certificate of incorporation Ex. CW1/2 agreement/what's app communication between the complainant's partners and the accused Ex.CW1/3 bank statement and record of the investment done by the complainant's partner Ex. CW1/4 receipt of subscription of mobile connection for the firm. Ex.CW1/5 receipt of purchase of domain name thekidskool.com'Ex.CW1/6 formal complaint to Delhi Commission for Women Ex.CW1/7 written complaint to SHO ACP and DCP Palam Village and postal receipt Ex.CW1/8 Ex CW1//9 certificate u/s 65B of Indian Evidence Act Ex.CW1/10 declaration of transfer of shares in favor of EKGF Kidskool LLP Ex. CW1/11 Aadhar card of complainant no.1.
30. In Vijay Kumar Ghai and Others versus State of West Bengal and Others (supra), Hon'ble Apex Court clarified that act of criminal breach of trust would mean using or disposing of property by a person who is entrusted with or has otherwise dominion there over and such an act must not only be done dishonestly but also in violation of any direction of law or any contract express or implied relating to carrying out the trust.Criminal Revision Page 16 of 21
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31. However, none of CW1 or CW2 in their deposition alleged that there was any entrustment of property. At best their testimony indicates that they invested some money in a joint venture to be initiated with respondents for which respondents backed out. Admittedly there was no written contract or partnership agreement. No terms of contract or partnership venture were drawn and Whatsapp chat relied upon by the appellants also fell short of any commitment or agreement between parties. Thus, allegations and material on record does not indicate commission of offence punishable under section 406 IPC.
32. To constitute an offence of cheating, a fraudulent or dishonest inducement is an essential ingredient. A person who dishonestly induces another person to deliver any property is liable for the offence of cheating. Neither CW1 nor CW2 in their deposition have narrated any instance which indicates any inducement on part of respondents to rope appellants in the partnership. Nothing is appearing in the testimony of CW1 & 2 which establishes dishonest Criminal Revision Page 17 of 21 CA No. 120/2023 "EKGF Kidskool LLP Vs. Neetu Prakash & Ors."
intention of the respondents to cheat appellants. Thus, offence under Section 415/420 IPC is also not made out.
33. Appellants have also alleged that respondents wrongfully restrained its partners and they were assaulted by respondents. In this regard it is deposed that on 04.07.2022, when CW1 went to the business premises of the play school near Sanatan Dharam Mandir, P Block, Raj Nagar Part II Palam Colony, she was denied entry stating that they have no claim again on 07.07.2022 and they got the same response from respondents and CW1 was threatened and defamed.
34. Appellants have not reported the matter to the police on alleged date of incident. Even presuming for the sake of arguments that partners of appellant were restrained from entering School premises but there is nothing on record which proves right of appellants (1a) & (1b) to enter that premises. No document is proved on record which gives any possessory title to the appellants. There is also no evidence on record to establish assault on appellants. There is no Criminal Revision Page 18 of 21 CA No. 120/2023 "EKGF Kidskool LLP Vs. Neetu Prakash & Ors."
material on record which establishes commission of offence under Section 339 or 352 IPC.
35. There is no material on record that appellants (1a) or 1(b) got alarmed by any threat given by respondents nor there is any evidence on record to suggest any infringement of Trade Mark by respondents.
36. Summoning of a person is a serious exercise of judicial discretion. The Court cannot summon any person mechanically without application of judicial mind on mere asking. In Pepsi Foods Ltd. And Another vs. Special Judicial Magistrate and Others, (1998) 5 SCC 749, Hon'ble Supreme Court of India held, as under:
"28. Summoning of an accused in a criminal case is a serious matter. Criminal law cannot be set into motion as a matter of course. It is not that the complainant has to bring only two witnesses to support his allegations in the complaint to have the criminal law set into motion. The order of the Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto. He has to examine the nature of allegations made in the complaint and the evidence both oral and documentary in support thereof and would that be sufficient for the complainant to succeed in bringing charge home to the accused. It is not that the Magistrate is a silent spectator at the time of recording of preliminary evidence before Criminal Revision Page 19 of 21 CA No. 120/2023 "EKGF Kidskool LLP Vs. Neetu Prakash & Ors."
summoning of the accused. evidence brought on record and may even himself put questions to the complainant and his witnesses to elicit answers to find out the truthfulness of the allegations or otherwise and then examine if any offence is prima facie committed by all or any of the accused."
37. In Deepak Gaba v. State of U.P., (2023) 3 SCC 423 Hon'ble Apex Court has held as under:
"31. Summoning order is to be passed when the complainant discloses the offence, and when there is material that supports and constitutes essential ingredients of the offence. It should not be passed lightly or as a matter of course. When the violation of law alleged is clearly debatable and doubtful, either on account of paucity and lack of clarity of facts, or on application of law to the facts, the Magistrate must ensure clarification of the ambiguities. Summoning without appreciation of the legal provisions and their application to the facts may result in an innocent being summoned to stand the prosecution/trial. Initiation of prosecution and summoning of the accused to stand trial, apart from monetary loss, sacrifice of time, and effort to prepare a defence, also causes humiliation and disrepute in the society. It results in anxiety of uncertain times."
38. In facts of the case, it is evident that violation of law as alleged by appellant is highly doubtful. Material on record did not find that respondents committed any offence rather the very premise of the allegations of privity of contract between the parties is doubtful. Thus, in view of authoritative judgments of Hon'ble Apex Court Ld Trial Criminal Revision Page 20 of 21 CA No. 120/2023 "EKGF Kidskool LLP Vs. Neetu Prakash & Ors."
Court took the right view in not summoning respondents and dismissing the complaint case.
39. This Court does not find any legal infirmity or material illegality or jurisdictional error in the impugned order which would occasion injustice, if it is not set-aside. Accordingly, petition stands dismissed. File be consigned to Record Room.
Announced in the open court on 30th day of May, 2023. Digitally signed by GAUTAM
GAUTAM MANAN MANAN Date:
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