Rajasthan High Court - Jaipur
Mr. Rohan Raj Savara S/O Mr. Rahul Savara vs State Of Rajasthan on 2 September, 2023
Author: Birendra Kumar
Bench: Birendra Kumar
[2023:RJ-JP:19432]
HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
S.B. Criminal Miscellaneous (Petition) No. 2581/2023
Mr. Rohan Raj Savara S/o Mr. Rahul Savara, Aged About 32
Years, Director Of Tropical Industries International Pvt. Ltd.
Having Its Registered Office At F-04 And 05, Triveni Commercial
Complex, Sheikh Sarai Phase-1, New Delhi-110017
----Petitioner
Versus
1. State Of Rajasthan, Through Pp
2. Mr. Ashish Periwal S/o Mr. Narendra Periwal, Partner Of
M/s Balaji Steel Trade And Having A Permanent Address
At C-112, Satya Vihar, Lokkothi Scheme, Lalkothi, Jaipur-
302007, Rajasthan
----Respondents
For Petitioner(s) : Mr. Rajendra Prasad, Sr. Adv. with
Mr. Susshil Daga, Adv.
Mr. Chitrans Mathur, Adv.
Ms. Parul Singhal, Adv.
Mr. Akshat Khandelwal, Adv.
For Respondent(s) : Mr. V.R. Bajwa, Sr. Adv. with
Mr. Ankit Juneja, Adv.
Mr. Manish Parmar, Adv.
Mr. Amar Kumar, Adv.
Ms. Savita Nathawat, Adv.
Mr. Prashant Sharma, PP
HON'BLE MR. JUSTICE BIRENDRA KUMAR
Judgment reserved on : 22.08.2023
Judgment pronounced on : 02.09.2023
1. Heard the parties.
2. The petitioner has sought for quashment of FIR No.73/2023
dated 17.02.2023 registered with Police Station Malviya Nagar for
offences under Sections 420, 406, 504, 506 and 120-B of IPC.
3. Mr. Rajendra Prasad, learned senior counsel for the petitioner
contends that a contractual dispute between the parties, which (Downloaded on 11/11/2023 at 07:44:45 PM) [2023:RJ-JP:19432] (2 of 15) [CRLMP-2581/2023] may be redressed by a civil proceeding has been ventured to be given a colour of criminal prosecution with ulterior motive, hence the impugned FIR and consequential proceedings would amount to abuse of the process of law.
Learned Senior Counsel next contends that no offence is made against the petitioner on bare perusal of the FIR. Learned Senior counsel next contends that the petitioner had no role in execution of the agreement or its execution. Hence, the petitioner need not be compelled to go to traumatic criminal proceeding. Moreover, there is an arbitration clause in the agreement to take care of dispute between the parties. Therefore, the impugned FIR needs to be quashed to prevent abuse of the process of law.
Learned senior counsel has relied on the judgment of the Hon'ble Supreme Court in Anil Mahajan vs. Bhor Industries Limited reported in (2005) 10 SCC 228, for his submission that the substance of the complaint is to be seen and not mere use of words "cheating", "deceive", "dishonest and fraudulent intention" would suffice.
Learned senior counsel has relied on Weyth Limited and Ors. vs. State of Bihar, reported in MANU/SC/1515/2022, for his submission when the complaint itself does not disclose anything more than a commercial relationship which broke, it is not possible for respondent No.2 to enlarge the scope of his complaint by merely adding the language used in the text of the Indian Penal Code.
In Sarabjit Kaur vs. State of Punjab and Anr., reported in (2003) 5 SCC 360, Hon'ble Supreme Court said that a breach of contract does not give rise to the criminal prosecution for (Downloaded on 11/11/2023 at 07:44:45 PM) [2023:RJ-JP:19432] (3 of 15) [CRLMP-2581/2023] cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction. Merely on the allegation of failure to keep promise will not be enough to initiate criminal proceedings.
Learned senior counsel has relied on Murari Lal Gupta vs. Gopi Singh, reported in MANU/SC/28.06/2005, for his submission that merely because an agreement to sale was entered into which agreement the petitioner failed to honour, it cannot be said that the petitioner had cheated to the respondent.
In G. Sagar Suri and Ors. vs. State of U.P. and Ors., reported in MANU/SC/0045/2000, the Hon'ble Supreme Court said that it is to be seen if a matter, which is essentially of civil nature, has been given a cloak of criminal offence.
4. Mr. V.R. Bajwa, learned senior counsel for respondent No.2 submits that remedy in the civil side is no bar for criminal prosecution, if cognizable offences are disclosed in the FIR, which is there in the present case.
Learned senior counsel next contends that arbitration clause and pendency of arbitration proceeding would not come in the way of criminal prosecution, if the FIR discloses criminal offence.
5. Learned senior counsel has placed reliance on the following judgments:-
"1. Trisuns Chemical Industry vs. Rajesh Agarwal and Others, (1999) 8 SCC 686.
2. State of Orissa vs. Ujjal Kumar Burdhan, (2012) 4 SCC 547.
3. Priti Saraf and Another vs. State of NCT of Delhi and Another, AIR 2021 SC 1531.
4. Lalmuni Devi vs. State of Bihar, (2001) 2 SCC 17,"(Downloaded on 11/11/2023 at 07:44:45 PM)
[2023:RJ-JP:19432] (4 of 15) [CRLMP-2581/2023]
6. The law regarding appreciation of case for quashing of FIR when civil cause is also made out is well settled. In Trisuns Chemical Industry vs. Rajesh Agarwal and Others reported in (1999) 8 SCC 686, the Hon'ble Supreme Court stated as follows:-
"7. Time and again this Court has been pointing out that quashment of FIR or a complaint in exercise of inherent powers of the High Court should be limited to very extreme exceptions (vide State of Haryana vs. Bhajan Lal 1992 Supp (1) SCC 335 and Rajesh Bajaj vs. State NCT of Delhi (1999) 3 SCC 259).
8. In the last referred case this court also pointed out that merely because an act has a civil profile is not sufficient to denude it of its criminal outfit. We quote the following observations: (SCC p. 263, para 10) "10. It may be that the facts narrated in the present complaint would as well reveal a commercial transaction or money transaction. But that is hardly a reason for holding that the offence of cheating would elude from such a transaction. In fact, many a cheatings were committed in the course of commercial and also money transactions."
In Kamaladevi Agarwal vs. State of West Bengal and Ors. reported in (2002) 1 SCC 555, the Hon'ble Supreme Court said that the criminal proceedings should not be quashed merely because of pendency of civil proceedings between the same parties even if it be pending in a higher Court. Nature and scope of and standard of proof required in civil and criminal proceedings are distinct.
In Lalmuni Devi (Smt) vs. State of Bihar and Ors. reported in (2001) 2 SCC 17, it was held:-
(Downloaded on 11/11/2023 at 07:44:45 PM)
[2023:RJ-JP:19432] (5 of 15) [CRLMP-2581/2023] "8. There could be no dispute to the proposition that if the complaint does not make out an offence it can be quashed. However, it is also settled law that facts may give rise to a civil claim and also amount to an offence.
Merely because a civil claim is maintainable does not mean that the criminal complaint cannot be maintained. In this case, on the facts, it cannot be stated, at this prima facie stage, that this is a frivolous complaint. The High Court does not state that on facts no offence is made out. If that be so, then merely on the ground that it was a civil wrong the criminal prosecution could not have been quashed." In State of Orissa and Ors. vs. Ujjal Kumar Burdhanm, reported in (2012) 4 SCC 547 it was held:-
"14. Further, the impugned order also notes that in view of the arbitration agreement between the agent and the Government, all the alleged violations fell within the purview of Arbitration and Conciliation Act, 1996 and therefore, the respondent could not be held liable for any criminal offence. This observation is against the well settled principle of law that the existence of an arbitration agreement cannot take the criminal acts out of the jurisdiction of the courts of law.
15. On this aspect, in S.W. Palanitkar & Ors. Vs. State of Bihar & Anr. reported in (2002) 1 SCC 241, this Court has echoed the following views: (SCC p. 250, para 22) "22. Looking to the complaint and the grievances made by the complainant therein and having regard to the agreement, it is clear that the dispute and grievances arise out of the said agreement. Clause 29 of the agreement provides for reference to arbitration in case of disputes or controversy between the parties and the said clause is wide enough to cover almost all sorts of disputes arising out of the agreement. As a matter of fact, it is also brought to our notice that the complainant issued a notice dated 3-10-1997 to the appellants invoking this arbitration clause claiming Rs.15 lakhs. It is thereafter the present complaint was filed. For the alleged breach of the (Downloaded on 11/11/2023 at 07:44:45 PM) [2023:RJ-JP:19432] (6 of 15) [CRLMP-2581/2023] agreement in relation to commercial transaction, it is open to the Respondent 2 to proceed against the appellants for his redressal for recovery of money by way of damages for the loss caused, if any. Merely because there is an arbitration clause in the agreement, that cannot prevent criminal prosecution against the accused if an act constituting a criminal offence is made out even prima facie."
In Priti Saraf & Anr. vs. State of NCT of Delhi and Anr. reported in AIR 2021 SC 1531, the Hon'ble Supreme Court stated in Para 32 as follows:-
"In the instant case, on a careful reading of the complaint/FIR/charge-sheet, in our view, it cannot be said that the complaint does not disclose the commission of an offence. The ingredients of the offences under Sections 406 and 420 IPC cannot be said to be absent on the basis of the allegations in the complaint/FIR/charge-sheet. We would like to add that whether the allegations in the complaint are otherwise correct or not, has to be decided on the basis of the evidence to be led during the course of trial. Simply because there is a remedy provided for breach of contract or arbitral proceedings initiated at the instance of the appellants, that does not by itself clothe the court to come to a conclusion that civil remedy is the only remedy, and the initiation of criminal proceedings, in any manner, will be an abuse of the process of the court for exercising inherent powers of the High Court under Section 482 CrPC for quashing such proceedings."
7. Keeping the aforesaid settled principles in mind, the fact of this case needs to be appreciated. The averment made in the counter affidavit by the complainant-respondent No.2 has not been controverted by the petitioner, rather some of the facts are established by the documents available on record and some are (Downloaded on 11/11/2023 at 07:44:45 PM) [2023:RJ-JP:19432] (7 of 15) [CRLMP-2581/2023] admitted by the petitioner, in the petition and written submission which are being narrated below.
8. The petitioner is Director of Tropical Industries International Private Limited an Indian entity of Tropical Group of Companies. The Tropical Group of Companies is operating worldwide. Two other Companies relevant for this purpose are Fludor Benin S.A. in West Africa and Vink Corporation DMCC in Dubai. The accused persons named in the FIR are shareholders / Directors / Mangers of each of the three companies.
The petitioner has admitted in the written arguments that the petitioner's company had entered into certain High Sea Sale Agreements with the complainant as a trading arm of Fludor Benin. The High Sea Sale Agreement was in relation to the transportation of particular quantity of shipments as specified in the High Sea Sale Agreements. The petitioner was only bridging the communication gap between the Fludor Benin and complainant. The petitioner being a Director in the Indian entity was asked to facilitate the smooth execution of the Addendum dated 9.2.2021 to the Buyer-Seller Agreement dated 6.6.2019.
9. Complainant-respondent No.2 is one of the partner of Balaji Steel Trade and is engaged in business of steel along with business of Agro Products and cattle feed since 2016. Co-accused Rahul Savara, who is father of the present petitioner and Director of Indian entity of Tropical group allegedly approached the complainant and persuaded the complainant to set up business of cotton seeds processing in the Republic of Benin, a West African Country. Co-accused Rahul Savara portrayed himself to be a key player having abundant supplies of cotton seeds as raw material (Downloaded on 11/11/2023 at 07:44:45 PM) [2023:RJ-JP:19432] (8 of 15) [CRLMP-2581/2023] from a cotton seeds distributor at Benin in the name and style of SODECO, which was duly supported by the Government of Benin.
10. Before entering into an agreement, one Ram Krishna, a Technical Director of Fludor Company at Benin, to learn technical and operational knowledge about the machinery and equipments to be supplied by the complainant was sent to the complainant and was made to learn operation of the machine. On 10.12.2018, a collaboration cum buy-back agreement was signed between the complainant and Fludor Benin. Under the agreement, the complainant was to supply machinery and equipments from India to Benin and the Fludor Company was to supply 1600 tons of cotton cakes every month and the machine was to operate whole of the years. The oils of cotton seeds was to be used by the Fludor Company. The agreement was for 5 years and depreciation value of the machinery was 20% every years. Accordingly, after 5 years, the machinery would be of Fludor Company. The cost of the cotton seed cakes was agreed at 160 US dollar per ton for one year. Under the agreement, only the complainant was to sale the cotton cakes in India.
11. The accused persons had dishonest and fraudulent intention in pursuing the complainant to enter into agreement dated 10.12.2018 as they had connived not to adhere to the agreement. Resultantly, as soon as the original export documents, fall into custody of the accused persons and the Machine reached the coast of Benin and technical person of the complainant Mr. Anil Kumar, reached there for installation of the Machine, co-accused Mr. Rahul Savara abruptly asked the complainant to change the terms and conditions of the aforesaid collaboration agreement dated (Downloaded on 11/11/2023 at 07:44:45 PM) [2023:RJ-JP:19432] (9 of 15) [CRLMP-2581/2023] 10.12.2018, otherwise they would not get custom clearance of the machinery. The complainant was threatened, intimidated and arms-twisted by the petitioner and his father Rahul Savera saying that if the complainant does not agree to the changes in the terms of corroboration agreement, the accused persons will not get the machines cleared from the Custom and for loss, the complainant would be responsible. In fact, the pressure to change the terms and conditions of the first agreement continued for 45 days and the machines were left on the harbour lying low and idle. The complainant was not in a position to get back the Machinery which would have burdened the complainant with heavy cost. As such the complainant was forced to succumb to the pressure of the Directors of Indian entity, who had collusion with Directors of South Africa entity as the accused persons were asserting that unless the complainant agrees to new terms and condition, the custom clearance of the Machinery would not be done and the complainant would be solely responsibly for the loss.
12. The complainant could not visualize dishonest and fraudulent intention of the accused persons and entered into a fresh agreement titled as "buyer seller agreement" on 06.06.2019. Under the new agreement, the supply of cotton cakes were reduced from 1600 to 1250 metric ton. The rate was revised from 160 to 165 US dollar per ton. The petitioner was asked to submit invoice of Machinery and equipments to be purchased by Fludor Company and the petitioner was asked to sale the cotton cakes only in Rajasthan, Punjab and Haryana and in rest of India, the accused company would sale the cotton cakes. Since the accused were aware that raw material i.e. cotton seeds were cheaper in (Downloaded on 11/11/2023 at 07:44:45 PM) [2023:RJ-JP:19432] (10 of 15) [CRLMP-2581/2023] Benin than India, they played a fraud upon the complainant by putting him under pressure. On 09.01.2021 an addendum to the aforesaid buyer seller agreement was placed before the complainant and the complainant was compelled to sign it, since the complainant had already invested a lot. The consent of complainant was obtained by fraud putting him under pressure within 6 months of the first agreement.
13. The complainant further alleged that the complainant was not paid the entire consideration money of the Machinery as agreed through buyer seller agreement, nor the complainant was ever supplied full quantity of seed cake as agreed, rather the accused persons just causing wrongful loss to the complainant, sold the produc to some other persons. Collusion of all the entity is evident from the fact that sometimes the company at Dubai Generated the invoice and sometime the India entity. Once the complainant went into the hands of the accused persons by supplying Machinery etc. and investing money for that, within few months without disclosing any rise in the cost of raw material, the cost of seed cake was raised. On 20.01.2022 the complainant paid Rs.14,00,000/- (Rupees fourteen lakhs only) to the company at Benin for supply of cakes but the cakes were not supplied. Hence, the complainant was made to understand that the accused persons have dishonestly misappropriated the cost of Machinery and the advanced money. If the complainant would have been aware of their ulterior design, the complainant must not have entered into the agreement with the accused persons.
14. Learned Senior counsel for the petitioner contends that initial agreement which is superseded by subsequent agreement and (Downloaded on 11/11/2023 at 07:44:45 PM) [2023:RJ-JP:19432] (11 of 15) [CRLMP-2581/2023] Addendum are voluntary and well thought action of the complainant. As such after execution of the same, complainant should not be allowed to abuse the process of law and resort to a criminal proceeding. The advance money of 14 lacs paid by the complainant is subject to accounting which shall be looked into during arbitration proceedings by examination of the details of the evidence.
FINDING
15. On careful consideration of the averment made in the FIR and surrounding materials it is not a case of bald allegation with technical words of the offences. The allegation of fraudulent and dishonest intention can be gathered from the acts/omission alleged. The first agreement between the complainant and the accused company dated 10.12.2018 was for a period of 5 years. There is no stipulation that terms and conditions of the agreement could be changed in the mid-way. The complainant supplied machinery etc. to the accused persons to be installed at Benin. The technical person of the accused company learnt before-hand regarding handling and operation of the machine. The total depreciation value of the machine was 20% every year and after completion of 5 years, it would have no cost and would remain with the accused persons. The complainant was to get 1,600 tons of cotton seeds per month @ 160 U.S. Dollar per ton. This rate was to run at least for one year and thereafter only based of freight per 20 feet container, the cost may be 250 U.S. Dollar for the next year. Within six months of the aforesaid agreement, a (Downloaded on 11/11/2023 at 07:44:45 PM) [2023:RJ-JP:19432] (12 of 15) [CRLMP-2581/2023] fresh agreement was proposed by the accused persons whereunder the accused was allegedly pressurised to submit invoices of the cost of the machinery and get the price of the machinery. It was also asked that out of two invoices of the cost of machinery, one would be paid and another would be retained as advance for supply of cotton cakes. Under new agreement, the quantum of supply of cotton cakes was reduced from 1600 tone to 1250. In the first agreement, complainant was to sell the cotton cakes in India whereas the subsequent agreement dated 6.6.2019 restricted that the complainant would sale in Rajasthan, Punjab and Haryana and in rest of India, the accused company would sale. Evidently, the aforesaid conditions in the second agreement was not beneficial to the complainant, hence claim of the complainant that the subsequent agreement was obtained by putting the complainant in undue pressure due to fraudulent and dishonest intention of accused persons has substance for the purpose of consideration of the prayer of the petitioner. It is not disputed that the complainant had paid advance of Rs. 14 lacs in the year 2022 as cost of cotton cakes but neither cotton cakes was supplied nor money was refunded.
16. Now, examination of provisions of law is necessary to examine the allegation of cognizable offences in the FIR which reads as under:
"Section 405 IPC 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 (Downloaded on 11/11/2023 at 07:44:45 PM) [2023:RJ-JP:19432] (13 of 15) [CRLMP-2581/2023] 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".
[Explanation 2[1].--A person, being an employer 3[of an establishment whether exempted under section 17 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952), or not] who deducts the employee's contribution from the wages payable to the employee for credit to a Provident Fund or Family Pension Fund established by any law for the time being in force, shall be deemed to have been entrusted with the amount of the contribution so deducted by him and if he makes default in the payment of such contribution to the said Fund in violation of the said law, shall be deemed to have dishonestly used the amount of the said contribution in violation of a direction of law as aforesaid.] [Explanation 2.--A person, being an employer, who deducts the employees' contribution from the wages payable to the employee for credit to the Employees' State Insurance Fund held and administered by the Employees' State Insurance Corporation established under the Employees' State Insurance Act, 1948 (34 of 1948), shall be deemed to have been entrusted with the amount of the contribution so deducted by him and if he makes default in the payment of such contribution to the said Fund in violation of the said Act, shall be deemed to have dishonestly used the amount of the said contribution in violation of a direction of law as aforesaid." Section 415 IPC. 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, (Downloaded on 11/11/2023 at 07:44:45 PM) [2023:RJ-JP:19432] (14 of 15) [CRLMP-2581/2023] reputation or property, is said to "cheat". Explanation.--A dishonest concealment of facts is a deception within the meaning of this section.
Section 24 IPC. "Dishonestly".--Whoever does anything with the intention of causing wrongful gain to one person or wrongful loss to another person, is said to do that thing "dishonestly".
Section 25 IPC. "Fraudulently".--A person is said to do a thing fraudulently if he does that thing with intent to defraud but not otherwise."
17. The requirement of offence of cheating is to deceive a person fradulently or dishonestly 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 mind reputation or property. The allegation made, discloses that if complainant would have been aware of the dishonest connivance of the accused person, he would not have supplied the machinery. After supply of the machinery, the original agreement was superseded by a subsequent agreement which certainly had effect to cause harm to the complainant at least in property and mind. Therefore, the Court considers that offence of cheating is made out.
18. Further, it is a case of entrustement of property to the accused persons by the complainant because till completion of period of 5 years, as per first agreement the complainant was owner of the machinery. Only after the complainant was reduced (Downloaded on 11/11/2023 at 07:44:45 PM) [2023:RJ-JP:19432] (15 of 15) [CRLMP-2581/2023] to a position not to get back the machine, certain conditions were imposed on the complainant and consent was obtained by fraud. The entrusted property was to be disposed of in terms of the legal contract between the parties (first contract) wherein there was provision that the machinery would get depreciated in value to 20% every year. After supply of the machinery invoices of total cost of the machinery was obtained from the complainant and no payment was made of the entire cost which goes to show the dishonest and fraudulent intention of the accused persons. In the legal notice of the complainant, relied by the petitioner herein, the complainant raised specifically that unilateral raising of the price of cotton cakes by the accused company in between March-April, 2022 was against the agreed terms and conditions. It is worth to notice that certain invoices were raised by the petitioner company, therefore, it is not acceptable that there was no role of the petitioner as a Director of the Company which is also an accused. Since the companies and its Directors are accused and prima facie cognizable offence is disclosed in the FIR, it would be subject matter of investigation/ trial regarding individual and collective role of the individual Directors.
19. On totality of the consideration of the facts narrated above, this Court is of the view that the impugned FIR requires to be investigated, hence this petition stands dismissed as devoid of merit.
(BIRENDRA KUMAR),J Bm gandhi/Ashwani/ (Downloaded on 11/11/2023 at 07:44:45 PM) Powered by TCPDF (www.tcpdf.org)