Gauhati High Court
M/S. Aaron Softech Pvt. Ltd. And 3 Ors vs The State Of Assam And Anr on 5 April, 2019
Equivalent citations: AIRONLINE 2019 GAU 457, 2020 CRI LJ (NOC) 1, (2019) 198 ALLINDCAS 755, (2019) 2 GAU LT 727, (2019) 7 GAU LR 671
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GAHC010150852018
THE GAUHATI HIGH COURT
(HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)
Case No. : Crl.Pet. 665/2018
1:M/S. AARON SOFTECH PVT. LTD. AND 3 ORS.
A PRIVATE LIMITED COMPANY REGISTERED UNDER COMPANIES ACT,
1956, HAVING ITS REGISTERED OFFICE AT SF-10, JTM BUILDING, NEAR
JAGATPUTRA FLYOVER, MALVIYA NAGAR, JAIPUR-302017
2: SATISH GARHWAL
DIRECTOR OF M/S AARON SOFTECH PVT. LTD.
S/O SRI OMPRAKASH GARHWAL
PERMANENT R/O WARD NO. 24
BASWA ROAD
BANDIKUI
DAUSA
PIN-303313
RAJASTHAN AND ALSO RESIDING AT B-62
SHIV SHAKTI NAGAR
MODEL TOWN
MALVYA NAGAR
JAIPUR-302017
3: VINOD KUMAR GARHWAL
DIRECTOR OF M/S AARON SOFTECH PVT. LTD.
S/O SRI OMPRAKASH GARHWAL
PERMANENT R/O WARD NO. 24
BASWA ROAD
BANDIKUI
DAUSA
PIN-303313. RAJASTHAN
AND R/O P.R. TOWER
NEAR JAGATPURA FLYOVER
JAIPUR-302017
4: RAJNI VERMA
DIRECTOR OF M/S AARON SOFTECH PVT. LTD.
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R/O P.R. TOWER
NEAR JAGATPURA FLYOVER
JAIPUR-302017 AND PERMANENT R/O WRAD NO. 24
BASWA ROAD
BANDIKUI
DAUSA
PIN-303313
RAJASTHA
VERSUS
1:THE STATE OF ASSAM AND ANR.
REPRESENTED BY PP, ASSAM
2:RISHIKESH ATAL
S/O SHRI GOVERDHAN PRASAD ATAL
BUSINESSMAN AND PROPRIETOR OF M/S LIVING TECHNOLOGIES
HAVING HIS RESIDENT AND PLACE OF BUSINESS AT SEUNI ALI
A.T. ROAD
PO
PS AND DIST. JORHAT
ASSAM
PIN-78500
Advocate for the Petitioner : MR. M SARMA
Advocate for the Respondent : PP, ASSAM
BEFORE
HONOURABLE MR. JUSTICE MIR ALFAZ ALI
JUDGMENT
Date : 05-04-2019 By this application under section 482 Cr.P.C., the petitioners have prayed for setting aside the order dated 27-04-2018, whereby the learned Judicial Magistrate took cognizance against the petitioners under Sections 406/420/120(B) IPC read with Sections 65/66/72A/85 of the Information Technology Act, as well as for quashing the criminal proceeding in C.R.Case No. 47/2018, pending in the court of Judicial Magistrate 1st Class, Jorhat.
2. Mr. M. Sharma, learned counsel for the petitioners and Mr. J.C. Gaur, learned Page No.# 3/9 counsel for the respondent No. 2 were heard.
3. The respondent No. 2 lodged a complaint against the present petitioners, whereupon, the learned Judicial Magistrate took cognizance against the petitioners and issued process.
4. Aggrieved by the order passed by the learned Magistrate taking cognizance and also the initiation of the criminal proceeding, the petitioners, who were arrayed as accused persons in the complaint, have filed the present petition seeking quashment of the proceeding, basically on the ground, that the complaint did not disclose any criminal offence and the dispute as alleged by the complainant was purely civil in nature arising out of a commercial contract, and as such, the present criminal proceeding is abuse of the process of the court.
5. Learned counsel for the petitioners contended, that the petitioners completed the work, as per the contract entered into between the parties but the complainant/respondent No. 2, in order to avoid the balance payment, due to the petitioners, instituted the false criminal case. Learned counsel further submitted, that the contract agreement contained arbitration clause, and as such, the petitioners asked the respondent No. 2 to refer the matter to arbitrator if there is any dispute, but the respondent No. 2 lodged the complaint with the ulterior motive to pressurize the petitioners not to make claim for payment. Per contra, Mr. Gaur contended, that the petitioners provided less number of resources and the persons engaged also did not have requisite experience and they left the work incomplete and thereby cheated the respondent No. 2, taking advantage of his lack of knowledge in the information technology.
6. Having regard to the ground of challenge to the criminal proceeding, it would be apposite to go through the allegations made in the complaint. It has been alleged in the complaint that the complainant being a businessman, conceptualised an idea of developing a hybrid mobile apps/mobile responsive websites (portals/applications) at/from his Jorhat office. As the complainant did not have the requisite technical knowledge of developing such a computer software and mobile apps, he was in-
Page No.# 4/9 search of technical experts capable of developing such computer applications and website for him. Accordingly, the complainant visited various places including Jaipur, where he met the accused No. 2. The accused No. 2 assured the complainant, that they would be able to complete the project within the given time limit. Accordingly, the complainant entered into an agreement with the accused No. 1, on 27-11-2017 at Jorhat for developing the website and hybrid mobile applications. As per contract, the petitioners agreed to provide minimum 4 plus years experienced resources (developers) for the work. It was agreed that the project will be completed within one month. Pursuant to such contract, the complainant paid Rs. 56,000/- as advance. Initially the accused promised to provide eleven numbers of resources (developers) within 7th of December, 2017, so that the project could be completed within the stipulated time. However, the accused sent only six developers. Later on the accused visited Jorhat on 26-12-2017 and requested for enhancing the number of resources to 14, instead of 11, which was also conceded by the complainant and payment was accordingly made. The complainant also took a house on rent and purchased various appliances like computer systems, furniture, etc for the project. However, the accused sent only 11 resources (developers) instead of 14. It was also stated by the complainant, that he could know subsequently that the developers engaged by the petitioners did not have the requisite experience. However, the resources (developers) left the premise of the respondent no. 2, meant for developing the aforementioned computer programme, without completing the work. Though the complainant tried to communicate with the accused No. 2 several times over phone and through email, but did not get any response from him. It was also stated, that at the behest of the accused persons, the respondent No. 2 also purchased new computer system in order to upgrade and change his computer configuration, software and its technologies. However, the developers engaged by the petitioners left the work without completing it. It was also stated, that whatever work or modules were developed by the resources engaged by the petitioners, could not be used by the complainant without the help of any expert and technical person having knowledge of such programming technology. It was also stated that in course Page No.# 5/9 of developing the aforementioned computer programme, complainant's personal information, password and other unique identification features came into the knowledge and control of the petitioners and therefore, the complainant apprehended, that the petitioners might misuse those data and password. Complainant also expressed his apprehension in the complaint, that the accused/petitioners may steal or destroy or alter the software of the programme. It was also stated that the petitioners did not complete the work and thereby misappropriated the money paid to them. The learned trial court conducted enquiry under Sections 200/202 Cr.P.C., wherein the complainant stated that till filing of the complaint, the project was not completed. However, the developers engaged by the petitioners left the work. On the basis of the above allegations made in the complaint and the statement of the witnesses recorded under Sections 200/202 CrPC, learned Magistrate took cognizance against the petitioners u/s 406/420/120(B) IPC read with Sections 65/66/72(A) of the Information Technology Act.
7. The written agreement entered into between the complainant and the accused, which was annexed with the petition shows, that there was an arbitration clause, which provided that disputes and differences arising out of the contract shall be referred to arbitration. Contention of the learned counsel for the petitioners was that inspite of the arbitration clause, the respondent No.2 took the short cut way of lodging criminal complaint, which is nothing but abuse of the process of the Court. Arbitration clause in the contract, per-se is not a bar against lodging criminal complaint. What is of the utmost importance is to see, whether the complaint discloses the ingredients of offence or the breach of contract was actuated by criminal intention or fraud which may constitute any offence or offences.
8. From the allegations made in the complaint, it is apparent that there was a contract between the accused/petitioners and the complainant, where-under the petitioners were to carry out certain works of information technology under the terms and conditions laid down in the agreement entered into between the parties. The basic allegations of the complainant was that the accused persons have violated the terms and conditions of contract and allegedly left the work incomplete. It was Page No.# 6/9 further alleged that while doing the work, the petitioners engaged less number of workers (developers) than what was agreed between the parties and left the job without completing the same within the stipulated time. Admittedly the petitioners engaged the developers for carrying out the works and the works were done, though might not be to the satisfaction of the complainant. Therefore, the contention of the respondent No. 2 was that though money was paid by the complainant for engagement of certain number of developers, the accused persons employed less number of developers. The admitted fact is that the petitioners employed the developers and carried out the works and in fact, the dispute related to non-completion of the work. Therefore, from the allegations made in the complaint, it is difficult to infer, that the accused had a dishonest intention at the beginning of the contract to deceive the complainant, or there was deception at the initiation of the contract. It was not the case, that the petitioners by making any false representation or deceiving the complainant, induced him to deliver money or property, inasmuch as, admittedly the petitioners engaged developers and carried out the work, however, did not complete the same or might not be to the satisfaction of the complainant. The above allegations made in the complaint in my considered view, can at best, make out a case of mere breach of contract. It is the settled position that mere breach of contract per se, does not constitute a criminal offence, unless criminal intention and fraudulent deception at the inception of the contract is available. The Apex Court dealing with the distinction between breach of contract and cheating in V.Y. Jose -Vs- State of Gujarat and Anr. reported in (2009) 3 SCC 78 held as under :-
"21. There exists a distinction between pure contractual dispute of a civil nature and an offence of cheating. Although breach of contract per se would not come in the way of initiation of a criminal proceeding, there cannot be any doubt whatsoever that in the absence of the averments made in the complaint petition wherefrom the ingredients of an offence can be found out, the court should not hesitate to exercise its jurisdiction under Section 482 of the Code of Criminal Procedure."
9. In order to constitute an offence of cheating as defined u/s 415 IPC or to attribute criminality to a breach of contract, the allegation must disclose, that there Page No.# 7/9 was deception or dishonest intention at the very beginning of the contract, which is sina qua non for constituting an offence of cheating. Having regard to the allegations made in the complaint as indicated above, it is difficult to hold that there was any fraudulent deception or dishonest intention at the beginning of the contract. Therefore, on the facts and circumstances of the case in hand, the allegations made in the complaint, even if accepted in its entirety as true, do not appear to have make out an offence of cheating u/s 420 IPC.
10. The two basic ingredients of the offence of criminal breach of trust u/s 406 IPC is (1) entrustment and dominion over the property and (ii) dishonest misappropriation or conversion of the entrusted property to own use of the accused. Admittedly as per the terms of the contract the petitioners were to employ developers for developing the computer programme and they admittedly employed such resources (developers) and time to time payments were made by the complainant as per contract. However, as per allegations, payments were made in excess, as less number of developers were engaged by the petitioners. Payment made against the work under the contract, cannot be construed as entrustment. If the person is entrusted with a property by another person, the person entrusted (trustee) does not have any vested interest or right over the property, inasmuch as, the right to property remains with the person, who entrusted the same. The person entrusted with the property becomes only a custodian or trustee to discharge the trust in terms of the contract or in accordance with any law prescribing the mode in which the trust is to be discharged. Therefore, payment made for and against work done, though in excess, such payment cannot be construed as entrustment to constitute the offence of criminal breach of trust. In absence of entrustment there cannot be question of dishonest misappropriation or conversion of the entrusted property to own use of the trustee. That apart, admittedly the petitioners engaged developers, may be in less numbers, to carry out the work as per contract, and as such, the allegations made in the complaint also failed to disclose the dishonest misappropriation of the property entrusted. So far the offences under the provision of Information Technology Act are concerned, the complainant only expressed his Page No.# 8/9 apprehension that the data may be misused by the petitioners or the petitioners may destroy such data or share such data with strangers. Mere apprehension does not constitute any offence. There was no allegation in the complaint disclosing any ingredient of the offences under Sections 65/66/72(A) of the Information Technology Act. Therefore, having considered the allegations made in the complaint in the instant case, I am unable to persuade myself to hold that there was any ingredient of any criminal offence, though, there might be a breach of contract, inasmuch as, breach of contract per-se, is not an offence, unless it contains the criminal elements.
11. Thus for the reasons stated above, I have no hesitation in my mind to hold, that the allegations made in the complaint, at best, could make out a civil dispute for which appropriate remedy is available in the civil court. Therefore, the present case, in my considered opinion is nothing but an attempt to give criminal flavour to an out and out civil dispute.
12. The Apex Court in Devendra-Vs- State of U.P. reported in (2009) 7 SCC 495 observed that "....a distinction must be made between civil wrong and criminal wrong. When dispute between the parties constituting only civil wrong and not criminal wrong, the courts would not permit a person to harass although no case for taking cognizance of offence has been made out."
13. In GHCL Employees Stock Option Trust Vs. India Infoline Ltd (2013) 4 SCC 505, the Apex Court held that "there is no dispute with regard to the legal proposition, that the case of breach of trust or cheating are both a civil wrong and a criminal offence, but under certain situations, where the act alleged would predominantly be a civil wrong, such act does not constitute a criminal offence."
14. The Apex Court, in G. Sagar Suri and Another Vs. State of U.P & Ors. (2000) 2 SCC 636 held that if a matter, which is essentially of a civil nature, has been given a cloak of criminal offence merely to pressurize the accused, such criminal proceedings taking a shortcut of other remedies available, should not be encouraged and before issuing process, the Court should exercise a great deal of caution while issuing process in a proceeding which are essentially of civil nature.
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15. When the allegations made in the complaint did not make out any offence, taking cognizance mechanically on the basis of such complaint, demonstrates non application of mind on the part of the Magistrate. Therefore, in my considered view, allowing the present proceeding to continue would amount to abuse of the process of the court. Accordingly, the criminal proceeding in C.R. Case No. 47/2018 pending in the court of Judicial Magistrate First Class, Jorhat is hereby quashed and the petition stands allowed.
JUDGE arup Comparing Assistant