Punjab-Haryana High Court
Gian Chand Saini vs State Of Haryana And Another on 14 August, 2013
Author: Sabina
Bench: Sabina
Criminal Misc. No.M-14665 of 2011 (O&M) 1
In the High Court of Punjab and Haryana at Chandigarh
Criminal Misc. No.M-14665 of 2011 (O&M)
Date of decision: 14.8.2013
Gian Chand Saini
......Petitioner
Versus
State of Haryana and another
.......Respondent
CORAM: HON'BLE MRS. JUSTICE SABINA
Present: Mr.S.C.Sibal, Sr. Advocate with
Mr.S.S.Rana, Advocate,
for the petitioner .
Mr.Gaurav Dhir, DAG, Haryana.
Mr.Ashwani Talwar, Advocate,
for respondent No.2.
****
SABINA, J.
This petition has been filed by the petitioner under Section 482 of the Code of Criminal Procedure, 1973 seeking quashing of FIR No.441 dated 1.12.2010 under Sections 406/ 420/ 120-B of the Indian Penal Code ("IPC" for short) registered at Police Station Sadar Thanesar District Kurukshetra (Annexure P-1).
Learned counsel for the petitioner has submitted that no criminal offence could be said to have been committed by the Devi Anita petitioner. The dispute between the parties could be said to be 2013.08.21 14:59 I attest to the accuracy and integrity of this document Chandigarh Criminal Misc. No.M-14665 of 2011 (O&M) 2 purely civil in nature as there was an arbitration clause in the agreement at the time of handing over the paddy by the complainant to the miller for shelling.
Learned State counsel as well as learned counsel for respondent No.2, on the other hand, have opposed the petition and have submitted that after thorough investigation, challan has been presented against the petitioner.
Prosecution story, in brief is that complainant had handed over the paddy to M/s Saini Rice Mills for milling. Agreement in this regard was executed between the parties on 12.10.2009. However, the Mill misappropriated 7190.14 quintals of rice and had caused loss to the Government exchequer to the tune of ` 2,04,29,154/-.
Thus, in the present case, serious allegations have been levelled against the petitioner. Challan has already been presented against the petitioner after thorough investigation of the case. Paddy had been entrusted to the mill for milling. However, the entire paddy had not been accounted for after milling, hence, the complainant had suffered huge loses. The fact that there was an arbitration clause in the agreement is not a bar to initiation of criminal proceedings against the petitioner. So far as arbitration is concerned, it is a remedy for affording relief to the effected party on account of breach of terms of the agreement but the arbitrator cannot conduct a criminal trial with regard to the amount embezzled by the petitioner.
In State of Orissa and others vs. Ujjal Kumar Burdhan 2012 (2) RCR (Criminal) 467, the Apext Court has held as under:- Devi Anita 2013.08.21 14:59 I attest to the accuracy and integrity of this document Chandigarh Criminal Misc. No.M-14665 of 2011 (O&M) 3
"12. 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. On this aspect, in S.W. Palanitkar & Ors. Vs. State of Bihar & Anr., 2001 (4) RCR (Criminal) 572: (2002) 1 SCC 241, this Court has echoed the following views:
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 `15 lakhs. It is thereafter the present complaint was filed. For the Devi Anita 2013.08.21 14:59 I attest to the accuracy and integrity of this document Chandigarh Criminal Misc. No.M-14665 of 2011 (O&M) 4 alleged breach of the 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 Punjab Agro Industries Corporation vs. State of Punjab and another (CRR No.1037 of 2002), this Court has held as under:-
"It can be, thus, said that criminal prosecution and remedy by way of arbitration are two separate and distinct courses available to an aggrieved party. As noticed by the Hon'ble Supreme Court, arbitration is a remedy affording relief for breach of agreement and this cannot be a substitute for a criminal trial where the facts reveal commission of an offence, which may be arising out of the same sets of facts. As already noticed above, the arbitration clause in itself cannot lead to quashing all the proceedings and it would depend on facts and circumstances of the case. It has to be resorted to in an exceptional case as may have been done in the case of Kailash Verma (supra). The present case, in my Devi Anita 2013.08.21 14:59 I attest to the accuracy and integrity of this document Chandigarh Criminal Misc. No.M-14665 of 2011 (O&M) 5 considered opinion, would not fall under such extreme or exceptional case.
In the cases before us M/s Ganpati Rice Mill was entrusted a huge quantity of paddy and it being custom milling arrangement, the mill was required to return rice after shelling paddy. In short, this was the property of the petitioner concern in respective cases and was entrusted to the mill only for the purposes of shelling. How can conduct of the mill be held justified when on checking huge quantity of paddy entrusted by respective Corporations was found to be missing. This is a clear case of embezzlement or breach of trust. As noticed in the earlier portion of the judgment, the arbitration would go into the compensation, which is required to be paid to the respective Corporations due to embezzlement of the paddy entrusted by the Corporation to the Mill. This apparently would have been done because the rate of the rice in the market was bound to be much more than at which it was supposed to be given to the Corporations. It is very easy for the mill now to say that it is prepared to compensate the Corporations but it would still be a gainer. This aspect will be looked into as a civil liability in the arbitration proceedings. The conduct of the respondent mill in respective petitions cannot get absolved of criminal liability at the thresh hold for Devi Anita 2013.08.21 14:59 I attest to the accuracy and integrity of this document Chandigarh Criminal Misc. No.M-14665 of 2011 (O&M) 6 embezzling or mis-appropriating the paddy, which was entrusted to it for shelling and return of the rice to the respective Corporations. These facts in the petitions would make out a prima-facie case for commission of offences under Penal law in addition to the civil liability that may be standing against the respondent mill."
It has been held by this Court in Pawan Kumar vs. State of Haryana, 2006 (2) RCR (Criminal) 162 as under:-
"The last contention raised by the counsel for the petitioner that as pursuant to the arbitration clause, in the agreement, arbitration proceedings are pending, the present FIR should be quashed, in my considered opinion, lacks merit. It is no doubt true that an arbitration clause exists and binds parties to seek adjudication of their disputes, before an Arbitrator. The existence of an arbitration clause, in my considered opinion, cannot, in the facts and circumstances of the present case, be construed to be a bar to criminal proceedings. As already held hereinbefore, a given set of facts may give rise to both civil and/or criminal consequences. The existence of one would not necessarily rule out the other. An arbitration clause enables parties to seek adjudication of the civil consequences of the violation of a contract. An arbitration clause does not envisages adjudication of criminal consequences of an alleged breach of contract. Devi Anita 2013.08.21 14:59 I attest to the accuracy and integrity of this document Chandigarh Criminal Misc. No.M-14665 of 2011 (O&M) 7 The Arbitrator, would obviously adjudicate the civil consequences of the violation of the the contract and if this violation leads to the commission of a criminal offence, the Arbitrator would have no jurisdiction to investigate or launch prosecution, in respect thereof. The mere existence of an arbitration clause or the pendency of arbitration proceedings would, in my considered not opinion, not oust the jurisdiction of criminal Courts, to consider whether on the facts narrated in the FIR, a criminal offence has been committed. The judgments relied upon by learned counsel for the petitioner namely; Bal Kishan Das vs. P.C.Nayar (Supra), and Kailash Verma Vs. Punsup and another, (supra), in my considered opinion, do not aid the petitioner in any manner.
In the aforementioned judgments the Hon'ble Supreme Court has not laid down any absolute proposition of law that the existence of an arbitration clause or the pendency of arbitration proceedings would entail an automatic quashing of an FIR. In Bal Kishan Das (supra), after examining the facts of the case and specifically taking note of the fact that after registration of a case under Section 409 of the IPC, the Vigilance Department dropped the case and that arbitration proceedings were pending for more than 17 years, the Devi Anita 2013.08.21 14:59 I attest to the accuracy and integrity of this document Chandigarh Criminal Misc. No.M-14665 of 2011 (O&M) 8 Hon'ble Supreme Court quashed criminal proceedings.
This judgment, in my considered opinion, cannot be construed to be a precedent for the proposition that the existence of an arbitration clause bars the filing of a complaint or any FIR for an offence under Sections 406/409 of the IPC etc. The next judgment namely:
Kailash Verma's case (supra) also does not set down any absolute proposition that the existence of an arbitration clause would necessarily oust the right of an aggrieved party to lodge an FIR nor does the aforementioned judgment lay down any absolute rule of law that the existence of an arbitration clause would bar criminal proceedings. In Kailash Verm's case (supra), the appellant was discharged by the trial Court. The said order was reversed and the matter remitted to the trial Court. The Supreme Court held that as there was no prima facie evidence of entrustment of paddy or shortage of rice supplied to the Corporation, and the dispute disclosed being civil in nature, the petitioner could not be prosecuted.
In the present case, however, there are specific allegations or entrustment of paddy, failure of the petitioner to deliver rice and, therefore, the above mentioned judgment cannot be pressed into service by the petitioner to pray for quashing of the FIR and the Devi Anita 2013.08.21 14:59 I attest to the accuracy and integrity of this document Chandigarh Criminal Misc. No.M-14665 of 2011 (O&M) 9 proceedings initiated thereon. The conclusion that the existence of an arbitration clause is not a bar to the initiation of criminal proceedings, despite the pendency of arbitration proceedings is fortified by a judgment of the Hon'ble Supreme Court in Trisuns Chemical Industry v. Rajesh Aggarwal, 1994(4) RCR (Crl.) 223 (SC)(supra)." In Trisuns Chemical Industry vs. Rajesh Agarwal and others, JT 1999 (6) SC 618, it was held as under:-
"We are unable to appreciate the reasoning that the provision incorporated in the agreement for referring the disputes to arrbitration is an effective substitute for a criminal prosecution when the disputed act is an offence. Arbitration is a remedy for affording reliefs to the party affected by breach of the agreement but the arbitrator cannot conduct a trial of any act which amounted to an offence albeit the same act may be connected with the discharge of any function under the agreement. Hence, those are not good reasons for the High Court to axe down the complaint at the threshold itself. The investigating agency should have had the freedom to go into the whole gamut of the allegations and to reach a conclusion of its own. Pre-emption of such investigation would be justified only in very extreme cases as indicated in Bhajan Lal v. State of Haryana (supra)"
Thus, in the present case, prosecution story, is that Devi Anita 2013.08.21 14:59 I attest to the accuracy and integrity of this document Chandigarh Criminal Misc. No.M-14665 of 2011 (O&M) 10 petitioner had misappropriated the paddy entrusted to the mill for shelling and due to this reason, respondent No.2 had suffered huge loss. Merely because there was an arbitration clause in the agreement executed between the mill and the complainant is no ground to quash the criminal proceedings in view of the decisions of the Apex Court as well this Court referred above. No ground for interference by this Court is made out.
Accordingly, this petition is dismissed.
(SABINA)
August 14, 2013 JUDGE
anita
Devi Anita
2013.08.21 14:59
I attest to the accuracy and
integrity of this document
Chandigarh