Delhi District Court
Suresh Goel vs ) Rohit Kewal Ramani on 11 November, 2014
IN THE COURT OF SH. REETESH SINGH, ASJ-02/FTC
NEW DELHI DISTRICT PATIALA HOUSE COURTS, DELHI
Crl. Revision No. 66/14
I.D. No 02403R0230332010
Suresh Goel,
S/o Late Sh. D.P. Goel,
R/o 145, Sultan Pur,
Mehrauli Gurgaon Road, New Delhi-110030.
.......Petitioner
Versus
1) Rohit Kewal Ramani
S/o Sh. R.F. Kewal Ramani
R/o Ardee Farms, Gadaipur,
New Delhi.
2) State
......... Respondents
Date of institution of the case : 20.08.2014
Date of reservation of orders : 20.10.2014
Date of announcement of orders : 11.11.2014
ORDER
1. This revision petition has been filed against the impugned order dated 13.04.2010 by which the Ld. Trial Court discharged the accused / respondent of charges of having committed offences under Sections 420/201 of the Indian Penal Code (hereinafter referred to as 'IPC').
2. Brief facts leading to the filing of the present petition are that M/s GSEC Capital Market Private Limited through its Managing Director Sh.Suresh Goel made a complaint dated 08.12.2000 to the CR No. 66/2014 1/17 Commissioner of Police with the allegations that the complainant was a franchisee of M/s SSKI, Bombay who are the main share brokers registered with Bombay Stock Exchange and National Stock Exchange. It is alleged that the respondent / accused Rohit Kewal Ramani was a friend of another Director Sh.Gautam Goel, son of Sh.Suresh Goel. It is alleged that the respondent and Sh.Gautam Goel were classmates since school itself and the respondent expressed his interest to Sh. Gautam Goel for sale and purchase of shares and wanted the complainant company to deal with his portfolio of shares. It is alleged that the respondent entered into forward transactions from time to time but suffered made initial losses of Rs.11,90,000/- up to 19.09.2000 and the said amount was paid by the respondent to the complainant company which was reflected in its books of accounts. It is alleged that the accused thereafter made further forward transactions and incurred further losses of Rs.56,73,831.17 (approximately) till 30 th September, 2000.
3. It is alleged that during this period, the officials of the complainant company had handed over certain documents to the respondent to be executed while entering into the transactions i.e. a contract which the respondent carried with him with the promise to return the same. It is alleged that the respondent had also made a request to Sh.Gautam Goel that he would sending these documents / contract to the complainant shortly. It is further alleged that the respondent had an intention to defraud the complainant as initially the respondent made a loss of Rs.11,90,000/- which he repaid to the complainant company and induced the complainant company to repose faith in him and later on, the respondent has incurred further losses of Rs.56,73,831.17 and was fully aware of the losses incurred by him and CR No. 66/2014 2/17 also the fact that if he did not reimburse the complainant company with the same, the complainant company being the principal obligator would have to make the payment of said losses to M/s SSKI, Bombay. It is alleged that the respondent had taken advantage of his old association with Sh.Gautam Goel and misrepresented, defrauded and intentionally cheated the complainant company and made unlawful gains to himself by entering into the forward transactions at the cost of the complainant company. It is alleged that the Director Sh.Gautam Goel in good faith entrusted the accused with the shares and permitted him to enter into the forward transactions which he dishonestly misappropriated and converted for his own use. It is further alleged that the respondent was under obligation to reimburse the complainant company in respect of the losses incurred by him which he intentionally had not done and he therefore, violated the implied contract to that extent.
4. It is further alleged that the respondent deceived Sh.Gautam Goel and the complainant company by entering into forward transactions and has further intentionally induced him not to press for the execution of any contract which has caused damage and harm to the complainant company. It is alleged that had it not been for the representations made by the respondent to the complainant company and Sh.Gautam Goel that he would pay the losses, if any incurred in the forward transactions, the complainant company and Sh.Gautam Goel would not have permitted the accused / respondent to enter into such forward transactions. It is alleged that the respondent had clear intentions since inception itself that he would not repay the losses incurred by him to the complainant company and despite the same, he induced the complainant company to permit him to enter into forward transactions. It is further alleged that despite several requests, the CR No. 66/2014 3/17 respondent / accused had not made payment of the losses.
5. On the basis of the said complaint, FIR No. 253/01, PS Connaught Place was registered under Sections 201/420 of the IPC. After investigation, charge-sheet was filed before the Ld. Trial Court against the respondent / accused under Sections 420/201 IPC.
6. The Ld. Trial Court after considering the material placed with the charge-sheet discharged the respondent by the impugned order holding that no prima facie case had been made against the respondent even if the same were considered on the face value; that the Investigating Officer (IO) appeared to have conducted the investigation in a particular direction to achieve a particular purpose to file a charge-sheet against the respondent and all aspects of the case had been ignored by the IO; that as per charge-sheet, no documentation was insisted upon by the complainant company at the instance of son of the Managing Director of the complainant company in view of the cordial relationship maintained by him with the respondent; that as per the charge-sheet, his declared income for the financial year 1998-99 was only Rs.76,000/- although he is stated to have incurred losses of Rs.55.66 lacs; that there is no case of enmity between the Managing Director of the complainant company, his son and the respondent and on the other hand, the respondent and son of the Managing Director of the complainant company were friends since childhood and inference could be raised that even the complainant was well aware of the financial status of the respondent; there was no evidence to infer that the respondent had an intention to cheat the complainant company from the inception i.e. at the time of entering into forward transactions; that the story setup that initially losses of CR No. 66/2014 4/17 Rs.11,90,000/- incurred were paid by the respondent and thereafter, he suffered further losses was not probable as it was not understood as to why a person would suffer further losses unless there was enmity of the respondent / accused with the complainant company; that it could not be presumed that the accused suffered huge losses initially only to inflict further future losses to the complainant company; that the tape recorded conversation relied upon by the prosecution was in favour of the accused as the same revealed that he did not have any illegal intention to enter into forward transactions i.e. not to pay the same later on and that the accused subsequently had failed to make the payment to the complainant, he could not be charged for cheating; that no material with the charge-sheet could disclose any offence under Section 201 IPC yet the charge-sheet was filed under the said Section and that the entire case of the prosecution was based on the statement of the accused dated 26.11.2001 as well as statements of wife of the accused and his friend Sh. Gurvinder Saini which were not admissible under law and even otherwise, were not available on the judicial record.
7. Before this Court, despite grant of opportunities, counsel for the petitioner did not appear to make any arguments. Sh. Suresh Goel, Managing Director of the complainant company on 26.09.2014 stated to this Court that the written submissions of his counsel filed earlier, were already on record and the Court could go through the same and pass appropriate orders on the revision petition.
8. In the written submissions appended to the revision petition, it is contended that the Ld. Trial Court failed to appreciate that the material on record with the charge-sheet established the factum of the accused having entered into forward transactions. It is submitted CR No. 66/2014 5/17 that the statements of the eye-witnesses have been recorded, statement of the complainant had been recorded under Section 161Cr.P.C. and that the tape recorded conversation on record and refusal of the accused to give his voice sample would result in an adverse inference to be drawn against the accused under Section 114
(g) of the Indian Evidence Act. Reliance is placed on illustration (f) of Section 415 IPC and on case of Acharya Arun Dev vs. State & Anr. reported in 2005 Vol. II JCC 897 to contend that the Ld. Trial Court could not appreciate the real nature of forward transactions. It is contended that direct evidence of cheating may not be available and it could only be inferred on the basis of the material on record as held in the case of Devender Kumar Singla, reported in 204 Vol. II AD Criminal SC 127 as well as in the case of Punit Puri & Ors., reported in 2009 Vol. IV JCC 3006. It was submitted that the dishonest intention is a question of fact which could be determined only during the course of trial and the Ld. Trial Court had erred in relying on the friendship of the accused with son of the Managing Director of the complainant company and failed to appreciate that it was this friendship of which advantage was taken of by the accused / respondent.
9. Arguments were heard on behalf of counsel for the respondent Sh. Manoj Taneja who supported the impugned order and submitted that the same did not call be any interference.
10. After the matter was reserved for orders, Sh. Vijay Aggarwal, counsel for the petitioner had appeared before this Court and placed on record the following case laws in support of the petitioner:-
i. Devender Kumar Singla vs. Baldev Krishan Singla, 2004 II AD (Cr) S.C. 217;
ii. State of Bombay vs. Purushottam Jog Naik, 1952 Cri.L.J 1269 CR No. 66/2014 6/17 iii. Ramzan vs. Emperor, AIR 1935 Sindh 203;
iv. The Queen vs. Shane Leigh Lovett, Supreme Court of Victoria, Appeal No. 211/04 dated 07.02.2006;
v. Punit Pruti & Ors. vs. State of Govt. of NCT of Delhi & Ors., 2009 [4] JCC 3006;
vi. Seelamuthu Servaigaran & Anr. vs. Pallamuthu Karuppen, 1911 Vol. 12 Crl. L.J. 30; and vii. Sarvjeet Mahto vs State, 2013 [6] AD Delhi 334.
11. I have gone through the written submissions filed by counsel for the petitioner and considered oral arguments addressed by counsel for the respondent. I have also perused the record of the Trial Court and my findings are as under.
12. The case of the petitioner / complainant in a nut shell was that the respondent / accused engaged the services of the petitioner / complainant company for the purposes of trading of shares in the securities market. The petitioner / complainant being a sub-broker / franchisee of M/s SSKI, Bombay permitted the respondent accused to enter into such transactions through its entity. The respondent / accused ran into losses from inception but went on trading. The respondent / accused paid up part of the initial losses suffered by him which induced the petitioner / complainant into permitting him to trade further and when the respondent / accused suffered more losses, which were substantial, he refused to pay up.
13. As noticed above, the petitioner / complainant in its complaint dated 08.12.2000 has alleged that the respondent accused was given a set of contract papers to execute for the purposes of carrying out trade in the share market but he took the contract papers with him and did not return the signed copies to the petitioner / complainant. However in the charge sheet it is submitted that as the CR No. 66/2014 7/17 accused was making heavy losses Sh. Suresh Goel by way of abandoned caution somehow managed to execute a Client Agreement Form signed by the accused to make his position safe. As observed above, in the complaint dated 08.12.2000 of Sh. Suresh Goel, it is clearly mentioned in para no. 6 that the officials of the complainant company had handed over documents and contracts to be signed by the accused which the accused carried with him with a promise to return. In other words, despite the complainant company handing over the contract to be executed by the accused, the accused did not execute the same. However, in the charge sheet it is mentioned that Sh. Suresh Goel somehow managed to get a Client Agreement Form executed. There is no explanation as to when and where such agreement was executed by the accused when the complainant had initially taken a stand that the accused did not execute the agreement / contract despite request.
14. The complainant company had claimed that it was franchise of M/s SSKI, Bombay who were the main share brokers. Thus, the position of the complainant company would that be of a sub broker. The complainant company had stated that it had suffered losses to the extent of Rs. 56,73,831.17 as the accused had failed to pay up the said amount to the complainant company despite suffering losses while trading in shares. In other words, the complainant company had contended that it had to make good this loss of the accused with M/s SSKI, Bombay. There is nothing in the file i.e. the charge sheet and the documents enclosed with the same to indicate that the complainant company ever made any payment of the said amount to M/s SSKI, Bombay.
CR No. 66/2014 8/1715. The IO has filed photocopies of agreements stated to have been executed by the accused in favour of the complainant company. The first agreement is titled as a 'Sub-Broker Client Agreement'. It bears the date of 31 st August but does not bear the year of its execution. The said document consists of two pages and is stated to bear the signatures of the accused at the foot of each page. Both these signatures are encircled in red bearing Q1 and Q2 from which it appears that the same was sent to some handwriting expert to ascertain whether the said signatures were of the accused. However, there is no report of any such expert to show that the signatures on this document are that of the accused.
16. Immediately under the above mentioned agreement is another photocopy of an agreement also titled as 'Sub-broker Client Agreement' dated 28th of August but this document also does not bear the year of execution. The contents of this agreement are identical to the above mentioned agreement which dated 31 st of August. Even this agreement dated 28th August has two signatures stated to be of the accused on the foot of each page encircled in red bearing mark Q3 and Q4 but there is no report of any handwriting expert regarding the signature of the accused in respect of this document.
17. The next document is titled as a 'Client Registration Application Form' which is also a photocopy. The same has a box for a photograph of the client but there is no photograph affixed on the same. This document consist of two pages and is stated to bear the signatures of the accused on the second page which encircled in red with Q5 written outside the circle. There is no report of any laboratory or expert regarding the signatures of the accused on this document.
CR No. 66/2014 9/1718. The charge-sheet includes a letter dated 14.09.2001 of the Sub-Inspector Crime Branch addressed to the Chief Prosecutor (Crime and Railways) in which the IO has sought an opinion of the Chief Prosecutor as to whether the facts of the case disclosed any cognizable offences against the accused and whether the accused could be arrested on the basis of such evidence and what more investigation could be done to strengthen the case.
19. The charge-sheet includes the opinion dated 06.10.2001 of Sh. Baksish Singh, Chief Prosecutor (Crime and Railways) given in response to the letter dated 14.09.2001 of the Sub-Inspector Crime Branch addressed to the Chief Prosecutor. Before referring to the contents of this opinion, one has to ponder as to why communications were filed by the IO alongwith the charge sheet as the same do not form part of the investigation. Such opinion rendered by the Chief Prosecutor cannot be termed as any piece of evidence for the purposes of prosecution of the accused. The same cannot be considered for the purposes of the matter by the Court.
20. Now coming to the opinion of the Chief Prosecutor, it refers to the two agreements titled as 'Sub-broker Client Agreement' to be of the year 2000 whereas the said agreements as such do not bear any year of their execution. The opinion further states that the IO should collect the original copies of these two documents from the accused whereas the charge sheet states that Sh. Suresh Goel managed to get the 'Client Agreement Form' executed from the accused meaning thereby original of this document i.e. 'Client Agreement Form' would be with the complainant and not with the accused. However the original of CR No. 66/2014 10/17 the 'Client Agreement Form' has not been filed with the charge sheet.
21. The charge-sheet refers to the statements of one Mr. Gurvinder Saini, a Director in the company of the father-in-law of the accused. No such statement of Mr. Gurvinder Saini has been filed with the charge-sheet.
22. The charge-sheet records that the financial position of the accused Kewal Ramani was not sound as he had declared only an income of Rs. 76,000/- for the financial year 1998-99 and did not pay any income tax. The charge-sheet states that accused was married to a girl belonging to a rich family. The charge sheet further states that the accused and Sh. Gautam Goel were childhood friends and were known to each other very well. An inference can be raised that the financial status of the accused was very well known to Sh. Gautam Goel as well as Sh. Suresh Goel and it would therefore improbable that the complainant company and its Directors would have permitted the accused to indulge in such heavy transactions without seeking to secure themselves from suffering any potential losses that may be incurred from transactions of such nature.
23. I have gone through the case law relied upon by the petitioner. However, the case laws relied upon by the petitioner pale into insignificance in view of the inconsistencies and contradictions which appear in the charge-sheet and the documents filed by the prosecution. The case law relied upon by counsel for the petitioner do not come to the aid of the petitioner.
24. The complaint of the petitioner was that of cheating which CR No. 66/2014 11/17 is defined under Section 415 of the IPC and has been the subject matter of several decisions of the Hon'ble Supreme Court. In the case of V.P. Shrivastava v. Indian Explosives Ltd. reported in (2010) 10 SCC 361 the Hon'ble Supreme Court observed as under:
"21. Section 415 IPC deals with "cheating" and reads as follows:
"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 deception within the meaning of this section."
It is plain from a bare reading of the section that to hold a person guilty of cheating, as defined in Section 415 IPC, it is necessary to show that at the time of making the promise he had fraudulent or dishonest intention to retain the property or to induce the person so deceived to do something which he would not otherwise do.
23. The ingredients required to constitute an offence of cheating have been succinctly laid down in Ram Jas v. State 5 of U.P. as follows: (SCC p. 743, para 3) "(i) there should be fraudulent or dishonest inducement of a person by deceiving him;
(ii)(a) the person so deceived should be induced to deliver any property to any person, or to consent that any person shall retain any property; or
(b) the person so deceived should be intentionally induced to do or omit to do anything which he would not do or omit if he were not so deceived; and
(iii) in cases covered by (ii)(b), the act or omission should be one which causes or is likely to cause damage or harm to the person induced in body, mind, reputation or property."
6(Hridaya Ranjan Prasad Verma v. State of Bihar , S.W. CR No. 66/2014 12/17 7 Palanitkar v. State of Bihar , Kuriachan Chacko v. State of 8 Kerala )
24. Similar views were echoed in Medchl Chemicals & 9 Pharma (P) Ltd. v. Biological E. Ltd. wherein it was observed that: (SCC p. 277, para 11) "11. ... In order to attract the provisions of Sections 418 and 420 the guilty intent, at the time of making the promise is a requirement and an essential ingredient thereto and subsequent failure to fulfil the promise by itself would not attract the provisions of Section 418 or Section 420. Mens rea is one of the essential ingredients of the offence of cheating under Section 420. As a matter of fact Illustration (g) to Section 415 makes the position clear enough to indicate that mere failure to deliver in breach of an agreement would not amount to cheating but is liable only to a civil action for breach of contract...."
25. It is well settled that in order to constitute an offence of cheating, it must be shown that the accused had fraudulent or dishonest intention at the time of making the representation or promise and such a culpable intention right at the time of entering into an agreement cannot be presumed merely from his failure to keep the promise subsequently. (Also see Hira 10 Lal Hari Lal Bhagwati v. CBI .)"
25. Further in the case of in the case of Anil Mahajan v. Bhor Industries Ltd reported in (2005) 10 SCC 228 the Hob'ble Supreme Court was pleased to hold as under:
" 6. The order of the Magistrate was challenged before the Court of Session. The learned Additional Sessions Judge, Pune, by order dated 19-10-2001 has set aside the order of the Magistrate issuing process. It has been stated by the learned Additional Sessions Judge in the order that:
"In this case there is no allegation that the accused made unlawful representation. Even, according to the complaint, they entered into memorandum of understanding. Grievance seems to be that the accused failed to discharge obligations under the MOU. In the CR No. 66/2014 13/17 complaint, there was no allegation that there was fraud or dishonest inducement on the part of the applicant and thereby the opponent parted with the property."
Reliance has been placed, in that order, on various decisions of this Court holding that from mere failure of a person to keep up promise subsequently, a culpable intention right at the beginning, that is, when he made the promises cannot be presumed. A distinction has to be kept in mind between mere breach of contract and the offence of cheating. It depends upon the intention of the accused at the time of inducement. The subsequent conduct is not the sole test. Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent, dishonest intention is shown at the beginning of the transaction.
7. The order of the learned Additional Sessions Judge has been set aside by the High Court by the impugned judgment. The High Court, except noticing that the ratio of the judgment of this Court cannot be applied to all cases in a uniform way, has neither discussed the said judgment nor stated as to how it was wrongly applied by the learned Additional Sessions Judge. There is hardly any discussion in the impugned judgment for reversing a well-considered judgment of the learned Additional Sessions Judge.
8. The substance of the complaint is to be seen.
Mere use of the expression "cheating" in the complaint is of no consequence. Except mention of the words "deceive" and "cheat" in the complaint filed before the Magistrate and "cheating" in the complaint filed before the police, there is no averment about the deceit, cheating or fraudulent intention of the accused at the time of entering into MOU wherefrom it can be inferred that the accused had the intention to deceive the complainant to pay. According to the complainant, a sum of Rs 3,05,39,086 out of the total amount of Rs 3,38,62,860 was paid leaving balance of Rs 33,23,774. We need not go into the question of the difference of the amounts mentioned in the complaint which is much more than what is mentioned in the notice and also the defence of the accused and the stand taken in reply to notice because the complainant's own case is that over rupees three crores was paid and for balance, the CR No. 66/2014 14/17 accused was giving reasons as above-noticed. The additional reason for not going into these aspects is that a civil suit is pending inter se the parties for the amounts in question.
19. In Alpic Finance Ltd. v. P. Sadasivan this Court was considering a case where the complainant had alleged that the accused was not regular in making payment and committed default in payment of instalments and the bank had dishonoured certain cheques issued by him. Further allegation of the complainant was that on physical verification certain chairs were found missing from the premises of the accused and thus it was alleged that the accused committed cheating and caused misappropriation of the property belonging to the complainant. Noticing the decision in the case of Nagawwa v. Veeranna 2 Shivalingappa Konjalgi wherein it was held that the Magistrate while issuing process should satisfy himself as to whether the allegations in the complaint, if proved, would ultimately end in the conviction of the accused, and the circumstances under which the process issued by the Magistrate could be quashed, the contours of the powers of the High Court under Section 482 CrPC were laid down and it was held: (SCC p. 520, paras 10-11) "10. The facts in the present case have to be appreciated in the light of the various decisions of this Court. When somebody suffers injury to his person, property or reputation, he may have remedies both under civil and criminal law. The injury alleged may form the basis of civil claim and may also constitute the ingredients of some crime punishable under criminal law. When there is dispute between the parties arising out of a transaction involving passing of valuable properties between them, the aggrieved person may have a right to sue for damages or compensation and at the same time, law permits the victim to proceed against the wrongdoer for having committed an offence of criminal breach of trust or cheating. Here the main offence alleged by the appellant is that the respondents committed the offence under Section 420 IPC and the case of the appellant is that the respondents have cheated him and thereby dishonestly induced him to CR No. 66/2014 15/17 deliver property. To deceive is to induce a man to believe that a thing is true which is false and which the person practising the deceit knows or believes to be false. It must also be shown that there existed a fraudulent and dishonest intention at the time of commission of the offence. There is no allegation that the respondents made any wilful misrepresentation. Even according to the appellant, the parties entered into a valid lease agreement and the grievance of the appellant is that the respondents failed to discharge their contractual obligations. In the complaint, there is no allegation that there was fraud or dishonest inducement on the part of the respondents and thereby the respondents parted with the property. It is trite law and common sense that an honest man entering into a contract is deemed to represent that he has the present intention of carrying it out but if, having accepted the pecuniary advantage involved in the transaction, he fails to pay his debt, he does not necessarily evade the debt by deception.
11. Moreover, the appellant has no case that the respondents obtained the article by any fraudulent inducement or by wilful misrepresentation. We are told that the respondents, though committed default in paying some instalments, have paid substantial amount towards the consideration."
(emphasis supplied by us)"
26. The ratio of the law laid down by the Hon'ble Supreme Court in the above mentioned matters is that in order to demonstrate that a person has committed the offence as defined under Section 415 IPC, it is necessary to show that at the time of making the promise, he had fraudulent and dishonest intention to retain the property or fraudulent intention to induce a person to do something that he would otherwise had not done. It has been held that merely because a person has failed to keep his promise subsequently did not lead to the presumption that the representation made initially was fraudulent. It has further been held that where the dispute between the parties was a civil CR No. 66/2014 16/17 dispute resulting from breach of a contract by not refunding amount of advance, the same would not constitute the offence of cheating. It has been further held that an honest man entering into a contract is deemed to represent that he has the present intention of carrying it out but if, having accepted the pecuniary advantage involved in the transaction, he fails to pay his debt, he does not necessarily evade the debt by deception.
27. All the facts recorded above point to only one conclusion that the Directors of the complainant company were aware of the financial status of the respondent / accused and even then permitted him to continue with the alleged transactions causing losses to the complainant company. There is no material to indicate that the accused had since inception planned to cheat the complainant company. Further, there is no allegation of destruction of any evidence and thus no case was made out under Section 201 of the IPC. There are several unexplained inconsistencies in the case set up in the chargesheet. In these circumstances, I did not see any reason to interfere with the findings of the Ld. Trial Court in discharging the respondent / accused.
28. This revision petition has no merit and is dismissed accordingly.
29. TCR be sent back alongwith copy of this order. Revision file be consigned to Record Room.
Announced in the open court (REETESH SINGH)
on 11th November, 2014 ASJ-02/FTC, PHC/NDD
11.11.2014
CR No. 66/2014 17/17