Telangana High Court
Mohan Ranboare, Hyd., And 2 Othrs., vs Water Health Inida Pvt.Ltd., Secbad ... on 20 September, 2022
THE HONOURABLE SRI JUSTICE A.SANTHOSH REDDY
CRL.P.Nos.5450 & 8986 OF 2013
COMMON ORDER:
Since these criminal petitions arise out of the same calendar case and crime, they are being disposed of by this common order.
2. Crl.P.No.5450 of 2013 is filed by petitioner/A-1 and Crl.P.No.8986 of 2013 is filed petitioners/A-2 to A-4 under Section 482 Cr.P.C., to quash the proceedings against them in C.C.No.61 of 2013, on the file of the XI Additional Chief Metropolitan Magistrate, Secunderabad.
3. Heard learned counsel for the petitioner/A-1 and petitioners/A-2 to A-4, learned counsel for the respondent- complainant and learned Assistant Public Prosecutor for the first respondent-State. Perused the material on record.
4. The respondent-complainant presented a complaint before the XI Additional Chief Metropolitan Magistrate, Secunderabad against the petitioners-A-1 to A-4 for the offence punishable under Section 418 IPC. It is alleged in the complaint that the 2 complainant is a company viz., Water Health India Pvt., Ltd., formed with an object of carrying on business of designing, manufacturing, acquiring, transferring, selling, leasing, distributing or otherwise disposing of all the apparatus, devices, appliances, projects, filters, chemicals relating directly or indirectly to the treatment and conditioning of water and purification of water; that A-1 to A-3 are former senior executives of the complainant company and A-4 is a middle level manager working in the complainant company; that A-1 was the Regional President, A-2 was the Director of Capital Sales functionally reporting to A-1 and A-3 was the Regional Director of Capital Sales functionally reporting to A-2; that A-1 to A-4 are bound to protect the interests of Water Health India Pvt., Ltd., through their employment; that the complainant company strongly believed that the accused discharged their duties in a bona fide manner and worked diligently to achieve the objectives of the company.
5. It is further stated that from October, 2008 to December, 2008, A-1 to A-3 had submitted their resignations and the complainant could not understand the reason for their sudden 3 resignations and on enquiries, it revealed that A-1 to A-3 after observing the rapid growth of the complainant company developed a mala fide intention driven by greed and started a new company in the name and style of 'Water Life India Pvt., Ltd.' to compete with complainant company in the same industry by copying their business model and operational plan; that the complainant obtained the details about the said company, which was incorporated on 04.08.2008, from the Ministry of Corporate Affairs, a time when the accused were gainfully employed with the complainant company; that A-1 and A-2 were the directors and subscribers to the Memorandum of Association (MOA) of the complainant company; that A-1 is indicated as the Managing Director in Form No.32 of the Indian Companies Act, 1956; that complainant also obtained the MOA of Water Life India Pvt., Ltd., which is identical to the objects and clauses of complainant's company's MOA; that the accused plagiarized the objects and business model of the complainant company and also incorporated the same polices of the complainant company in Water Life India Pvt., Ltd., management; that after incorporating Water Life India 4 Pvt., Ltd., A-1 to A-3 poached critical employees from Water Health India Pvt., Ltd; that A-1 to A-4 have stolen proprietary information, leads and customer contacts from the complainant company and used that to develop and generate business for their own enterprise and that since July, 2008, they have been working in a surreptitious manner to switch all the large and important customers of the complainant company to their own enterprise and have also undertaken the work for installation of plant for drinking water plant at Durgapur and Howrah using the same design and technology and devices developed by the complainant company.
6. It is further stated that A-1 to A-3 systematically with a dishonest intention worked towards siphoning the business opportunities away from Water Health India Pvt., Ltd., to Water Life India Pvt., Ltd., and while doing so, they undermined the position of the complainant with major customers; that the launch of a separate company with the same objectives of the complainant company using similar design, technology, business model and processes as that of the complainant company is a clear breach of trust amounting to cheating.
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7. Based on the said complaint, the learned Magistrate referred the complaint to the police, who, in turn, registered a case in Cr.No.201 of 2009 against petitioners-A-1 to A-4 for the offence under Section 418 read with Section 34 IPC and took up investigation. After completion of investigation, the police submitted a final report stating that the investigation revealed that the accused were employees of the complainant firm and have started identical business while in service of the complainant firm and later they relinquished their positions in the complainant firm and continued similar business activity as that of the complainant firm and as such the matter was found to be civil in nature and does not amount to cheating punishable under Section 418 IPC and they do not come under the provisions of Section 415 IPC. Therefore, the case was referred treating it as 'civil in nature'.
8. The complainant filed a protest application being Crl.M.P.No.3171 of 2011 in Cr.No.201 of 2009 against the final report stating that there is sufficient material evidence to prove the culpability of the accused and the report was filed without conducting proper investigation and the same is false and there is 6 prima facie material to proceed against the petitioners-A-1 to A-4 and prayed not to accept the final report. The learned Magistrate by docket order dated 12.10.2012 in Crl.M.P.No.3171 of 2011 passed the following order:
"Court has recorded sworn statement of complainant. Perused the contents of complaint, FIR and the contents of sworn statement of complainant and documents filed along with this petition including the decisions relied upon by learned counsel for complainant. There is prima facie material against A-1 to A-4 to try them for offence under Section 418 read with Section 34 IPC. Accordingly, cognizance is taken for offence under Section 418 read with Section 34 IPC against A-1 to A-4. Register as calendar case against A-1 to A-4. Issue summons to A-1 to A-4 by RPAD and through court on payment of process. Call on 23.1.2013 for appearance of A-1 to A-4 and Crl.M.P is accordingly allowed".
9. Being aggrieved, A-1 filed Crl.P.No.5450 of 2013 and A-2 to A-4 filed Crl.P.No.8986 of 2013 to quash the proceedings in C.C.No.61 of 2013.
10. Learned counsel for the petitioners-A-1 to A-4 submits that the docket order dated 12.10.2012 was passed by the learned Magistrate without any reasons and the allegations in the complaint 7 prima facie do not constitute the offence under Section 415 IPC. The learned Magistrate failed to consider that the entire allegations in the complaint prima facie do not show that the accused fraudulently or dishonestly induced any person and thereby the essential ingredients of the alleged offence is missing and the investigating officer had rightly submitted a final report that the allegations are totally civil in nature. Learned counsel further submits that the learned Magistrate had not assigned any proper reasons at the time of taking cognizance and mechanically passed the order taking cognizance and the same is liable to be set aside. In support of his submissions, learned counsel relied on the following decisions:
i) HARMANPREET SINGH AHLUWALIA
AND OTHER1
ii) VASANTI DUBEY v. STATE OF
MADHYA PRADESH2
iii) VESA HOLDINGS PRIVATE LIMITED
AND ANOTHER3
1
(2009) SCC 712
2
(2012) 2 SCC 731
3
(2015) 8 SCC 293
8
iv) J.SESHA RATNA KUMAR AND OTHERS
v. STATE OF A.P. AND OTHERS4
v) BHAGWAN SAHAI KHANDELWAL
AND OTHERS v. STATE OF
RAJASTHAN AND ANOTHER5
11. Learned for the respondent-complainant submits that when the Magistrate is competent to take cognizance and forms an opinion and finds that there is sufficient ground for proceeding, then summons can be issued. The learned Magistrate had rightly taken cognizance for the offence under Section 418 IPC against A-1 to A-4 and the impugned docket order did not suffer from any infirmity warranting interference. In support of his contentions, learned counsel relied on the following decisions:
i) M/S INDIA CARAT PVT., LTD., v. STATE OF KARNATAKA AND ANOTHER6 ii) M/S MEDCHEL CHEMICAL & PHARMA PVT. LTD.7 iii) U.P. POLLUTION CONTROL BOARD v. MOHAN MEAKINS LTD. AND ANOTHER8 4 2016 (1) ALD (Crl.) 481 (AP) 5 RLW 2006 (1) RAJ 640 6 (1989) 3 SCC 132 7 2000(1) ALT (Crl.) 279 (SC) 8 (2000) 3 SCC 745 9 iv) BHUSHAN KUMAR AND ANOTHER v. STATE (NCT OF DELHI) AND ANOTHER9
12. Thus, after hearing the submissions of both the learned counsel and after perusing the material available on record, the point for arises for consideration is - whether the impugned docket order of the learned Magistrate taking cognizance for the offence under Section 418 IPC read with Section 34 IPC against petitoners- A-1 to A-4 suffers from any infirmity or illegality warranting interference?
13. The impugned order discloses that cognizance was taken by the learned Magistrate against petitioners-A-1 to A-4 for the offence under Section 418 IPC and the said section reads as under:
"Cheating with knowledge that wrongful loss may ensue to person whose interest offender is bound to protect. - Whoever cheats with the knowledge that he is likely thereby to cause wrongful loss to a person whose interest in the transaction to which the cheating relates, he was bound, either by law, or by a legal contract, to protect, shall be punished with imprisonment of either description for a term which may extend to three years, or with fine, or with both".9
(2012) 5 SCC 424 10
14. The ingredients of Section 418 read as under:
(a) accused cheated a person;
(b) at the time of offence accused was bound by law or legal contract to protect the interests of the person whom he cheated;
(c) the obligation related to the transaction involving the cheating;
(d) accused had knowledge that his act was likely to cause wrongful loss to the person cheated and whose interest he was bound to protect.
While Section 415 is an offence of cheating, Section 418 deals with cheating with knowledge that wrongful loss may ensue to person whose interest offender is bound to protect. In order to attract the provisions of Sections 418 and 420 IPC, the guilty intention and knowledge of the accused to cause wrongful loss to the person cheated and whose interest he was bound to protect, are essential ingredients.
15. Coming to the facts of the present case, A-1 to A-3 are former senior executives and A-4 is a middle level manager working in the complainant company i.e., Water Health India Pvt., Ltd. A-1 to A-3 submitted their resignations from October, 2008 to December, 2008. While working in the company of the 11 complainant, A-1 & A-2 are alleged to have incorporated similar company with the name and style Water life India Pvt., Ltd., on 04.08.2008. The MOA of Water Life India Pvt., Ltd., was identical to the objects and clauses of complainant's company's MOA. A-1 and A-3 systematically with a dishonest intention worked towards siphoning the business opportunities away from Water Health India Pvt., Ltd., to Water Life India Pvt., Ltd. It is stated that A-1 to A-3 tarnished the image of the complainant company and gave the technology, business and finances of the complainant to Water Life India Pvt., Ltd. A-4 cooperated in the nefarious design of A-1 to A-3.
16. It appears final report was filed by the police and referred it as civil in nature. In the final report, it is mentioned that the accused started business while in service of the complainant firm and later they relinquished their positions in the complainant's firm and continued similar business activity as that of the complainant's firm. The acts of accused do not constitute provisions of Sections 415 IPC and there are no ingredients of Section 418 IPC. Therefore, police filed final report as civil in nature, as none of the 12 allegations constitute any of the offence alleged against the accused.
17. The complainant filed protest application against the final report in Crl.M.P.No.3171 of 2011 and the learned Magistrate after considering the final report and the sworn statement of the complainant and the material on record had taken cognizance of the offence under Section 418 read with Section 34 IPC against A-1 to A-4.
18. It is the contention of learned counsel for the petitioners that the learned Magistrate had not passed a reasoned order and instead passed a cryptic order at the time of taking cognizance and the same is liable to be set aside. The learned counsel for the petitioners relied on the decision reported in BHAGWAN SAHAI KHANDELWAL's case (5 supra).
19. On the other hand, learned counsel for the respondent- complainant submits that the finding of the learned Magistrate cannot not be faulted on the ground that it was not a reasoned order. The said aspect was settled by the Hon'ble Apex Court in 13 M/s INDIA CARAT PVT., LTD (6 supra) wherein it was held as under:
"The fact that in this case the investigation had not originated from a complaint preferred to the Magistrate but had been made pursuant to a report given to the police would not alter the situation in any manner. Even if the appellant had preferred a complaint before the learned Magistrate and the Magistrate had ordered investigation under Section 156(3), the police would have had to submit a report under Section 173(2). It has been held in Tufa Ram & Ors. v. Kishore Singh [1978] 1 SCR 615 that if the police, after making an investigation, send a report that no case was made out against the accused, the Magistrate could ignore the conclusion drawn by the police and take cognizance of a case under Section 190(1)(b) and issue process or in the alternative he can take cognizance of the original complaint and examine the complainant and his witnesses and thereafter issue process to the accused, if he is of opinion that the case should be proceeded with".
20. In BHUSHAN KUMAR's case (9 supra), the Hon'ble Apex Court held as follows:
"Section 204 of the Code does not mandate the Magistrate to explicitly state the reasons for issuance of summons. It clearly states that if in the opinion of a Magistrate taking cognizance of an offence, there is sufficient ground for proceeding, 14 then the summons may be issued. This section mandates the Magistrate to form an opinion as to whether there exists a sufficient ground for summons to be issued but it is nowhere mentioned in the section that the explicit narration of the same is mandatory, meaning thereby that it is not a pre- requisite for deciding the validity of the summons issued".
21. The decisions of the Hon'ble Apex Court stated supra had already settled the legal position that at the time of taking cognizance and issuance of summons, the opinion of the learned Magistrate that there exists sufficient ground to proceed is sufficient while taking cognizance of an offence and need not give any reasons, as Section 204 Cr.P.C do not mandate for the same. Therefore, the same being the settled legal position, the order passed by the learned Magistrate in Crl.M.P.No.3171 of 2011 on 12.10.2012 cannot be faulted procedurally. Having found that the impugned order is procedurally correct, it is to be seen whether the order of learned Magistrate taking cognizance for the offence under Section 418 IPC against the petitioners-A-1 to A-4 on the allegations in the complaint and other material on record is legally valid?
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22. A careful perusal of the allegations in the complaint would disclose that the accused persons have not fraudulently or dishonestly induced the officials of the complainant to deliver any property and committed such act or omission which is likely to cause harm or damage to the complainant. The entire allegations in the complaint would only show that A-1 and A-2 incorporated Water Life India Pvt., Ltd on 04.08.2008 with the Registrar of Companies and the MOA of the said company were identical with the MOA of the Water Health India Pvt., Ltd. However, the said allegations do not attract the essential ingredients of the offence alleged, particularly that the accused with guilty intention induced the complainant to deliver any property. The essential ingredients of the offence under Section 418 IPC, which deals with cheating with knowledge, are lacking in the complaint to constitute the alleged offence and particularly the entire allegations do not disclose what was the inducement made by the accused, their fraudulent and dishonest intention and what wrongful loss was caused to the complainant to attract the ingredients of the offence alleged. The allegations in the charge sheet make out a clear case 16 for filing a civil suit for appropriate remedy. The entire allegations do not prima facie constitute the ingredients of the alleged offence under Section 418 IPC.
23. The main allegations in the complaint and final report disclose that the accused were former employees of the complainant firm and they have started identical business while in service of the complainant's firm without relinquishing their positions and continued similar business. However, from the averments in the complaint or the sworn statement, there are no specific allegations as to what is the precise damage or harm caused to mind, reputation or property of the complainant so as to make the necessary ingredients of the offence alleged.
24. For the foregoing reasons, I am of the opinion that the allegations made in the complaint/FIR, final report and protest application and other material on record even if they are taken at their face value and accepted, they do not prima facie constitute any of the offences alleged or make out a case against the accused. The entire allegations and the material on record would only make out a case that the same is civil in nature. Therefore, it is a fit case 17 to invoke the inherent powers under Section 482 Cr.P.C., to quash the proceedings against the petitioners-A-1 to A-4.
25. Accordingly, both the criminal petitions are allowed. The proceedings against the petitioners-A-1 to A-4 in C.C.No.61 of 2013, on the file of the XI Additional Chief Metropolitan Magistrate, Secunderabad, are hereby quashed.
26. Pending miscellaneous petitions, if any, stand closed.
_______________________ A.SANTHOSH REDDY, J 20.09.2022 Lrkm