Gujarat High Court
Ashish vs State on 2 March, 2012
Author: R.M.Chhaya
Bench: R.M.Chhaya
ASHISH CHORDIA - CEO OF PRECISION MOTORS INDIA PVT.LTD.V/SSTATE OF GUJARAT R/CR.MA/6565/2012 CAV JUDGEMNT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD CRIMINAL MISC.APPLICATION (FOR QUASHING & SET ASIDE FIR/ORDER) NO.6565 of 2012 For Approval and Signature:
HONOURABLE MR.JUSTICE R.M.CHHAYA Sd/-
===================================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment ?
NO 2 To be referred to the Reporter or not ?
NO 3 Whether their Lordships wish to see the fair copy of the judgment ?
NO 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ?
NO 5 Whether it is to be circulated to the civil judge ?
NO =================================================== ASHISH CHORDIA - CEO OF PRECISION MOTORS INDIA PVT.LTD. &
3....Applicant(s) Versus STATE OF GUJARAT & 1....Respondent(s) =================================================== Appearance:
MR ND NANAVATY, SENIOR COUNSEL, WITH MR ND BUCH, FOR NANAVATY ADVOCATES, FOR APPLICANT(S) NO.1-4 MS MOXA THAKKAR, APP for Respondent(s) No. 1 MR MIHIR J THAKORE, SENIOR COUNSEL, WITH MR ZUBIN F BHARDA, ADVOCATE for Respondent(s) No. 2 =================================================== CORAM:
HONOURABLE MR.JUSTICE R.M.CHHAYA Date : 12/06/2013 CAV JUDGEMNT (1) By way of this application under Section 482 of the Code of Criminal Procedure, 1973 (the Code) the applicants have prayed for quashing of criminal complaint being Inquiry Case No.5 of 2012 filed by respondent No.2-original complainant in the court of Metropolitan Magistrate, Court No.25, Ahmedabad for the alleged offences punishable under Sections 406, 420 read with Sections 120(B), 418, 504 and 114 of the Indian Penal Code, 1860 (the IPC) as well as order dated 02.03.2012 passed thereon, as provided under Section 202 of the Code, directing the police to submit report within 60 days. The present application is filed by the original accused Nos.1, 3, 6 and 7.
(2) That respondent No.2-original complainant is a private limited company registered under the Companies Act, 1956, having its registered office at Ahmedabad and is trading in the name and style of M/s.Cama Motors Private Limited and the complaint is filed through its authorized officer against seven accused. As can be culled out from the record of the application original accused No.5 i.e. Ducati Motor Holding SPA/Ducati Asia Pacific is a company, which is dealing in distributing Ducati bikes and the relevant spare-parts thereof across the world to its dealers. Original accused No.7-Company happens to be the sole importer of the Ducati bikes (for short 'the bikes') in India. That the bikes are manufactured in Italy and are distributed across the country through various dealers. That respondent No.2 entered into an agreement i.e. Letter of Intent (LoI), duly signed by accused No.1 and also executed Stand by Letter of Credit (S.B.L.C.) dated 16.11.2010. As per the agreement between the parties and as averred in the complaint, relationship of the principal and the dealers was established though dealership agreement was not executed between respondent No.2 and original accused No.7 and/or 5. As per the allegations made in the complaint and as per the version of the complainant, certain illegalities were committed by all accused, including the present applicants and on this factual matrix, respondent No.2 has filed the criminal complaint in question. Being aggrieved by the impugned criminal complaint as well as order of issuance of process passed thereon, the applicants prefer the present application.
(3) This Court (Coram: A.S.Dave, J) vide order dated 11.05.2012 admitted the matter and passed the following order:
Heard learned advocate for the applicants and it is submitted that dispute if any has geniuses in letter of intent containing various terms and conditions with dealer and further clause 11 of the said letter of intent provide inbuilt mechanism of referring the dispute to a single arbitrator in terms of the Indian Arbitration and Conciliation Act, 1996. Besides, the complainant has also taken remedy with a relief that dealership be not provided. Even otherwise also bare reading of the complaint do not disclose any of the ingredients of the offence alleged.
In view of the above, Rule. Learned APP, waives service of rule on behalf of respondent No.1.
Ad-interim relief in terms of para 12(B).
Notice as to interim relief returnable on 4.7.2012.
(4) Heard Mr.N.D.Nanavaty, learned Senior Counsel, with Mr.N.D.Buch, learned advocate, for Nanavaty Advocates for the applicants, Ms.Moxa Thakkar, learned Additional Public Prosecutor for respondent No.1-State, and Mr.Mihir J. Thakore, learned Senior Counsel, with Mr.Zubin Bharda, learned advocate, for respondent No.2-original complainant.
(5) Mr.N.D.Nanavaty, learned Senior Counsel for the applicants, has taken this Court through the factual matrix arising out of the present complaint. It was pointed out that there is not a single word in the complaint which constitute criminal offences as alleged. It was submitted that the complainant has already instituted a civil suit, which is pending before the competent civil court at Ahmedabad wherein also, as per the agreement, arbitration proceedings are provided for. However, after filing of the suit, the present complaint is filed almost on the same grounds. It was further submitted that the S.B.L.C. is not a property, it is not even a tangible security, which can be encashed and dishonestly utilized by a person to whom it is entrusted. It was pointed out that in the entire complaint, except the fact that S.B.L.C. is given, nothing is stated or mentioned as to how it is misused. It was further pointed out that on bare reading of the complaint as it is, it does not make out any case under Section 405 and/or Section 415 of the IPC. It was therefore submitted that even if the complaint is read as it is, no offence can be culled out as alleged. It was further submitted that the impugned complaint amounts to abuse of process of court and law and the same is filed only as arm twisting method.
(5.1) Further relying upon the averments made in Paragraph Nos.2, 3, 8 and 11 of the complaint, it was submitted that there are no allegations worth the name, against the present applicants. It was further pointed out that even the allegations, which are made in Paragraph Nos.25-30 of the impugned complaint, in no manner constitute offence as alleged. Further elucidating the point that the present compliant is filed only with the purpose of arm twisting method, it was submitted that what is stated in Paragraph No.30 of the suit, the same is averred in Paragraph No.22 of the compliant also. It was therefore submitted that the present offence is a civil dispute and the original complainant has already resorted to a civil remedy wherein damages are prayed for. It was therefore contended that the present complaint amounts to abuse of process of court and the same therefore deserves to be quashed as prayed for.
(5.2) It was submitted that considering the complaint as it is, no offence is culled out and it is mainly a civil dispute, which can be culled out from the bare reading of the complaint as it is. It was therefore submitted that the present application deserves to be allowed as prayed for. Reliance was placed upon the following judgments of the Apex Court:
Madhavrao Jiwajirao Scindia Vs. Sambhajirao Chandrojtrao Angre, 1988 (1) S.C.C. 692;
Shatrughna Prasad Sinha Vs. Rajbhau Surajmal Rathi, 1996 (6) S.C.C. 263;
S.K. Alagh Vs. State of Uttar Pradesh 2008 (5) S.C.C. 662;
State of Maharashtra Vs. Sayed Mohammed Masood, 2009 (8) S.C.C. 787;
Rajeswar Tiwari Vs. Nanda Kishore Roy, 2010 (8) S.C.C. 442;
Joseph Salvaraj A Vs. State of Gujarat & Ors., 2011 (7) S.C.C. 59;
M/s. Thermax Ltd. Vs. K.M.Johny, 2011 (13) S.C.C. 412;
Paramjeet Batra Vs. State of Uttarakhand, JT 2012 (12) S.C. 393;
GHCL Employees Stock Option Trust Vs. India Infoline Ltd., 2013 STPL (Web) 240 S.C.; AND Rajiv Thapar & Ors.
Vs. Madan Lal Kapoor (2013) 3 S.C.C. 330;
(6) Per contra, Ms.Moxa Thakkar, learned Additional Public Prosecutor for respondent No.1-State, has opposed the present application. It was submitted that the application is filed at pre-cognizance stage and, therefore, this Court should restrain itself from exercising its inherent powers under Section 482 of the Code and be pleased to dismiss the present application.
(7) Per Contra, Mr.Mihir J. Thakore, learned Senior Counsel appearing for respondent No.2-original complainant, submitted that the order impugned passed by Metropolitan Magistrate is under Section 202 of the Code, which is a pre-cognizance stage and, therefore, this Court should be slow to stall the proceedings at this stage. Relying upon the averments made in the complaint, more particularly Paragraph Nos.8-12 and 25-30 thereof, it was submitted that right from inception there was no intention on the part of the applicants and other accused to supply the bikes and spare-parts and still, however, they induced the complainant to accept the dealership and also give S.B.L.C. to the tune of Rs.110 crores. It was further submitted that ingredients of Sections 405 and 415 of the IPC are clearly made out on bare reading of the complaint. It was further submitted that the S.B.L.C., which was given is a property by itself which entitles the party in whose favour the S.B.L.C. is given to have money when called upon. It was submitted that if the S.B.L.C. is used contrary to the very purpose for which it was given then it amounts to a use, which is contrary to law and contract expressly implied. It was submitted that the police will have to inquire into the fact that since inception there was ill-intention of the accused to obtain S.B.L.C. and then not to supply any bikes. It was submitted that even bikes which have been supplied by the applicants and other accused were not as per the order and on the contrary the bikes of different colours were being sent to the original complainant without proper spare-parts. It was submitted that the offence as alleged in the compliant is totally made out. Reliance was placed upon the ratio of the following judgments of the Apex Court :
Trisuns Chemical Industry Vs. Rajesh Agarwal & Ors., 1999 (8) S.C.C. 686;
Medchel Chemicals & Pharma (P) Ltd., Vs. Biological E. Ltd., (2000) 3 S.C.C. 269;
M.Krishnan Vs. Vijay Singh & Anr., (2001) 8 S.C.C. 645;
Amit Kapoor Vs. Ramesh Chander & Anr., (2012) 9 S.C.C.
460.
(8) It was submitted that the present case is not a fit case for exercise of inherent jurisdiction vested in this Court which, as per the ratio laid down by the Apex Court, has to be utilized very sparingly. It was submitted that the entire narration of the complaint clearly makes out case against the applicants and other accused and at every stage the accused have taken undue advantage of their position and have also received wrongful gain out of these transactions, whereas the original complainant has suffered wrongful loss. It was further submitted that the complainant continued to buy the bikes and the materials on advance payments and initially there was no provision of S.B.L.C. to be issued as averred in the complaint but when the complainant was on the verge of opening showroom, after having invested huge amount on stocks, the accused insisted for S.B.L.C. only and even refused to accept the bank guarantee. It was further submitted that the complainant, in order to prevent its goodwill and reputation from being tarnished, had no option but to give S.B.L.C. of Rs.110 crores upon assurance by original accused No.7 that it would be utilized for import of bikes, spares and equipments required by the complainant only. It was submitted that as such instead of utilizing S.B.L.C. given by the complainant, as promised, the accused thereafter used it for its own benefit. It was submitted that only because a civil suit is filed it does not take away the right of the complainant to file and initiate criminal proceedings. It was submitted that the averments made that the complainant clearly established the offences under Sections 406, 420 read with Sections 120(B), 418, 504 and 114 the IPC. It was further alleged that because of stay granted by this Court it is an absolutely doubtful whether all the applicants and other accused would be available for trial or not. It was pointed out that the impugned complaint if taken at face value clearly demonstrates the offences which are attributed against the accused. It was further submitted that only because there is clause of arbitration as provided under the Indian Arbitration and Conciliation Act, 1996, which is one of the covenants of LoI, would not take away the right of the complainant to file the present complaint, more particularly when all the accused are not signatories of the said LoI. It was submitted that a clear case is made out against the original accused and the present application is filed at a very primitive stage, before the Court is to consider the report to be submitted by the investigation agency. It was therefore submitted that the application deserves to be dismissed.
(9) Mr.N.D.Nanavaty, learned Senior Counsel for the applicants, in rejoinder to the contentions raised on behalf of respondent No.2-original complainant, in particular submitted that the present application is maintainable and only because an order of inquiry is passed it cannot be contended that a quashing application under Section 482 of the Code is not maintainable. It was submitted that the complaint may be cryptic and relying upon the definition of word complaint as provided under Section 2(d) of the Code, it was submitted that the allegations made in the complaint should disclose prima facie that the offences as alleged are made out. It was submitted that ipsi dixit oral or written cannot be a matter of inquiry by the magistrate. It was submitted that the present complaint is nothing but a clever drafting within the four corners only with a view to achieve settlement of civil dispute. It was submitted that by clever drafting of the present complaint the same allegations are made as averred in the suit wherein damages are prayed for by the complainant. It was further submitted that even if act or omission has given cause of action to the complainant to claim damages at least offence of cheating is not made out. It was submitted that the fact that business continued and the complainant went on making payment and only because the complainant was not appointed as dealer and the bikes were not supplied, the suit is filed and the present complaint is filed only as arm twisting device. It was contended that even the proceedings of suit are governed by the arbitration clause, which is pending before the City Civil Court. It was submitted that the present complaint is nothing but abuse of process of court and the same is required to be discouraged by this Court in exercise of its inherent jurisdiction under Section 482 of the Code. It was submitted that no specific allegations are made against the present applicants-accused Nos.1, 3, 6 and 7. It was submitted that there are no allegations in regard to S.B.L.C. being encashed and though money paid bikes were not supplied. It was therefore submitted that no case of criminal breach of trust is made out. Even if the allegations leveled in the impugned complaint are taken at its face value no offence of cheating is culled out. It was further submitted by learned Senior Counsel on behalf of the applicants that no judgment may straightway apply to the facts of the present case, however, the test which is provided for exercise of powers under Section 482 of the Code, is whether the impugned complaint amounts to abuse of process of court or not. It was submitted that the predominant civil dispute, which is raised by way of suit and only because the civil case takes more time short-cut cannot be adopted by resorting to criminal proceedings. It was therefore submitted that in this backdrop of the facts the impugned complaint deserves to be quashed qua the present applicants.
No other and further submission/ contentions are made/raised on behalf of the respective parties.
(10) Before considering the submissions made by the learned counsel appearing for the respective parties, it would be necessary to appreciate the allegations made in the impugned complaint.
(11) On bare perusal of the impugned complaint, it appears that the complaint is filed by respondent No.2 against the seven accused. On examining the complaint as it is on its face value, it is found that the allegations are made against all accused, including the present applicants. As observed hereinabove, specific allegations are made in the complaint, more particularly in Paragraph Nos.8-12 and 24-30 and thus, according to the complainant, the applicants have committed offences as alleged in the impugned complaint.
(12) It appears from the record that the impugned complaint is filed on 16.12.2012 and the order of process is issued on 02.03.2012, the present application is filed on 09.05.2012 wherein stay has been granted by this Court vide order dated 11.05.2012 for implementation of the aforesaid order dated 02.03.2013 as well as further proceedings of Inquiry Case No.5 of 2012. It is therefore admitted position that the present application is filed at a stage when even cognizance is not taken by the magistrate and only order of inquiry is ordered.
(13) Considering the cardinal principle of exercise of jurisdiction of inherent powers under Section 482 of the Code to the effect whether complaint discloses prima facie offence on reading of the complaint as it is and taking its face value on examination of the complaint itself even though at first blush it appears that the complaint has contour of civil dispute, on reading the complaint at its face value, the allegations are made by the complainant, which prima facie discloses the offences as alleged. As observed by the Apex Court in the case of Trisuns Chemical Industry (supra), mere existence of arbitration clause in the contract i.e. Letter of Credit in the instance case cannot be a sufficient ground for quashing a complaint. The arbitrator cannot come to a conclusion that whether an offence is committed or not. Though the learned advocate for the applicants has tried to canvass that prima facie no offences as alleged, more particularly considering the averments made in the compliant, has further tried to canvas that no ingredients of either Section 405 or Section 415 of the IPC exist in the impugned complaint and, therefore, no offences of cheating or criminal breach of trust is prima face culled out from the impugned complaint, however, on taking the complaint at its face value gives a different picture. It is no doubt true that the complainant has filed a civil suit for damages, which is to be tried on merits, whereas the impugned complaint relates to the alleged offences under Sections 406, 420 read with Sections 120(B), 418, 504 and 114 of the IPC and, therefore, the contentions put forward by the applicants to the effect that the present complaint is an abuse of process of court is not well founded. Though the complaint discloses civil transaction it cannot be said that the complaint is filed as tool of arm twisting. The fact situation as is found from the judgment of the Apex Court in the case of Paramjeet Batra (supra), which is relied upon by the learned advocate for the applicants, more particularly at Paragraph Nos.6-9 is not a fact situation here because the fact that the civil suit is filed by the complainant. In opinion of this Court therefore it cannot be said that the impugned complaint is filed by giving a cloak of criminal offences. Similarly, the other decisions relied upon by the applicants deal with the aspect whether power under Section 482 of the Code needs to be exercised, more particularly in the complaint which speaks of a civil nature are with respect on the facts of each case and examination of the same and taking the impugned complaint as its face value it cannot be inferred that no prima facie offence is disclosed in the impugned complaint merely because the complaint discloses a civil dispute.
(14) It would be advantageous to refer to the judgment of the Apex Court (which is relied upon on behalf of the applicants) in the case reported in State of State of Maharashtra Vs. Sayed Mohammed Masood (supra) wherein it has been observed thus:
12. There cannot be any doubt or dispute whatsoever that a simple breach of contract or a case involving pure civil dispute would not attract the penal provisions contained in the Indian Penal Code either under Section 406 or Section 420 thereof.
Had the dispute between the parties rested in the aforementioned premise, probably we would not have interfered with the judgment of the High Court; but then, our attention has been drawn to certain evidences which have surfaced during investigation and disclosed before us by the State in the grounds stated in this Memo of Appeal.
We may notice a few of them : "cc) Because preliminary findings shows that public at large especially middle class and lower class people have invested their hard earned money and or money received at the time of their VRS or amount received from insurance companies after casualty of their legal heirs, are likely to be cheated by the inducement of "Rosy picture" shown by the company with respect to motor vehicle scheme. Because as soon as influx of investors stops the company will stop payment to the old investors, as the company does not have any type of business which generates fair legal income/profit.
xxx xxx xxx ff) Because another witness has stated in his statement dated 03/10/07 that he has invested Rs. 1,07,000 for Maruti Omni in the month of January 2005 immediately after the agreement he has received three post dated cheques of Rs. 4000/- each from CLIL. Company has taken Rs. 25,630/- for RTO and Insurance Charges but has not purchased a vehicle in his name.
xxx xxx xxx
ii) Because another witness in his statement dated 17-11-07 that he is running Travelling Business in the name as "Amey Tourist." He owns Maruti Esteem Car No. MH-01-JA-6710 and the same is being used for his business purpose. Neither he has given his said m/v to CLIL nor has invested money in C.L.I.L. An enquiry has been made with Shri Arun Potade because CLIL data on first mirror image shows this car as one which is from their scheme as Indica and registered in the name of Smt. Jayshree Devgude (File No. 15971 of CLIL).
jj) Because another witness has stated in his statement dated 19-11-07 that he had Kinetic Honda Scooter No. MH-01-E-6343 in his name but due to rusting/damage he had scraped the said m/v. He does not know anything about CLIL. An enquiry has been made with Shri Deepak R. Kalwar because CLIL data on first mirror image shows that Maruti Omni Car No. MH-01-E-6343 has been registered in the name of one Smt. Asha Thakur (file No. 1738 of CLIL) and enquiry with RTO revealed that the vehicle No. MH-01-E-6343 is Kinetic Honda Scooter and registered in the name of Deepak Kalwar."
14. The allegation made in the FIR and the materials collected during investigation, in our considered opinion, should be allowed to be taken to its logical end.
15. We must, however, acknowledge that Ms. Nair has cited the following decisions for our consideration.
i. Alpic Finance Ltd. v.
P. Sadasivan and another [(2001) 3 SCC 513] 2001 AIR SCW 823 ii. Radha Ballav Pal and another v. Emperor [AIR 1939 Calcutta 327] iii. Velji Raghavji Patel v. The State of Maharashtra [AIR 1965 SC 1433] iv. Vir Prakash Sharma v.
Anil Kumar Agarwal and another [(2007) 7 SCC 373] 2007 AIR SCW 4816 v. All Cargo Movers (India) Private Limited and others v. Dhanesh Badarmal Jain and another [(2007) 14 SCC 776] 2007 AIR SCW 6667 vi. New India Insurance Co. Ltd. v. Sadanand Mukhi and others [(2009) 1 SCALE 252] 2009 AIR SCW 1372 vii. U. Dhar and another v. State of Jharkhand and another [(2003) 2 SCC 219] 2003 AIR SCW 466 viii. Uma Shankar Gopalika v. State of Bihar and another [(2005) 10 SCC 336] In Alpic Finance Ltd.
(supra) the dispute was found to be of pure civil nature.
In Radha Ballav Pal and another (supra), the Calcutta High Court looked to the policies and schemes floated by the Company to opine that in the fact of the said case no case has been made out for convicting the appellant therein. But the matter having reached the High Court after a judgment of conviction was recorded, all the materials were brought on record by the parties by that time.
In Velji Raghavji Patel (supra), it involved a question of dealing with the assets of a partnership firm by a partner.
In Vir Prakash Sharma (supra), this case primarily revolved around bouncing of a cheque.
In Dhanesh Badarmal Jain (supra), the Court found only a civil liability on the part of the accused and opined that it was at best a case of interpretation of agreement, stating 2007 AIR SCW 6667 "16. We are of the opinion that the allegations made in the complaint petition, even if given face value and taken to be correct in its entirety, do not disclose an offence. For the said purpose, this Court may not only take into consideration the admitted facts but it is also permissible to look into the pleadings of Respondent 1-plaintiff in the suit. No allegation whatsoever was made against the appellants herein in the notice. What was contended was negligence and/or breach of contract on the part of the carriers and their agent. Breach of contract simpliciter does not constitute an offence. For the said purpose, allegations in the complaint petition must disclose the necessary ingredients therefor. Where a civil suit is pending and the complaint petition has been filed one year after filing of the civil suit, we may for the purpose of finding out as to whether the said allegations are prima facie correct, take into consideration the correspondences exchanged by the parties and other admitted documents. It is one thing to say that the Court at this juncture would not consider the defence of the accused but it is another thing to say that for exercising the inherent jurisdiction of this Court, it is impermissible also to look to the admitted documents. Criminal proceedings should not be encouraged, when it is found to be mala fide or otherwise an abuse of the process of the Court. Superior Courts while exercising this power should also strive to serve the ends of justice."
Sadanand Mukhi and others (supra) involved a pure civil dispute dealing with the compensation and insurance policies in the Motor Vehicle Claims Tribunal (MACT). 2009 AIR SCW 1372 Similar was the position in Uma Shankar Gopalika (supra) wherein it was stated :
"....It is well settled that every breach of contract would not give rise to an offence of cheating and only in those cases breach of contract would amount to cheating where there was any deception played at the very inception. If the intention to cheat has developed later on, the same cannot amount to cheating. In the present case it has nowhere been stated that at the very inception there was any intention on behalf of the accused persons to cheat which is a condition precedent for an offence under Section 420, IPC."
Hence the petition of complainant did not disclose any criminal offence at all much less any offence either under Section 420 or Section 120B of the Indian Penal Code. It was purely civil in nature.
(15) At this juncture it would also be necessary to refer to the judgment of the Apex Court in the case of Amit Kapoor (supra) wherein the Apex Court while considering the case where civil proceedings were pending has laid down the principle to be considered for appropriate exercise of jurisdiction under Section 397 or Section 482 of the Code and has observed thus:
26. This further raises a question as to the wrongs which become actionable in accordance with law. It may be purely a civil wrong or purely a criminal offence or a civil wrong as also a criminal offence constituting both on the same set of facts. But if the records disclose commission of a criminal offence and the ingredients of the offence are satisfied, then such criminal proceedings cannot be quashed merely because a civil wrong has also been committed. The power cannot be invoked to stifle or scuttle a legitimate prosecution. The factual foundation and ingredients of an offence being satisfied, the Court will not either dismiss a complaint or quash such proceedings in exercise of its inherent or original jurisdiction. In the case of Indian Oil Corporation v. NEPC India Ltd. & Ors. [(2006) 6 SCC 736], this Court took the similar view and upheld the order of the High Court declining to quash the criminal proceedings because a civil contract between the parties was pending.
27. Having discussed the scope of jurisdiction under these two provisions, i.e., Section 397 and Section 482 of the Code and the fine line of jurisdictional distinction, now it will be appropriate for us to enlist the principles with reference to which the courts should exercise such jurisdiction. However, it is not only difficult but is inherently impossible to state with precision such principles. At best and upon objective analysis of various judgments of this Court, we are able to cull out some of the principles to be considered for proper exercise of jurisdiction, particularly, with regard to quashing of charge either in exercise of jurisdiction under Section 397 or Section 482 of the Code or together, as the case may be :
27.1 Though there are no limits of the powers of the Court under Section 482 of the Code but the more the power, the more due care and caution is to be exercised in invoking these powers. The power of quashing criminal proceedings, particularly, the charge framed in terms of Section 228 of the Code should be exercised very sparingly and with circumspection and that too in the rarest of rare cases. 27.2 The Court should apply the test as to whether the uncontroverted allegations as made from the record of the case and the documents submitted therewith prima facie establish the offence or not. If the allegations are so patently absurd and inherently improbable that no prudent person can ever reach such a conclusion and where the basic ingredients of a criminal offence are not satisfied then the Court may interfere.
27.3 The High Court should not unduly interfere. No meticulous examination of the evidence is needed for considering whether the case would end in conviction or not at the stage of framing of charge or quashing of charge.
27.4 Where the exercise of such power is absolutely essential to prevent patent miscarriage of justice and for correcting some grave error that might be committed by the subordinate courts even in such cases, the High Court should be loathe to interfere, at the threshold, to throttle the prosecution in exercise of its inherent powers.
27.5 Where there is an express legal bar enacted in any of the provisions of the Code or any specific law in force to the very initiation or institution and continuance of such criminal proceedings, such a bar is intended to provide specific protection to an accused.
27.6 The Court has a duty to balance the freedom of a person and the right of the complainant or prosecution to investigate and prosecute the offender.
27.7) The process of the Court cannot be permitted to be used for an oblique or ultimate/ulterior purpose.
27.8 Where the allegations made and as they appeared from the record and documents annexed therewith to predominantly give rise and constitute a civil wrong with no element of criminality and does not satisfy the basic ingredients of a criminal offence, the Court may be justified in quashing the charge. Even in such cases, the Court would not embark upon the critical analysis of the evidence.
27.9 Another very significant caution that the courts have to observe is that it cannot examine the facts, evidence and materials on record to determine whether there is sufficient material on the basis of which the case would end in a conviction, the Court is concerned primarily with the allegations taken as a whole whether they will constitute an offence and, if so, is it an abuse of the process of court leading to injustice.
27.10 It is neither necessary nor is the court called upon to hold a full-fledged enquiry or to appreciate evidence collected by the investigating agencies to find out whether it is a case of acquittal or conviction.
27.11) Where allegations give rise to a civil claim and also amount to an offence, merely because a civil claim is maintainable, does not mean that a criminal complaint cannot be maintained.
27.12 In exercise of its jurisdiction under Section 228 and/or under Section 482, the Court cannot take into consideration external materials given by an accused for reaching the conclusion that no offence was disclosed or that there was possibility of his acquittal. The Court has to consider the record and documents annexed with by the prosecution.
27.13 Quashing of a charge is an exception to the rule of continuous prosecution. Where the offence is even broadly satisfied, the Court should be more inclined to permit continuation of prosecution rather than its quashing at that initial stage. The Court is not expected to marshal the records with a view to decide admissibility and reliability of the documents or records but is an opinion formed prima facie.
27.14 Where the charge-sheet, report under Section 173(2) of the Code, suffers from fundamental legal defects, the Court may be well within its jurisdiction to frame a charge.
27.15 Coupled with any or all of the above, where the Court finds that it would amount to abuse of process of the Code or that interest of justice favours, otherwise it may quash the charge. The power is to be exercised ex debito justitiae, i.e. to do real and substantial justice for administration of which alone, the courts exist. {Ref. State of West Bengal & Ors. v. Swapan Kumar Guha & Ors. [AIR 1982 SC 949]; Madhavrao Jiwaji Rao Scindia & Anr. v. Sambhajirao Chandrojirao Angre & Ors. [AIR 1988 SC 709]; Janata Dal v. H.S. Chowdhary & Ors. [AIR 1993 SC 892]; Mrs. Rupan Deol Bajaj & Anr. v. Kanwar Pal Singh Gill & Ors. [AIR 1996 SC 309; G. Sagar Suri & Anr. v. State of U.P. & Ors. [AIR 2000 SC 754]; Ajay Mitra v. State of M.P. [AIR 2003 SC 1069]; M/s. Pepsi Foods Ltd. & Anr. v. Special Judicial Magistrate & Ors. [AIR 1988 SC 128]; State of U.P. v. O.P. Sharma [(1996) 7 SCC 705]; Ganesh Narayan Hegde v. s. Bangarappa & Ors. [(1995) 4 SCC 41]; Zundu Pharmaceutical Works Ltd. v. Mohd. Sharaful Haque & Ors. [AIR 2005 SC 9]; M/s. Medchl Chemicals & Pharma (P) Ltd. v. M/s. Biological E. Ltd. & Ors. [AIR 2000 SC 1869]; Shakson Belthissor v. State of Kerala & Anr. [(2009) 14 SCC 466]; V.V.S. Rama Sharma & Ors. v. State of U.P. & Ors. [(2009) 7 SCC 234]; Chunduru Siva Ram Krishna & Anr. v. Peddi Ravindra Babu & Anr. [(2009) 11 SCC 203]; Sheo Nandan Paswan v. State of Bihar & Ors. [AIR 1987 SC 877]; State of Bihar & Anr. v. P.P. Sharma & Anr. [AIR 1991 SC 1260]; Lalmuni Devi (Smt.) v. State of Bihar & Ors. [(2001) 2 SCC 17]; M. Krishnan v. Vijay Singh & Anr. [(2001) 8 SCC 645]; Savita v. State of Rajasthan [(2005) 12 SCC 338]; and S.M. Datta v.State of Gujarat & Anr. [(2001) 7 SCC 659]}.
27.20 These are the principles which individually and preferably cumulatively (one or more) be taken into consideration as precepts to exercise of extraordinary and wide plenitude and jurisdiction under Section 482 of the Code by the High Court. Where the factual foundation for an offence has been laid down, the courts should be reluctant and should not hasten to quash the proceedings even on the premise that one or two ingredients have not been stated or do not appear to be satisfied if there is substantial compliance to the requirements of the offence.
(16) Similarly, in case of Iridium India Telecom Ltd. Vs. Motorola Incorporated & Ors., AIR 2011 SC 20, the Apex Court has held as under:
32. The contours within which the High Court would exercise its jurisdiction to quash the criminal proceeding has been dilated upon, and well defined by this Court in a catena of judgments. We may make a reference here only to a few representative cases. In the case of Smt. Nagawwa v.
Veeranna, (supra) considering the limits within which the Magistrate is required to conduct an inquiry under Section 202 of the Cr.P.C., this Court observed that the scope of such inquiry is (Para 4) "extremely limited - limited only to the ascertainment of the truth or falsehood of the allegations made in the complaint- (i) on the materials placed by the complainant before the Court; (ii) for the limited purpose of finding out whether a prima facie case for issue of process has been made out; and (iii) for deciding the question purely from the point of view of the complainant without at all adverting to any defence that the case may have. In fact it is well settled that in proceedings under Section 202, the accused has got absolutely no locus standi and is not entitled to be heard on the question whether the process should be issued against him or not". It has been further held (Para 5) as follows :-
"..........Once the Magistrate has exercised his discretion it is not for the High Court, or even this Court, to substitute its own discretion for that of the Magistrate or to examine the case on merits with a view to find out whether or not the allegations in the complaint, if proved, would ultimately end in conviction of the accused. These considerations, in our opinion, are totally foreign to the scope and ambit of an inquiry under Section 202 of the Code of Criminal Procedure which culminates into an order under Section 204 of the Code. Thus it may be safely held that in the following cases an order of the Magistrate issuing process against the accused can be quashed or set aside :
(1) where the allegations made in the complaint or the statements of the witnesses recorded in support of the same taken at their face value make out absolutely no case against the accused or the complaint does not disclose the essential ingredients of an offence which is alleged against the accused;
(2) where the allegations made in the complaint are patently absurd and inherently improbable so that no prudent person can ever reach a conclusion that there is sufficient ground for proceeding against the accused;
(3) where the discretion exercised by the Magistrate in issuing process is capricious and arbitrary having been based either on no evidence or on materials which are wholly irrelevant or inadmissible; and (4) where the complaint suffers from fundamental legal defects, such as, want of sanction, or absence of a complaint by legally competent authority and the like."
The aforesaid examples are of course purely illustrative and provide sufficient guidelines to indicate the contingencies where the High Court can quash proceedings.
This Court in the case of Kurukshetra University v. State of Haryana, [(1977) 4 SCC 451] :
(AIR 1977 SC 2229) again stated the principle regarding the exercise of the inherent powers conferred by Section 482, Cr.P.C. Chandrachud, J. speaking for the Bench observed as follows :
"It ought to be realised that inherent powers do not confer an arbitrary jurisdiction on the High Court to act according to whim or caprice.
That statutory power has to be exercised sparingly, with circumspection and in the rarest of rare cases."
In Municipal Corporation of Delhi v. Ram Kishan Rohtagi, (supra) this Court reiterated the legal position with regard to the limits of the power under Section 482, as stated in the case of Raj Kapoor and others v. State, [(1980) 1 SCC 43] : (AIR 1980 SC 258) wherein Krishna Iyer, J., observed as follows :-
"Even so, a general principle pervades this branch of law when a specific provision is made : easy resort to inherent power is not right except under compelling circumstances. Not that there is absence of jurisdiction but that inherent power should not invade areas set apart for specific power under the same Code."
This Court also reiterated the four propositions of law which were said to be illustrative in the case of Smt. Nagawwa v. Veeranna (supra). It was further held as follows :-
"10. It is, therefore, manifestly clear that proceedings against an accused in the initial stages can be quashed only if on the face of the complaint or the papers accompanying the same, no offence is constituted. In other words, the test is that taking the allegations and the complaint as they are, without adding or subtracting anything, if no offence is made out then the High Court will be justified in quashing the proceedings in exercise of its powers under Section 482 of the present Code."
The aforesaid proposition of law was again reiterated by this Court in the case of Madhavrao Jiwajirao Scindia and others v. Sambhajirao Chandrojirao Angre and others, (supra) in the following words :-
"The legal position is well settled that when a prosecution at the initial stage is asked to be quashed, the test to be applied by the court is as to whether the uncontroverted allegations as made prima facie establish the offence. It is also for the court to take into consideration any special features which appear in a particular case to consider whether it is expedient and in the interest of justice to permit a prosecution to continue. This is so on the basis that the court cannot be utilised for any oblique purpose and where in the opinion of the court chances of an ultimate conviction are bleak and, therefore, no useful purpose is likely to be served by allowing a criminal prosecution to continue, the court may while taking into consideration the special facts of a case also quash the proceeding even though it may be at a preliminary stage."
The aforesaid ratio of law was further elaborately discussed in the case of State of Haryana v. Bhajan Lal, (supra) wherein this court had formulated certain principles pertaining to the exercise of such power in the following words :-
"102. In the backdrop of the interpretation of the various relevant provisions of the Code under Chapter XIV and of the principles of law enunciated by this Court in a series of decisions relating to the exercise of the extraordinary power under Article 226 or the inherent powers under Section 482 of the Code which we have extracted and reproduced above, we give the following categories of cases by way of illustration wherein such power could be exercised either to prevent abuse of the process of any court or otherwise to secure the ends of justice, though it may not be possible to lay down any precise, clearly defined and sufficiently channelised and inflexible guidelines or rigid formulae and to give an exhaustive list of myriad kinds of cases wherein such power should be exercised.
(1) Where the allegations made in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused.
(2) Where the allegations in the first information report and other materials, if any, accompanying the FIR do not disclose a cognizable offence, justifying an investigation by police officers under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section 155(2) of the Code.
(3) Where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused.
(4) Where, the allegations in the FIR do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code.
(5) Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused.
(6) Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party.
(7) Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge.
103. We also give a note of caution to the effect that the power of quashing a criminal proceeding should be exercised very sparingly and with circumspection and that too in the rarest of rare cases; that the court will not be justified in embarking upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the FIR or the complaint and that the extraordinary or inherent powers do not confer an arbitrary jurisdiction on the court to act according to its whim or caprice."
The aforesaid ratio of law was further reiterated in the case of Janata Dal v. H.S. Chowdhary, [(1992) 4 SCC 305] : (AIR 1993 SC 892) in the following words :
"132. The criminal courts are clothed with inherent power to make such orders as may be necessary for the ends of justice. Such power though unrestricted and undefined should not be capriciously or arbitrarily exercised, but should be exercised in appropriate cases, ex debito justitiae to do real and substantial justice for the administration of which alone the courts exist. The powers possessed by the High Court under Section 482 of the Code are very wide and the very plenitude of the power requires great caution in its exercise. Courts must be careful to see that its decision in exercise of this power is based on sound principles.
134. This Court in Dr. Raghubir Sharan v. State of Bihar had an occasion to examine the extent of inherent power of the High Court and its jurisdiction when to be exercised. Mudholkar, J. speaking for himself and Raghubar Dayal, J. after referring to a series of decisions of the Privy Council and of the various High Courts held thus :
"... [Every High Court as the highest court exercising criminal jurisdiction in a State has inherent power to make any order for the purpose of securing the ends of justice .... Being an extraordinary power it will, however, not be pressed in aid except for remedying a flagrant abuse by a subordinate court of its powers ..."
137. This inherent power conferred by Section 482 of the Code should not be exercised to stifle a legitimate prosecution. The High Court being the highest court of a State should normally refrain from giving a premature decision in a case wherein the entire facts are extremely incomplete and hazy, more so when the evidence has not been collected and produced before the Court and the issues involved whether factual or legal are of great magnitude and cannot be seen in their true perspective without sufficient material. Of course, no hard and fast rule can be laid down in regard to the cases in which the High Court will exercise its extraordinary jurisdiction of quashing the proceedings at any stage......"
Adverting to the scope of the jurisdiction of the High Court under Section 482, this Court in the case of State of Orissa v. Debendra Nath Padhi, [(2005) 1 SCC 568] : (AIR 2005 SC 359) again reiterated as follows :-
"It is evident from the above that this Court was considering the rare and exceptional cases where the High Court may consider unimpeachable evidence while exercising jurisdiction for quashing under Section 482 of the Code. In the present case, however, the question involved is not about the exercise of jurisdiction under Section 482 of the Code where along with the petition the accused may file unimpeachable evidence of sterling quality and on that basis seek quashing, but is about the right claimed by the accused to produce material at the stage of framing of charge."
Again upon a very elaborate examination of the powers possessed by the High Court under Section 482, Cr.P.C., this Court in the case of Inder Mohan Goswami and Anr. v. State of Uttaranchal and Ors., [(2007) 12 SCC 1] : (AIR 2008 SC 251) very clearly observed that the aforesaid powers are very wide and the very plentitude of the power requires great caution in its exercise. The Court must be careful to see that its decision in exercise of this power is based on sound principles. It is clearly observed that the High Courts have been invested with inherent powers, both in civil and criminal matters, to achieve a salutary public purpose. A Court proceeding ought not to be permitted to degenerate into a weapon of harassment or persecution. At the same time, it is also observed that the inherent power should not be exercised to stifle a legitimate prosecution. The High Court should normally refrain from giving a prima facie decision in a case where all the facts are incomplete and hazy, more so, when the evidence has not been collected and produced before the Court and the issues involved, whether factual or legal are of such magnitude that they cannot be seen in their true perspective without sufficient material. Reiterating the observations made by this Court in the case of Indian Oil Corporation v. NEPC India Ltd. and Ors., [(2006) 6 SCC 736] : (AIR 2006 SC 2780) the Court again cautioned about a growing tendency in business circles to convert purely civil disputes into criminal cases. The Court reiterated that any effort to settle civil disputes and claims, which do not involve any criminal offence, by applying pressure through criminal prosecution should be deprecated and discouraged.
The limits within which the jurisdiction under Section 482 can be exercised was again precisely stated in the case of Divine Retreat Centre v. State of Kerala, [(2008) 3 SCC 542] : (AIR 2008 SC 1614) as follows :
"In our view, there is nothing like unlimited arbitrary jurisdiction conferred on the High Court under Section 482 of the Code. The power has to be exercised sparingly, carefully and with caution only where such exercise is justified by the tests laid down in the section itself. It is well settled that Section 482 does not confer any new power on the High Court but only saves the inherent power which the Court possessed before the enactment of the Code. There are three circumstances under which the inherent jurisdiction may be exercised, namely, (i) to give effect to an order under the Code,
(ii) to prevent abuse of the process of court, and (iii) to otherwise secure the ends of justice."
In the case of M.N. Ojha and others v. Alok Kumar Srivastav and another (supra) this Court was dealing with a situation where the SDJM had issued process mechanically and without any application of mind. Furthermore, the High Court had dismissed a petition for quashing the order of SDJM by a cryptic and non-speaking order. In such circumstances, this Court observed :-
"25. Had the learned SDJM applied his mind to the facts and circumstances and sequence of events and as well as the documents filed by the complainant himself along with the complaint, surely he would have dismissed the complaint. He would have realised that the complaint was only a counterblast to the FIR lodged by the Bank against the complainant and others with regard to the same transaction.
27. The case on hand is a classic illustration of non-application of mind by the learned Magistrate. The learned Magistrate did not scrutinise even the contents of the complaint, leave aside the material documents available on record. The learned Magistrate truly was a silent spectator at the time of recording of preliminary evidence before summoning the appellants.
28. The High Court committed a manifest error in disposing of the petition filed by the appellants under Section 482 of the Code without even adverting to the basic facts which were placed before it for its consideration.
29. It is true that the Court in exercise of its jurisdiction under Section 482 of the Code of Criminal Procedure cannot go into the truth or otherwise of the allegations and appreciate the evidence if any available on record. Normally, the High Court would not intervene in the criminal proceedings at the preliminary stage/when the investigation/enquiry is pending.
30. Interference by the High Court in exercise of its jurisdiction under Section 482 of the Code of Criminal Procedure can only be where a clear case for such interference is made out. Frequent and uncalled for interference even at the preliminary stage by the High Court may result in causing obstruction in progress of the inquiry in a criminal case which may not be in the public interest. But at the same time the High Court cannot refuse to exercise its jurisdiction if the interest of justice so required where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no fair minded and informed observer can ever reach a just and proper conclusion as to the existence of sufficient grounds for proceeding. In such cases refusal to exercise the jurisdiction may equally result in injustice more particularly in cases where the complainant sets the criminal law in motion with a view to exert pressure and harass the persons arrayed as accused in the complaint."
(17) Also, in the case of Rajiv Thapar (supra) it has been held by ac as under:
23. Based on the factors canvassed in the foregoing paragraphs, we would delineate the following steps to determine the veracity of a prayer for quashing, raised by an accused by invoking the power vested in the High Court under Section 482 of the Cr.P.C.:-
30.1. Step one, whether the material relied upon by the accused is sound, reasonable, and indubitable, i.e., the material is of sterling and impeccable quality?
30.2. Step two, whether the material relied upon by the accused, would rule out the assertions contained in the charges levelled against the accused, i.e., the material is sufficient to reject and overrule the factual assertions contained in the complaint, i.e., the material is such, as would persuade a reasonable person to dismiss and condemn the factual basis of the accusations as false.
30.3. Step three, whether the material relied upon by the accused, has not been refuted by the prosecution/ complainant; and/or the material is such, that it cannot be justifiably refuted by the prosecution/complainant?
30.4. Step four, whether proceeding with the trial would result in an abuse of process of the court, and would not serve the ends of justice?
30.5. If the answer to all the steps is in the affirmative, judicial conscience of the High Court should persuade it to quash such criminal proceedings, in exercise of power vested in it under Section 482 of the Cr.P.C. Such exercise of power, besides doing justice to the accused, would save precious court time, which would otherwise be wasted in holding such a trial (as well as, proceedings arising therefrom) specially when, it is clear that the same would not conclude in the conviction of the accused.
(18) In view of the aforesaid background of the facts and consideration of the arguments made and the judgments relied upon by the learned counsel appearing for the respective parties and the judgments of the Apex Court referred to hereinabove, even though the impugned complaint has all contours of civil dispute, if the complaint is taken at its face value it does disclose prima facie offences as alleged, which requires at least investigation. In the opinion of this Court therefore filing of the complaint does not amount to abuse of process of court, which warrants exercise of its inherent powers under Section 482 of the Code. In the facts of the case therefore the investigation does not require to be throttled at this stage as the powers under Section 482 of the Code are to be exercised by this High Court in cautious manner and sparingly in the rarest of rare case and the impugned complaint does not fall within that category.
(19) It may further be noted that this Court while exercising powers under Section 482 of the Code is required to consider the impugned F.I.R. or complaint at its face value. In addition to these, while exercising the powers under Section 482 of the Code it is not necessary to examine the evidence in detail and presume that on investigation or further trial being conducted whether the same would result into conviction or acquittal. The civil remedy which is in the instance case resorted to by the complainant has to be examined by the competent civil court on its own merits, whereas the impugned complaint has to be examined in light of the allegations made therein. On taking the impugned complaint at its face value therefore, in the opinion of this Court, as observed by the Apex Court in the case reported in State of Maharashtra Vs. Sayed Mohammed Masood (supra) requires to be brought to its logical end and considering the fact that the present application is filed at a very primitive stage even before the cognizance is to be taken, no interference is called for to exercise inherent powers of this Court under Section 482 of the Code.
In view of the above, the application fails and the same is hereby dismissed. RULE discharged. Ad-interim relief stands vacated.
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[R.M.CHHAYA, J ] FURDER ORDER After pronouncement of the aforesaid judgment, Mr.N.D.Buch, learned advocate, for Nanavaty Advocates for the applicants, prays for extension of the ad-interim relief. However, the said request is objected to by Mr.Zubin Bharda, learned advocate for respondent No.2-original complainant.
In view of the fact that the ad-interim relief is operating since 11.05.2012, the same is extended till 12.07.2013.
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[R.M.CHHAYA, J ] *** Bhavesh* Page 32 of 32