Dispute in the total sum of invoice prepared by the appellant (accused) was considered as foul play by the respondent.2 (complainant)
2) The appellant, at the material point of time, stood posted as the Head of factory of Exide Industries Limited (“EIL”), a corporate entity, situated at Bawal, District Rewari, Haryana. The respondent no.2, ran a proprietary concern, Ambika Gases. He was the supplier of Dissolved Acetylene Gas (“DA Gas”), which is used for manufacturing battery in the said factory. So far as the present appeal is concerned, the dispute is over a purchase order issued for the supply of the said item. The original purchase order dated 01.04.2019 was amended twice on the basis of representations made by the respondent no.2. The first amendment was made on 18.07.2019 by which the rate was increased from Rs.1.55 per unit to Rs.1.65 per unit and the second amendment was made on 20.12.2019 through which the rate per unit was brought down to Rs.1.48 from Rs.1.65. An invoice was raised by the respondent no.2 with the aforesaid rates for a total sum of Rs.9,36,693.18/-. The dispute revolves around nonpayment of the said sum. However, it has been contended by the appellant that EIL, after ascertaining the market price of DA Gas from other vendors, by a letter dated 29.06.2020, reconciled the accounts by informing respondent no.2 of what it claimed was foul play with respect to revision of rates and appropriated the alleged illegal amounts claimed by the vendor (respondent no.2) from the invoice.
Respondent no.2 has instituted a complaint against the appellant
3) The respondent no.2 instituted a complaint case in the Court of the Chief Judicial Magistrate, Ghaziabad and the substance of the complaint would be revealed from the following passages of the petition of complaint (registered as Misc. Application No.317/2020):
“…………….”
Magistrate after taking sworn statements issued summons to the appellant
4) The learned Magistrate upon recording initial deposition of Saurabh Sharma, the proprietor of the supplier firm and his father Padam Kant Sharma issued summons for trial under Sections 406, 504 and 506 of the Indian Penal Code, 1860 (“1860 Code”) on 18.08.2021.
Quash dismissed
5) The appellant had approached the High Court at Allahabad under Section 482 of Code of Criminal Procedure, 1973 (“the 1973 Code”) by filing, Criminal Miscellaneous Application No.18603/2021, for quashing the said summons and also the complaint case itself. The judgment of the High Court was delivered dismissing the application filed by the appellant on 23.03.2023 and it is this judgment which is under appeal before us. The main reason for dismissal of the appellant’s quashing plea was that the subject-complaint involved adjudication of disputed questions of fact. Referring to the judgments of this Court in the cases of Neeharika Infrastructure Pvt. Ltd. -vs- State of Maharashtra and Ors. [(2021) 19 SCC 401], R.P. Kapur -vs- State of Punjab [AIR 1960 SC 866], State of Haryana and Ors. -vsBhajan Lal and Ors. [1992 SCC (Cr.) 426], State of Bihar and Anr. -vs- P. P. Sharma, IAS and Anr. [1992 SCC (Cr.) 192] and lastly Zandu Pharmaceutical Works Ltd. and Ors. -vs- Mohd. Sharaful Haque and Another [2005 SCC (Cr.) 283], the High Court refrained from considering the defence of the accused.
Analysing Neeharika Infrastructure Ltd case
6) In the case of Neeharika Infrastructure Ltd (supra), a three judge Bench of this Court examined the factors which were to be considered by the High Court for quashing an F.I.R. at the threshold, relating to factors which would apply to a proceeding which forms the subject-matter of the present case. Referring to the judgment in the case of R.P. Kapur (supra), principles for quashing were set down as:-
“10.1 The first case on the point which is required to be noticed is the decision of this Court in the case of R.P. Kapur (supra). While dealing with the inherent powers of the High Court under Section 561-A of the earlier Code (which is pari materia with Section 482 of the Code), it is observed and held that the inherent powers of the High Court under Section 561 of the earlier Code cannot be exercised in regard to the matters specifically covered by the other provisions of the Code; the inherent jurisdiction of the High Court can be exercised to quash proceedings in a proper case either to prevent the abuse of the process of any court or otherwise to secure the ends of justice; ordinarily criminal proceedings instituted against an accused person must be tried under the provisions of the Code, and the High Court would be reluctant to interfere with the said proceedings at an interlocutory stage. After observing this, thereafter this Court then carved out some exceptions to the above-stated rule, which are as under:
“(i) Where it manifestly appears that there is a legal bar against the institution or continuance of the criminal proceeding in respect of the offence alleged. Absence of the requisite sanction may, for instance, furnish cases under this category.
(ii) Where the allegations in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety, do not constitute the offence alleged; in such cases no question of appreciating evidence arises; it is a matter merely of looking at the complaint or the first information report to decide whether the offence alleged is disclosed or not.
(iii) Where the allegations made against the accused person do constitute an offence alleged but there is either no legal evidence adduced in support of the case or the evidence adduced clearly or manifestly fails to prove the charge. In dealing with this class of cases it is important to bear in mind the distinction between a case where there is no legal evidence or where there is evidence which is manifestly and clearly inconsistent with the accusation made and cases where there is legal evidence which on its appreciation may or may not support the accusation in question. In exercising its jurisdiction under Section 561-A the High Court would not embark upon an enquiry as to whether the evidence in question is reliable or not. That is the function of the trial Magistrate, and ordinarily it would not be open to any party to invoke the High Court’s inherent jurisdiction and contend that on a reasonable appreciation of the evidence the accusation made against the accused would not be sustained.”
7) In the same decision (i.e. Neeharika Infrastructure Ltd.) (supra), the seven-point edict laid down in the case of Bhajan Lal (supra) was also referred to.
Analysing Deepak gaba case
9) The judgment in Deepak Gaba [Deepak Gaba and Ors. -vsState of Uttar Pradesh and Another (2023) 3 SCC 423] was delivered in a case in which there was subsisting commercial relationship between the parties and the complainant had made allegations of a forged demand, for a sum of around rupees six and a half lakhs. On that basis a summoning order was issued for trial under Section 406 of the 1860 Code. A coordinate Bench of this Court held:-
“17. However, in the instant case, materials on record fail to satisfy the ingredients of Section 405 IPC. The complaint does not directly refer to the ingredients of Section 405IPC and does not state how and in what manner, on facts, the requirements are satisfied. Pre-summoning evidence is also lacking and suffers on this account. On these aspects, the summoning order is equally quiet, albeit, it states that “a forged demand of Rs 6,37,252.16p had been raised by JIPL, which demand is not due in terms of statements by Shubhankar P. Tomar and Sakshi Tilak Chand”. A mere wrong demand or claim would not meet the conditions specified by Section 405IPC in the absence of evidence to establish entrustment, dishonest misappropriation, conversion, use or disposal, which action should be in violation of any direction of law, or legal contract touching the discharge of trust. Hence, even if Respondent 2 complainant is of the opinion that the monetary demand or claim is incorrect and not payable, given the failure to prove the requirements of Section 405 IPC, an offence under the same section is not constituted. In the absence of factual allegations which satisfy the ingredients of the offence under Section 405IPC, a mere dispute on monetary demand of Rs 6,37,252.16p, does not attract criminal prosecution under Section 406IPC.”
10) The same view was expressed by this Court in the cases of Prof. R.K. Vijayasarathy and Anr. -vs- Sudha Seetharam and Anr. [(2019) 16 SCC 739] and Vijay Kumar Ghai and Ors. -vsState of West Bengal and Ors. [(2022) 7 SCC 124]. The judgment of this Court in the case of Dalip Kaur and Ors. -vs- Jagnar Singh and Anr. [(2009) 14 SCC 696] has also been cited in support of the appellant’s case and in this decision it has been, inter-alia, held:-
“10. The High Court, therefore, should have posed a question as to whether any act of inducement on the part of the appellant has been raised by the second respondent and whether the appellant had an intention to cheat him from the very inception. If the dispute between the parties was essentially a civil dispute resulting from a breach of contract on the part of the appellants by non-refunding the amount of advance the same would not constitute an offence of cheating. Similar is the legal position in respect of an offence of criminal breach of trust having regard to its definition contained in Section 405 of the Penal Code.”
This goes for allegations relating to Section 406 of the 1860 Code.
Regarding ss. 504 and 506 IPC allegations surfaces in the last portion and not made in the initial statement
11) So far as the allegations of commission of offence under Sections 504 and 506 of the 1860 Code are concerned, we have gone through the petition of complaint as well as the initial depositions. The allegations pertaining to the aforesaid provisions of the 1860 Code surfaces in the last portion of the petition of complaint. The complainant, in his initial deposition has not made any statement relatable to criminal intimidation. But his father made the following statement at that stage under Section 202 of the 1973 Code:-
It is not required to repeat actual words or language of insult word by word to constitute criminal intimidation
13) As far as the allegations of criminal intimidation are concerned, our attention has been drawn to the judgment of this Court in the case of Fiona Shrikhande -vs- State of Maharashtra and Another [(2013) 14 SCC 44]. It has been held in this case that the petition of complaint need not repeat the actual words or language of insult word by word and the complaint has to be read as a whole. If the Magistrate comes to a conclusion, prima facie, that there has been an intentional insult so as to provoke any person to break the public peace or to commit any other offence it should be sufficient to bring the complaint within the ambit of the aforesaid provision. It has also been argued on behalf of the respondent no.2 that the appellant in any event has got the right to apply for discharge and the petition of complaint does not suffer from the defect of not having made out any offence at all. This was the view taken by the High Court.
There was no misappropriation or conversion of the subject property but issue revolves around the rate for work only which does not constitute offence under section 405 IPC
14) Past commercial relationship between the appellant’s employer and the respondent no.2 is admitted. It would also be evident from the petition of complaint the dispute between the parties centred around the rate at which the assigned work was to be done. Neither in the petition of complainant nor in the initial deposition of the two witnesses (that includes the complainant) the ingredients of the offence under Section 405 of the 1860 Code surfaced. Such commercial disputes over variation of rate cannot per se give rise to an offence under Section 405 of the 1860 Code without presence of any aggravating factor leading to the substantiation of its ingredients. We do not find any material to come to a prima facie finding that there was dishonest misappropriation or conversion of any material for the personal use of the appellant in relation to gas supplying work done by the respondent no.2. The said work was done in course of regular commercial transactions. It cannot be said that there was misappropriation or conversion of the subject property, being dissolved acetylene gas which was supplied to the factory for the purpose of battery manufacturing at EIL. The dispute pertains to the revision of rate per unit in an ongoing commercial transaction. What has emerged from the petition of complaint and the initial deposition made in support thereof that the accused-appellant wanted a rate variation and the entire dispute arose out of such stand of the appellant. On the basis of these materials, it cannot be said that there was evidence for commission of offence under Section 405/406. The High Court also did not apply the test formulated in the case of Dalip Kaur (supra). We have narrated the relevant passage from that decision earlier
16) So far as the criminal complaint and the initial depositions with which we are concerned in this case, the factual basis is broadly similar. We have reproduced these materials earlier in this judgment. We do not find they carry the ingredients of offence as specified in Section 405 of the 1860 Code.
Only bald allegation is found in the complaint for criminal intimidation
17) The allegation of criminal intimidation against the accused is made in the complaint statements made by the appellant, no particulars thereof have been given. Both in the complaint petition and the initial deposition of one of the witnesses, there is only reproduction of part of the statutory provision giving rise to the offence of criminal intimidation. This would constitute a mere bald allegation, short of any particulars as regards to the manner in which threat was conveyed.
Summoning order: Magistrate failed to see the criminal colour of a commercial civil dispute
18) While it is true that at the stage of issuing summons a magistrate only needs to be satisfied with a prima facie case for taking cognizance, the duty of the magistrate is also to be satisfied whether there is sufficient ground for proceeding, as has been held in the case of Jagdish Ram (supra). The same proposition of law has been laid down in the case of Pepsi Foods Ltd. and Anr. -vs- Special Judicial Magistrate and Ors. [(1998) 5 SCC 749]. The learned Magistrate’s order issuing summons records the background of the case in rather longish detail but reflects his satisfaction in a cryptic manner. At the stage of issue of summons, detailed reasoning as to why a Magistrate is issuing summons, however, is not necessary. But in this case, we are satisfied that the allegations made by the complainant do not give rise to the offences for which the appellant has been summoned for trial. A commercial dispute, which ought to have been resolved through the forum of Civil Court has been given criminal colour by lifting from the penal code certain words or phrases and implanting them in a criminal complaint. The learned Magistrate here failed to apply his mind in issuing summons and the High Court also failed to exercise its jurisdiction under Section 482 of the 1973 Code to prevent abuse of the power of the Criminal Court.
Not necessary to invoke discharge
19) It is true that the appellant could seek discharge in course of the proceeding itself before the concerned Court, but here we find that no case at all has been made out that would justify invoking the machinery of the Criminal Courts. The dispute, per se, is commercial in nature having no element of criminality.
Criminal intimidation case was filed directly on the head of the company hence the complaint case cannot be rejected at the nascent stage on the sole ground of not implicating the company
20) The appellant also wanted dismissal of the complaint and the orders passed in ensuing proceeding on another ground. The respondent no. 2’s allegations were against EIL, for whom he did the job-work. The appellant’s argument on this point is that the complaint should not have been entertained without arraigning the principal company as an accused. The judgment relied upon on this point is a decision of a Coordinate Bench in the case of Sharad Kumar Sanghi -vs- Sangita Rane [(2015) 12 SCC 781]. This was a case where complaint was made by a consumer for being sold a damaged vehicle under Section 420 of the 1860 Code. But arraigned as accused was the managing director of the dealer, the latter being a corporate entity. Cognizance was taken in that case and summons were issued. The accused failed to get relief after invoking the High Court’s jurisdiction, but two-judge Bench of this Court quashed the proceeding primarily on the ground that the company was not made an accused. The Coordinate Bench found that the allegations were made against the company, which was not made a party. Allegations against the accused (managing director of that company) were vague. So far the present case is concerned, the ratio of the decision in the case of Sharad Kumar Sanghi (supra) would not be applicable for ousting the complaint at the threshold on this ground alone. The perceived wrongdoing in this case has been attributed to the appellant, though the complaint petition acknowledges that the job-work was being done for EIL. Moreover, the allegation of criminal intimidation is against the appellant directly – whatever be the value or quality of such allegations. Thus, for that reason the complaint case cannot be rejected at the nascent stage on the sole ground of not implicating the company. But as otherwise we have given our reasons for quashing the complaint and the summons, we do not find any reason to dilate further on this point.
Party
SACHIN GARG …APPELLANT VERSUS STATE OF U.P & ANR. …RESPONDENTS – CRIMINAL APPEAL NO. 497 OF 2024 (Arising out of Petition for Special Leave to Appeal (Criminal) No.4415 OF 2023) – 30th JANUARY, 2024 – 2024 INSC 72
Sachin Garg vs. State of U.P – 129892023_2024-01-30
Further study
FINDINGS IN CIVIL PROCEEDINGS WILL MAKE SUBSTRATUM OF A CRIMINAL COMPLAINT VANISH
WRONG: A wrongful contract may constitute both civil wrong and criminal offence
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