Vemulapalli S.Sridhar Babu vs Neerajan Jain
2024 Latest Caselaw 883 AP

Andhra Pradesh High Court - Amravati

Vemulapalli S.Sridhar Babu vs Neerajan Jain on 2 February, 2024

 THE HON'BLE SRI JUSTICE TARLADA RAJASEKHAR RAO

            CRIMINAL PETITION No.10400 OF 2018

ORDER:

The present Criminal Petition is filed under Section 482 of

the Code of Criminal Procedure, 1973 (Cr.P.C.), praying to call

for the record pertaining to Crime No.26 of 2018 of Harbour Law

& Order Police Station, Visakhapatnam and to quash the same

against the petitioner/A1.

2. The facts, which are germane for disposal of the

present case, are as follows:

The 1st respondent-defacto complainant has lodged a

report to the police on 25.06.2018 alleging that M/s. Lotus Inter-

trade Private Limited is having its registered office at 188,

Ground Floor, Swayam Sewa Society CGHS, Jhilmil Colony, East

Delhi-110095, where the Company is indulged in business of

procurement and supply of coal streams to the interested

buyers. Accordingly, they have supplied the coal to M/s. Sneha

Analytics and Scientifics (SAS) based at Akkayyapalem,

Visakhapatnam, and as per the sale agreement dated

14.02.2018, the ownership/title of the material shall remain

with the defacto complainant-Company and the same will be

transferred to SAS only after paying the consideration.

Accordingly, they have imported the cargo of 55,000 metric

tonnes sourced from sourced from Fareast Coal and Resources

PTE Ltd., Singapore, and transported the same to

Visakhapatnam Port on 19.02.2018 and unloaded the cargo till

08.03.2018 and thereby incurred a demurrage of Rs.73 lakhs.

Subsequently, SAS moved the entire cargo parcel of 55,000

metric tonnes to a leased plot at Visakhapatnam Port Trust and

the cargo is lying in Essar-2, 5-14, SVK Plot and WQ North Plots.

In spite of repeated requests and reminders, the balance amount

of Rs.10,23,22,100/- towards the cost of the material and the

demurrage to the tune of Rs.73 lakhs incurred have not been

paid by SAS to the 1st respondent-Company and Mr. Vemulapalli

S.Sridhar Babu is Managing Partner of Sneha Analytic and

Scientific, Visakhapatnam, with clear intention to defraud/cheat

and extort money from Mr. Vemulapalli S.Sridhar Babu, together

with Mr. P.Padma Kumar, though Padma Kumar is not related to

SAS, has signed on the business contract dated 24.01.2018

instead of Sridhar Babu and affixed stamp of SAS. They

conspired to cheat and defraud LIPL by booking cargo by paying

small advance and taking control of same and misappropriate

material by illegally selling it in market (proclaiming themselves

as owner) without having title/paying money and also black

mailing the owner of the 1st respondent-company to extort

money for returning the balance cargo. The cheques towards

were bounced with a reason "Stop Payment" that clearly speaks

the malafide intention of the accused to cheat and defraud the

1st respondent-Company.

3. Basing on the said allegations, Harbour L & O Police

Station has registered F.I.R.No.26 of 2018 dated 25.06.2018 and

apprehended the accused and in the remand report, it was

stated that with the help of Mr. A.Sujay as the Agents of the

Vessel lifted the material from site/plot without having authority

and also conspired and took part in same crime and helped them

to take out/steal the material from site/plot and there are clear

instructions from the owners of the Vessel, vide their e-mail

dated 22.03.2018 to Vessel Agents M/s. Ocean Line Shipping &

Logistics advising not to issue any delivery orders with respect to

the subject cargo. The said P.Padma Kumar and Sujay are

blackmailing LIPL by Rs.2 crores (approximate) as ransom

money for releasing illegal custody of material in favour of LIPL

or else face dire consequences financially and physically.

4. On the aforesaid allegations, the police have requested the

learned Metropolitan Magistrate, Visakhapatnam, to grant

remand for a period of 15 days to the petitioner-accused.

Accordingly, the learned Magistrate has remanded the accused

to judicial custody.

5. Assailing the said FIR, the present Criminal Petition is filed

by the petitioner/accused stating that the 1st respondent-

Company entered into an agreement for sale and purchase of

some coal on 16.01.2018 and as per the specifications, gross

calorific value (K.Cal/Kg) (ARB) typical 3000 and they have not

supplied as per the specifications as entered by both the

petitioner-Company and the 1st respondent-Company, therefore,

the accused have incurred a loss and the coal was sent to the

test report and as per the test report, the gross calorific value

(ARB) is 2,741, which is outside the range of NABL accreditation.

Therefore, he would submit that the 1st respondent-Company

has not supplied the coal as per the specifications and also

submits that Section 420 I.P.C. as well as Section 406 I.P.C.

have absolutely no application, as there is no dishonest intention

right from the inception on the part of the petitioner-accused

and the goods were not entrusted and as held by the Hon‟ble

Apex Court in catena of decisions in the growing tendency in

business circles in order to convert the civil disputes into

criminal cases, they have lodged the report maliciously and

relied on the judgment of the Hon‟ble Apex Court in Rajib Ranjan

and others vs. R.Vijay Kumar 1, wherein it was held that "the

Court must ensure that criminal prosecution is not used as an

instrument of harassment or for seeking private vendetta or with

an ulterior motive to pressurize the accused" and also contends

that 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 and 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, which is

a ground for quashing the proceedings as held by the Hon‟ble

Apex Court in State of Haryana and others vs. Bhajan Lal and

others2 and the 1st respondent-Company misrepresented the

facts and the allegations that have been made are fabricated and

(2015) 1 SCC 513

1992 Supp.(1) SCC 335

lack any corroboration and even assuming that taking into

account all the allegations that have been made, no case is made

out against the petitioner and therefore, continuation of the

proceedings would only be a futile exercise. Hence, urged to

quash the proceedings.

6. Learned counsel for the petitioner would rely on the

judgment of the Hon‟ble Apex Court in Hridaya Ranjan Pd.

Verma and others vs. State of Bihar and another 3 for the

proposition that dishonest intention of the accused at beginning of

negotiations not made out by averments in complaint would be a

ground to quash the proceedings. Learned counsel also relied on

the judgment of the Hon‟ble Apex Court in B.Suresh Yadav vs.

Sharifa Bee and another4 for the proposition that the complainant

is required to show that the accused had fraudulent or dishonest

intention at the time of making promise or representation. And

also relied on the judgment of the Hon‟ble Apex Court in

International Advanced Research Centre for Powder Metallurgy

and New Materials (ARCI) and others vs. Nimra Cerglass Technics

Private Limited and another5.

AIR 2000 SC 2341

(2007) 13 SCC 107

(2016) 1 SCC 348

7. As per the above cited judgments, the complainant is

required to show that the accused had fraudulent or dishonest

intention at the time of making promise or representation. The

learned counsel for the petitioner also relied on judgment of the

Hon‟ble Apex Court in Murari Lal Gupta vs. Gopi Singh6 for the

proposition that merely because the accused had failed to honour

the agreement, it cannot be said that he had cheated the

complainant and he also contended that arbitration proceedings

were initiated as per the agreement dated 16.01.2018 and also

Criminal Petition vide Crl.P.No.9700 of 2018 was filed and this

Court, vide order dated 11.09.2018, by relying on the judgment

of the Hon‟ble Apex Court in Sunderbhai Ambalal Desai vs. State

of Gujarat7, has directed the Chief Metropolitan Magistrate,

Visakhapatnam to dispose of the property on the same condition

and obtain undertaking as contemplated in the judgment of the

Hon‟ble Apex Court in Sunderbhai Ambalal Desai's case (7 supra)

for interim custody of coal of 50,000 metric tonnes. Therefore, it

assumes that there is no criminal intention or dishonest

intention on the part of the accused to cheat the 1 st respondent

and he would urge to quash the proceedings.

(2005) 13 SCC 699

2002 Law Suit (SC) 1346

8. Heard Sri G.Rama Gopal, learned counsel appearing for the

petitioner and the notice sent to the 1st respondent-Company

was returned on the ground that „the Company not on this

address‟. Though it cannot be deemed valid service of notice,

this Court is inclined to dispose of the Criminal Petition basing

on the material available on record.

9. The main contention of the petitioner herein is that the

petitioner has not supplied the coal as per the specifications and

it is also the contention of the petitioner herein that there is no

fraudulent or dishonest intention on the part of the petitioner

herein to cheat the 1st respondent-complainant and as per the

law laid down by the Hon‟ble Apex Court, such intention should

be from the inception of the agreement. There is no dispute with

regard to the proposition of the Hon‟ble Apex Court referred

supra. But whether the said facts therein and the facts in the

present case are similar, which is to be looked into while

disposing of the Criminal Petition.

10. The contention of the 1st respondent-complainant is that

they have supplied the material to the petitioner-Company as per

the agreement dated 16.01.2018 and the repeated requests and

reminders, the balance amount of Rs.10,23,22,100/- was not

paid and with an intention to defraud and cheat the 1 st

respondent to extort money, a cheque was issued and the same

was bounced with the reason „stop payment‟ and which clearly

shows the malafide intention of the petitioner-accused to cheat

and defraud the 1st respondent.

11. The Hon‟ble Apex Court in Neeharika Infrastructure Pvt.

Ltd. vs. State of Maharashtra and others8, held that in exceptional

cases with circumspection, the High Court may stay the further

investigation. However, at the time, there may be genuine

complaints/FIRs and the police/investigating agency has a

statutory obligation/right/duty to enquire into the cognizable

offences. Therefore, a balance has to be struck between the rights

of the genuine complainants and the FIRs disclosing commission

of a cognizable offence and the statutory obligation/duty of the

investigating agency to investigate into the cognizable offences on

the one hand and those innocent persons against whom the

criminal proceedings are initiated which may be in a given case

abuse of process of law and the process. However, if the facts are

hazy and the investigation has just begun, the High Court would

be circumspect in exercising such powers and the High Court must

2021 SCC Online SC 315

permit the investigating agency to proceed further with the

investigation in exercise of its statutory duty under the provisions

of the Code.

12. The Hon‟ble Apex Court in the above said judgment, i.e.,

Neeharika Infrastructure‟s case (8 supra), considering the

judgment in King Emperor vs. Khwaja Nazir Ahmad9, has laid

down the following principles:

From the aforesaid decisions of this Court, right from the decision of the Privy Council in the case of Khawaja Nazir Ahmad (supra), the following principles of law emerge:

i) Police has the statutory right and duty under the relevant provisions of the Code of Criminal Procedure contained in Chapter XIV of the Code to investigate into cognizable offences;

ii) Courts would not thwart any investigation into the cognizable offences;

iii) However, in cases where no cognizable offence or offence of any kind is disclosed in the first information report the Court will not permit an investigation to go on;

iv) The power of quashing should be exercised sparingly with circumspection, in the „rarest of rare cases‟. (The rarest of rare cases standard in its application for quashing under Section 482 Cr.P.C. is not to be confused with the norm which has been formulated in the context of the death penalty, as explained previously by this Court);

AIR 1944 Privy Council 18

v) While examining an FIR/complaint, quashing of which is sought, the court cannot embark upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the FIR/complaint;

vi) Criminal proceedings ought not to be scuttled at the initial stage;

vii) Quashing of a complaint/FIR should be an exception and a rarity than an ordinary rule;

viii) Ordinarily, the courts are barred from usurping the jurisdiction of the police, since the two organs of the State operate in two specific spheres of activities. The inherent power of the court is, however, recognised to secure the ends of justice or prevent the above of the process by Section 482 Cr.P.C.

ix) The functions of the judiciary and the police are complementary, not overlapping;

x) Save in exceptional cases where non-interference would result in miscarriage of justice, the Court and the judicial process should not interfere at the stage of investigation of offences;

xi) Extraordinary and inherent powers of the Court do not confer an arbitrary jurisdiction on the Court to act according to its whims or caprice;

xii) The first information report is not an encyclopaedia which must disclose all facts and details relating to the offence reported. Therefore, when the investigation by the police is in progress, the court should not go into the merits of the allegations in the FIR. Police must be permitted to complete the investigation. It would be premature to pronounce the conclusion based on hazy facts that the

complaint/FIR does not deserve to be investigated or that it amounts to abuse of process of law. During or after investigation, if the investigating officer finds that there is no substance in the application made by the complainant, the investigating officer may file an appropriate report/summary before the learned Magistrate which may be considered by the learned Magistrate in accordance with the known procedure;

xiii) The power under Section 482 Cr.P.C. is very wide, but conferment of wide power requires the court to be cautious. It casts an onerous and more diligent duty on the court;

xiv) However, at the same time, the court, if it thinks fit, regard being had to the parameters of quashing and the self-restraint imposed by law, more particularly the parameters laid down by this Court in the cases of R.P. Kapur (supra) and Bhajan Lal (supra), has the jurisdiction to quash the FIR/complaint; and

xv) When a prayer for quashing the FIR is made by the alleged accused, the court when it exercises the power under Section 482 Cr.P.C., only has to consider whether or not the allegations in the FIR disclose the commission of a cognizable offence and is not required to consider on merits whether the allegations make out a cognizable offence or not and the court has to permit the investigating agency/police to investigate the allegations in the FIR.

13. In the case of Union of India vs. Prakash P.Hinduja10, it is

observed by the Hon‟ble Apex Court that the Court would not

(2003) 6 SCC 195

interfere with the investigation or during the course of

investigation which would mean from the time of the lodging of the

first information report till the submission of the report by the

officer in charge of the police station in Court under Section 173(2)

of Cr.P.C. and this field being exclusively reserved for the

investigating agency.

14. As per the judgment of the Hon‟ble Apex Court in

Sanapareday Maheedhar Seshagiri vs. State of Andhra

Pradesh11, the Court can quash the proceedings when the FIR

does not disclose commission of any offence or that the

allegations contained in the FIR do not constitute any cognizable

offence or that the prosecution is barred by law or the High

Court is convinced that it is necessary to interfere to prevent

abuse of the process of the Court.

15. As seen from the judgments referred supra, this Court can

interfere only when the FIR does not disclose commission of any

offence or the allegations do not constitute any cognizable

offence. In the present case, there is a specific allegation about

cheating and issuing of the cheque by the person not authorized

would show the dishonest/fraudulent intention on the part of

(2007) 13 SCC 165

the petitioner/accused. When there is a dishonest intention and

the contention raised that such dishonest intention at the

inception is a question of fact which has to be decided during the

course of trial by leading evidence.

16. Hence, in view of the judgments of the Hon‟ble Apex Court

referred supra by this Court, in paragraph Nos.12 to 14, this

Court circumscribed to exercise the power under Section 482

Cr.P.C. to quash the proceedings. The judgments relied on by

the learned counsel for the petitioner are not applicable to the

present facts of the case. The question, whether there is

dishonest/fraudulent intention from the inception, has to be

decided during the course of trial and this Court found no

reasons to quash the proceedings.

17. Accordingly, the Criminal Petition is dismissed.

As a sequel, interlocutory applications, pending if any in

this case, shall stand closed.

________________________________________ JUSTICE TARLADA RAJASEKHAR RAO Date: 02.02.2024 siva

THE HON'BLE SRI JUSTICE TARLADA RAJASEKHAR RAO

CRIMINAL PETITION No.10400 OF 2018

Date: 02.02.2024

siva