Bombay High Court
Nigel Palfreeman And Anr vs The State Of Maharashtra And Anr on 5 August, 2016
Bench: Anuja Prabhudessai
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPLICATION NO.547 OF 2013
1. Darton Zink
Adult, Inhabitant of United States of
America, President and Chief
Executive Officer of ZEECO, INC
having its registered address at
22151 East 91st Street Broken Arrow,
Oklahoma 74014, United States of
America
2. M/s. ZEECO INC
Company registered under the laws
of the Staet of Oklahoma, United
Staets of America, having its
registered address at 22151 East 91st
Street Broken Arrow, Oklahoma
74014, United States of America ...Applicants
(Original accused Nos.1 & 4)
Versus
1. The State of Maharashtra
Through the Public Prosecutor
2. Sunil Laxman Gupta
of Bombay, adult, Indian Inhabitant
carrying on business in the firm
name and style of M/s. Zeeco India
having office situated at 2A, Marve, ...Respondents
Link Building Mith Chowki, Malad (Respondent No.2-original
(W), Mumbai- 400 064. complainant.)
WITH
CRIMINAL APPLICATION NO.781 OF 2013
Nigel Palfreeman
Adult, Inhabitant of United Kingdom
Managing Director of Zeeco Europe
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Limited having its registered address
at The Woolfox Depot, Great North
Road, Ruthland United Kingdom,
Leicester 15, 7QT
2. M/s. Zeeco Europe Limited
a company registered under the law
of the United Kingdom, having its
registered address at The Woolfox
Depot, Great North Road, Ruthland ...Applicants
United Kingdom, Leicester 15, 7QT. (Orig. Accused Nos.2 and 5)
Versus
1. The State of Maharashtra
Through the Public Prosecutor.
2. Sunil Laxman Gupta
of Bombay, adult, Indian Inhabitant
carrying on business in the firm
name and style of M/s. Zeeco India
having office situated at 2A, Marve,
...Respondents
Link Building Mith Chowki, Malad
(Respondent No.2-original
(W), Mumbai- 400 064.
complainant.)
CRIMINAL APPLICATION NO.1133 OF 2012
1. Sanjeev Chipalkatti
Age 59, Indian Inhabitant,
Carrying on business in the firm
name and style of M/s. Zeeco (India)
Pvt. Ltd., having office situated at
801, Swastik Chambers Sion Tombay
Road, Chembur, Mumbai 400 071.
2. M/s. Zeeco India Pvt. Ltd.
having office situated at 801,
Swastik Chambers Sion Trombay
...Applicants
Road, Chembur, Mumbai 400 071.
(Orig. accused Nos.3 and 6)
Versus
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The State of Maharashtra
Through the Public Prosecutor
2. Sunil Laxman Gupta
of Bombay, adult, Indian Inhabitant
carrying on business in the firm
name and style of M/s. Zeeco India
having office situated at 2A, Marve,
...Respondents
Link Building Mith Chowki, Malad
(Respondent No.2-original
(W), Mumbai- 400 064.
complainant.)
....
Mr. Niteen Pradhan with Mr. Rajat Agarwal with
Mr. Omkar Kelkar i/b. Mr. Anish Ghoshal for the
Applicants.
Mrs. G.P. Mulekar, APP for Respondent No.1-State.
Mr. Manoj Mohite with Mr. Anand Mishra i/b. Mr.
A.M. Saraogi for Respondent No.2.
CORAM : SMT. ANUJA PRABHUDESSAI, J.
JUDGMENT RESERVED ON : 2nd AUGUST, 2016.
JUDGMENT PRONOUNCED ON: 5th AUGUST, 2016.
JUDGMENT :
By these applications filed under section 482 of the Cr.P.C.,
the Applicants, have sought to quash the order of issuance of process
dated 8th February, 2012 in Criminal Case No.36/SW/2009 for offences
punishable under sections 406, 420 and 120 B r/w. 34 of the IPC.
2. The aforesaid Applicants are the accused in Criminal Case
No.36/SW/2009. Darton Zink-accused No.1 is a foreign national and
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is a President and Chief Executive Officer of accused No.4 -M/s. Zeeco
INC, a company having its registered office in the State of Oklohoma,
USA, engaged in designing, manufacturing and supplying various
industrial equipments. The accused No.5 M/s. Zeeco Europe Limited is
the European affiliate of M/s. Zeeco INC, accused No.4-company. The
accused No.2 Nigel Palfreeman is the Director of accused No.5
company. Accused No.6-M/s. Zeeco India Pvt. Ltd. is the Indian
affiliate of the accused No.4 company and Shri Sanjiv Chipalkatti-
accused No.3 is the business Director of the accused No.6 company.
3. The accused No.4 company entered into an agreement
dated 31st August, 1994 with a company called USCO ltd. through its
President-Atulkumar, thereby appointing USCO as the sales
representative and granting sole and exclusive right to promote the
sale and solicit orders for the products of the accused No.4-M/s. Zeeco
INC Company. In terms of the said agreement USCO was entitled to
get necessary commission for the services provided under the contract.
USCO operated as a sales representative since the date of the execution
of the said agreement till February, 2005. The Respondent No.2-Sunil
Gupta is the complainant in Criminal Case No.36/SW/2009, who as
per the said agreement dated 31st August, 1994 was appointed as a
sales representative. The complainant Sunil Gupta claims that he had
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procured several contracts and assurances for the accused No.4- M/s.
Zeeco INC from various corporate sectors in India. The complainant
claims that it was only because of his efforts that the accused No.4
company could raise market within India as well as other countries.
4. The complainant has alleged that the accused in collusion
and connivance with each other tried to remove him from the picture
even though he had been looking after the work of accused No.4- M/s.
Zeeco INC and helped the accused No.4 in establishing its business in
Indian market and also in acquiring global business. The complainant
further claimed that accused Nos.1 to 4 had assured that they would
start a subsidiary company and that they would accommodate him as a
Director with a good percentage of profit and requested him to close
the original company and business.
5. The grievance of the complainant is that some time in the
year 2005, he procured a contract with Indian Oil Corporation. The
complainant signed an agreement with Indian Oil Corporation under
an authority from the accused No.3 and also received an advance
amount of Rs.51,86,464/-. The complainant has stated that since a
huge amount was due and payable to him by the accused No.3-Shri
Sanjiv Chipalkatti, it was agreed that he would retain the said amount
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received by him from Indian Oil Corporation towards dues payable to
him by accused No.3. The complainant has stated that even after
adjusting the said amount of Rs.51 lakhs, accused was liable to pay to
him a sum of Rs.1.2 crores. The complainant has stated that when he
had requested the accused to settle his dues and comply with the
contract assigned by Indian Oil Corporation, the accused started
pressurising him to transfer the said contract in the name of the
accused No.6- M/s. Zeeco India Pvt. Ltd. as if the said contract was
procured by accused No.6 directly from the Indian Oil Corporation.
The accused also suggested to the complainant that all future contracts
which would be obtained by the company would be shown as if
directly procured by accused No.6.
6. The grievance of the complainant is that though he has
been appointed exclusively as sales representative, slowly and
gradually the said arrangement was sought to be shared with the
accused Nos.6. Since the said suggestions were not accepted to him,
the accused in order to pressurise him started suggesting that amount
of Rs.51,86,464/- received by the complainant from the Indian Oil
Corporation should be transferred in the account of accused No.6.
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7. The complainant has further stated that the accused
created one document termed as MOU on the basis of which they
claimed that the entire assignment procured by the complainant from
the Indian Oil Corporation stands transferred in the name of accused
Nos.4 and 6. The complainant has denied having entered into any
such MOU. The complainant has stated that he had procured the said
contract from Indian Oil Corporation as exclusive sales representative
of accused No.4 company and there was no question of transferring the
assignment to any other party including the accused No.6.
8. The complainant has alleged that the accused Nos.1 to 3
got themselves introduced to the officers of the Indian Oil Corporation
and by misleading the officers of the Indian Oil Corporation they
claimed that they had procured the agreement directly from the Indian
Oil Corporation. This act, according to the complainant constitutes an
offence under section 406 of the IPC.
9. The complainant further claimed that right from the
beginning the accused had no intention to continue the services
rendered by the complainant and that they have side lined him after
utilising his services and after having established themselves in the
Indian market. The complainant has further stated that the accused
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have refused to pay to him sum of Rs.2 crores as sales commission in
addition to Rs.1.2 crores, which was due to him as estimated profit
under the contract and an amount of Rs.6 crore 70 lakhs towards
investment in establishing the accused No.4 company in India. The
complainant therefore, claimed that accused have made illegal profits
for themselves and loss to him to the equivalent amount. The said act
according to the complainant constitutes an offence of cheating.
10. The learned Magistrate recorded the statement of the
complainant under section 200 of the Cr.P.C. and thereafter forwarded
the complaint for further enquiry under section 202 of Cr.P.C. Since
the concerned police submitted a report stating that dispute was of
civil nature, the complainant /Respondent No.2 filed a protest petition
and after hearing the complainant, the learned Magistrate by order
dated 8th February, 2012 issued process under sections 406, 420 and
120 B as well as section 34 of the IPC. Being aggrieved with this order
the Applicants /accused have filed these applications under section 482
of the Cr.P.C. for quashing and setting aside the order of issuance of
process.
11. The learned counsel for the Respondent No.2-complainant
at the outset submitted that the order being revisable, the Applicants
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cannot be permitted to invoke the inherent jurisdiction of the Court
under section 482 of the Criminal Procedure Code. It may be
mentioned here that out of these criminal applications, Criminal
Application No.1133 of 2012 was admitted as early as in 2013 and
hence the Applicant cannot be non suited at this stage on the ground of
availability of alternative remedy.
12. Be that as it may, in the case of Madhu Limaye Vs. The
State of Maharashtra 1977 (4) SCC 551, three Judge Bench of the
Apex Court while considering the scope of section 482 and objective of
section 397(2) vis-a-vis section 482 of the Cr.P.C. has observed as
under:
"At the outset the following principles may be noticed in
relation to the exercise of the inherent power of the High Court
which have been followed ordinarily and generally, almost
invariably, barring a few exceptions :-
(1) That the power is not to be resorted to if there is a
specific provision in the Code for the redress of the grievance
of the aggrieved party ;
(2) That it should be exercised very sparingly to prevent
abuse of process of any Court or otherwise to secure the ends
of justice;
(3) That it should not be exercised as against the express bar
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of law engrafted in any other provision of the Code.
xxx
On a plain reading of section 482, however, it would follow that
nothing in the code, which would include subsection (2) of
section 397 also, "shall be deemed to limit or affect the inherent
powers of the High Court". But, if we were to say that the 754
said bar is not to operate in the exercise of the inherent power
at all, it will be setting at naught one of the limitations imposed
upon the exercise of the revisional powers. In such a situation,
what is-the harmonious way out ? In our opinion, a happy
solution of this problem would be to say that the bar provided
in sub-section (2) of section 397 operates only in exercise of the
revisional power of the High Court, meaning thereby that the
High Court will have no power of revision in relation to any
interlocutory order. Then in accordance with one of the other
principles enunciated above, the inherent power will come into
play, there being no other provision in the Code for the redress
of the grievance of the aggrieved party. But then, if the order
assailed is purely of an interlocutory character which could be
corrected in exercise of the revisional power of the High Court
under the 1898 Code. the High Court will refuse to exercise its
inherent power. But in case the impugned order clearly brings
about a situation which is an abuse of the process of the Court
or for the purpose of securing the ends of justice interference by
the High Court is absolutely necessary, then nothing contained
in section 397(2) can limit or affect the exercise of the inherent
power by the High Court. But such cases would be few and far
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between. The High Court must exercise the inherent power very
sparingly. One such case would be the desirability of the
quashing of, a criminal proceeding initiated illegally,
vexatiously or as being without jurisdiction."
13. In my considered view, for the reasons stated below the
present case is one of those exceptional cases which warrants exercise
of inherent jurisdiction to prevent abuse of process of the Court and to
secure the ends of justice.
14. It is pertinent to note that the learned Magistrate has issued
process under sections 406, 420 and 120 B of the IPC. It may be
mentioned that offence of criminal breach of trust, as defined under
section 405 of the IPC necessarily involves entrustment of the property
or dominion over the property and dishonest misappropriation or
conversion of the property by the agent to his own use or dishonest use
or disposal of the property in violation of mandate of the law or
dishonest use or disposal of the property in land in terms of any illegal
contract.
15. Similarly, in order to constitute an offence of cheating,
there must be deception and fraudulent or dishonest intention to
induce the person so deceived to part with his property. It is well
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settled that intention to deceive should be at the inception and a mere
failure to keep the promise cannot be an act of cheating.
16. So far as section 120 B of the IPC is concerned the essential
ingredients are that there should be an agreement between the persons
who are alleged to have conspired. The agreement should be for doing
an illegal act or an act by illegal means.
17. Reverting to the facts of this case, a plain reading of the
complaint reveals that some time in the year 1994 Shri Atulkumar,
brother of the complainant, who is the President of USCO has entered
into an agreement with the accused No.4 company thereby appointing
USCO as the sales representative and granting sole and exclusive right
to promote sale and solicit order for the product of accused No.4
company. The grievance of the complainant, as it is revealed from the
averments made in the complaint, is that the accused No.4 company
has now decided to sideline the complainant as its sales representative.
The accused No.4 company also set up accused No.6 Indian affiliate
company, which obtained a contract from the Indian Oil Corporation.
18. The complaint on the face of it does not contain any
allegations of entrustment of property or dishonest misappropriation or
conversion of the property. The complaint also does not contain any
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allegations of deception or inducement or dishonest or fraudulent
representation. Suffice it to say that mere breach of the contract
cannot give rise to criminal prosecution under sections 406, 420 or 120
B of the IPC unless the averments in the complaint prima facie disclose
essential ingredients of the offence. In the instant case there are no
averments to indicate that the accused had entered into an agreement
with dishonest intention. Hence, breach of terms of the agreement, if
any, would at the most give rise to civil cause of action. In M/s.
Indian Oil Corporation Vs. M/s. NEPC India Ltd. & Ors. AIR 2006
SC 2780, the Apex Court has observed as under:
"a growing tendency in business circles to convert purely
civil disputes into criminal cases is obviously on account of a
prevalent impression that civil law remedies are time
consuming and do not adequately protect the interests of
lenders/creditors. Such a tendency is seen in several family
disputes also, leading to irretrievable break down of
marriages/families. There is also an impression that if a
person could somehow be entangled in a criminal prosecution,
there is a likelihood of imminent settlement. Any effort to settle
civil disputes and claims, which do not involve any criminal
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offence, by applying pressure though criminal prosecution
should be deprecated and discouraged."
19. In V.Y. Jose and Anr. Vs. State of Gujarat and Anr. (2009)
3 SCC 78, the Apex court has held that :-
"15. There exists a distinction between pure contractual
dispute of civil nature and an offence of cheating. Although
breach of contract per se would not come in the way of
initiation of a criminal proceeding, there cannot be any
doubt whatsoever that in absence of the averments made in
the complaint petition wherefrom the ingredients of an
offence can be found out, the court should not hesitate to
exercise its jurisdiction under Section 482 of the Code of
Criminal Procedure.
We may reiterate that one of the ingredients of cheating as
defined in Section 415 of the Indian Penal Code is existence
of an intention of making initial promise or existence
thereof from the very beginning of formation of contract.
Section 482 of the Code of Criminal Procedure, saves the
inherent power of the court. It serves a salutary purpose viz.
a person should not undergo harassment of litigation for a
number of years although no case has been made out
against him.
It is one thing to say that a case has been made out for trial
and as such the criminal proceedings should not be quashed
but it is another thing to say that a person should undergo
a criminal trial despite the fact that no case has been made
out at all."
20. In the instant case, the complaint on the face of it does not
disclose offences of cheating, breach of trust and criminal conspiracy as
defined under sections 405, 415 and 120 A of the IPC. On the
contrary, the averments in the complaint reflect that certain differences
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between the parties have culminated in civil dispute. Consequently,
the present case, meets all the parameters laid down by the Apex Court
in M/s. Indian Oil Corporation Vs. M/s. NEPC India Ltd. & Ors and
V.Y. Jose and Anr. (supra) as well as M/s. Pepsi Food Ltd. Vs. Special
Jud. Magistrate & Ors. AIR 1998 SC 128.
21. Under such circumstances, compelling the accused to face
criminal prosecution, would be nothing but abuse of process of law.
Hence, this is a fit case to invoke the powers under section 482 of the
Cr.P.C. to secure the ends of justice. In view of discussion (supra) the
applications are allowed. The impugned order dated 8 th February,
2012 passed in C.C. No.36/SW/2009 is quashed and set aside.
(SMT. ANUJA PRABHUDESSAI, J.)
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