Bombay High Court
Venkadasamy Subburaj And Others vs State Of Mah. Through Police ... on 27 January, 2021
Bench: Z.A. Haq, Amit B. Borkar
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY,
NAGPUR BENCH, NAGPUR
CRIMINAL APPLICATION (APL) NO.423 OF 2018
APPLICANTS: 1. Venkadasamy Subburaj,
Age about : 61 years,
Occupation : Managing Director,
Subburaj Spinning Mill (P) Ltd.,
Office at Sankar Nagar,
Tirunelveli, Tamilnadu, R/o Door
No.32A, New Colony,
Perachiamman, Kovil Street,
Vannarapettai, Palayamkottai,
Tirunelveli, Tamilnadu.
2. Ramasamy Ragavan,
Age : 54 years,
Occupation : Director,
Subburaj Spinning Mill (P) Ltd.,
Office at Sankar Nagar,
Tirunelveli, Tamilnadu, R/o 637,
Ganapathy Mills Colony,
Sankar Nagar, Tirunelveli,
Tamilnadu.
3. Krishna Kumar Gurusamy,
Age about : 45 years,
Occupation : Business,
R/o Door No.32A,
New Colony, Perachiamman,
Kovil Street, Vannarapettai,
Palayamkottai, Tirunelveli,
Tamilnadu.
4. Arun Kumar Subbaiya,
Age : 45 years,
Occupation : Business,
R/o A3-15, TVH Eknta,
Masakkalipalayam Road, Near
G.V. Residency, Coimbatore
South, Coimbatore,
Uppilipalayam, Tamilnadu-15.
::: Uploaded on - 08/02/2021 ::: Downloaded on - 09/02/2021 00:37:02 :::
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VERSUS
NON-APPLICANTS : 1. The State of Maharashtra,
Through Police Station Officer,
Tehasil, Nagpur.
2. Pramod s/o Shivbhagavan Sabu,
Aged about : 57 years,
Occupation : Vice Chairman,
R/o Jagat Apts., 1st Floor,
Law Collage Square, Ambazari,
Nagpur.
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Mrs. Sonali Saware - Gadhawe, Advocate for applicants.
Shri T. A. Mirza, APP for non-applicant No.1.
Shri H. D. Dangre, Advocate for non-applicant No.2.
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CORAM: Z.A. HAQ & AMIT B. BORKAR, JJ.
DATED : 27/01/2021.
ORAL JUDGMENT : (PER : AMIT B. BORKAR, J.)
1. This is an application under Section 482 of the
Code of Criminal Procedure challenging registration of First
Information Report No.86/2018 with the non-applicant No.1 -
Police Station dated 19/02/2018 for the offence punishable under
Section 406 of the Indian Penal Code.
2. The First Information Report came to be registered
against the applicants and others with the accusation that the
cotton supplied by the non-applicant No.2 to the applicants was
3 27-J-APL-423-18.odt
converted into thread and as per the agreement dated
07/09/2013, in case of failure on the part of the applicants to
repay the amount of cotton supplied by the non-applicant No.2 to
the applicants, the applicants were prohibited from selling cotton
yarn manufactured and supplied by the non-applicant No.2. With
these accusations, it is alleged that the cotton entrusted by the
non-applicant No.2 with the applicants had been dishonestly
converted into own property by the applicants and have sold it in
the market contrary to the agreement between the non-applicant
No.2 and the applicants.
3. The applicants, therefore, have challenged
registration of First Information Report by way of present criminal
application. This Court on 07/06/2018 issued notice to the non-
applicants. The non-applicant No.2 in pursuance of the notice
issued by this Court, has filed reply. It is stated that the applicants
had specifically agreed that they shall not sell cotton supplied by
the non-applicant No.2 without written permission of the non-
applicant No.2. It is further stated that various cheques which
have been issued for repayment of the cotton supplied by the non-
applicant No.2 to the applicants, have been dishonoured. There is
civil suit for recovery of said amount filed before the Civil Judge
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Senior Division, Nagpur bearing Special Civil Suit No.610/2017
which is pending. It is further stated in para 9 of the reply that the
applicants are in-charge of day to day affairs of M/s. Subburaj
Spinning Mills Pvt. Ltd. and have dishonestly used and disposed of
cotton supplied by the non-applicant No.2. Therefore, prima facie,
ingredients of the offence punishable under Section 406 of the
Indian Penal Code are made out.
4. The non-applicant No.1 has also filed reply and it
has been stated in the reply that the applicants had purchased
cotton worth Rs.17,07,44,417/- and towards repayment of the
said cotton, initially, the applicants had paid an amount of
Rs.13,85,88,285/- to the non-applicant No.2. However, the
applicants failed to repay balance amount of Rs.3,21,56,172/-. It
is further stated that in pursuance of the contract between the
applicants and the non-applicant No.2, the applicants were
supposed to manufacture yarn out of cotton supplied by the non-
applicant No.2 and pay amount to the applicants which the
applicants have failed to repay the same. It is stated that the
applicants had given false assurance to the non-applicant No.2
that they will manufacture yarn out of cotton supplied by the non-
applicant No.2 and will refund the said amount to non-applicant
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No. 2 but the applicants failed to repay the said amount to the
non-applicant No.2.
5. We have carefully considered the contents of the
First Information Report and the replies filed by the non-applicant
No.1 and the non-applicant No.2. On meaningful reading of the
First Information Report, it appears that the principal accusation
of the non-applicant No.2 against the applicants is that the
applicants were not supposed to sell the cotton yarn manufactured
out of cotton supplied by the non-applicant No.2 without written
permission from the non-applicant No.2. The allegation of the
non-applicant No.2 is to the effect that the applicants have
dishonestly converted cotton supplied by the non-applicant No.2
to the applicants and have sold it in the open market without
written permission from the non-applicant No.2.
6. The scope and reach of the powers of this Court
under Section 482 of the Code of Criminal Procedure in
entertaining the prayer for quashing criminal proceeding is well
defined. The fundamental test is to ascertain whether taking the
allegations in the complaint to be true, without adding or
subtracting anything at the stage of challenge to the
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maintainability of the proceedings, prima facie, case for trial, had
been made out. It is only on such examination, the answer has to
be in the negative and, then an interference in exercise of power
under Section 482 of the Code of Criminal Procedure, for
quashing the said proceedings is called for. The High Court, at
this juncture, is not called upon to invoke an exercise to inquire
into the truth or otherwise of the allegations made. The limited
scrutiny is, for being satisfied, whether the allegations made in FIR
disclose cognizable offence or not.
7. The Apex Court has repeatedly sounded note of
caution to the effect that the power of quashing criminal
proceedings should be exercised very sparingly and with
circumspection that too in the rarest of rare case. In emphatic
words, it has been laid down that the Court would not be justified
in embarking as an inquiry as to reliability, genuineness or
otherwise of the allegations made in the First Information Report
and that the inherent powers do not confer an arbitrary
jurisdiction on the Court to act according to its whims or caprice.
The power can be exercised only when the Court comes to the
conclusion that there would be manifest injustice or there would
be abuse of process of the Court and not otherwise. It is not open
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for the Court in exercise of such powers to scrutinize the
allegations by sifting the evidence or appreciate the same and
come to the conclusion that no prima facie case is made out or
whether the allegations are likely to be upheld in the trial.
8. On prima facie perusal of the allegation made in
the First Information Report, we are satisfied that the accusations
are required to be proved during trial by the prosecution. This is
not a case where the prosecution can be thrown out at its
threshold without giving opportunity to the prosecution to prove
its case.
9. Mrs. Saware, learned Advocate appearing for the
applicants relied upon the judgment of Hon'ble Apex Court in the
case of S. W. Palanitkar and others Vrs. State of Bihar and another,
reported in (2002) 1 SCC 241. She submitted that the dishonest
intention at the inception is necessary before the accused faces
trial for the offences punishable under Sections 420 and 406 of the
Indian Penal Code. We have carefully considered the judgment of
the Hon'ble Apex Court. In para 20 of the said judgment, the
Hon'ble Apex Court has observed on facts of the said case that
there was no material placed that the complainants in the said
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case had entrusted any property to any of the appellants at all or
the appellants had domain over any of the properties of the
respondent No.2 in the said case which they dishonestly converted
it to their own use, which is necessary ingredient of Section 406 of
the Indian Penal Code. In the facts of the present case, it is specific
case of the non-applicant No.2 that the non-applicant No.2 had
supplied cotton to the applicants with the specific agreement that
in case of failure on the part of applicants to pay the amount for
the goods supplied by the non-applicant No.2, the applicants shall
not sell the cotton yarn manufactured out of cotton supplied by
the non-applicant No.2 in the open market without written
permission of the non-applicant No.2. Therefore, the judgment in
the case of S.W.Palanitkar (supra) is not applicable to the facts of
the present case.
10. Learned advocate for the applicants replied upon
another judgment of the Hon'ble Apex Court in the case of
G. Sagar Suri and another Vrs. State of U.P. and others, reported
in (2000) 2 SCC 636. In the said case, there were allegations
against the applicants wherein details of the offence alleged
against the accused therein have not been supplied. In the facts of
the said case, the Hon'ble Apex Court in para 14 has observed that
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there was attempt by the complainant to rope in all family
members of the Company to whom the goods were supplied.
Though, in the facts of the said case, the criminal complaint under
Section 138 of the Negotiable Instruments Act, 1881 (for short
"Act of 1881") was pending, in our opinion, the said fact of the
pendency of the complaint under the provisions of the Act of 1881
is of less significance taking into consideration the allegations in
the First Information Report. It appears that the Hon'ble Apex
Court in the said case had exercised its powers mainly on the
ground that the allegations in the First Information Report no
details given as to how the complainant was duped by the accused
persons. Therefore, the said judgment is distinguishable on facts of
the present case.
11. The next judgment relied upon on behalf of the
applicants is the case of All Cargo Movers (India) Private Limited
and others Vrs. Dhanesh Badarmal Jain and another, (2007) 14
Supreme Court Cases 776), wherein the Hon'ble Apex Court held
that mere breach of contract does not attract the ingredients of the
offence under Sections 406 and 420 of the Indian Penal Code. In
the facts of the said case, it has been held by Hon'ble Apex Court
that even if the allegations in the First Information Report of the
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said case are taken to be correct in their entirety, if it does not
disclose an offence. In the facts of the present case, the offence
which has been alleged against the applicants is under Section 406
of the Indian Penal Code. As stated above, there is specific
agreement wherein the applicants had agreed not to sell the
cotton yarn supplied by the non-applicant No.2 to the applicants.
In the light of the above allegations, there is entrustment of cotton
yarn to the applicants which had been dishonestly sold by the
applicants in the open market without written permission from the
non-applicant No.2. Therefore, the judgment of the Hon'ble Apex
Court in the case of All Cargo Movers (India) Private Limited
(supra) is not applicable to the facts of the present case.
12. Learned advocate for the applicants then relied
upon the judgment of the Hon'ble Apex Court in the case of Inder
Mohan Goswami and another Vrs. State of Uttaranchal and others,
reported in AIR 2008 SC 251. In the facts of the said case, issue
involved was under Sections 420 and 467 of the Indian Penal
Code. In the facts of the present case, the offence which has been
alleged against the applicants is under Section 406 of the Indian
Penal Code and, therefore, the observations of the Hon'ble Apex
Court in the said case would be of no help to the applicants.
11 27-J-APL-423-18.odt
13. Learned advocate for the applicants lastly relied
upon the judgment of the Hon'ble Apex Court in the case of Sushil
Sethi and another Vrs. State of Arunachal Pradesh and others,
reported in (2020) 3 SCC 240. In the facts of the said case also,
the offence was alleged against the accused under Section 420 of
the Indian Penal Code. Therefore considerations which weighed
Hon'ble Apex Court while setting aside First Information Report
are totally different than the considerations of the present case
wherein the offence alleged is only under Section 406 of the
Indian Penal Code.
14. It is next submitted by the learned Advocate
appearing for the applicants that the applicant No.4 had resigned
from M/s. Subburaj Spinning Mills Pvt. Ltd. in the year 2011 and
the applicant No.3 had resigned from the said Company in the
year 2014. In support of her submission, she relied upon photostat
copy of Form No.32. The Form No.32 which has been placed on
record does not show acknowledgment of submission of said form
to the Office of Registrar of Companies. The Board resolution
which had been annexed alongwith the said Form has not been
placed on record. There are no details given by the applicants as
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to when such Form was submitted to the Office of Registrar of
Companies. There are no details given as to when Board of M/s.
Subburaj Spinning Mills Pvt. Ltd. had accepted the resignation of
the applicant Nos.3 and 4. In absence of such details, at this stage,
it is difficult to accept the contention of the applicants that the
applicant Nos.3 and 4 have resigned from their Company. It is also
required to be noted that it is alleged by the applicants that the
applicant No.3 has resigned w.e.f. 07/10/2014. From the
agreement which has been placed on record, it appears that the
date of agreement is 07/09/2013. The date of alleged resignation
of applicant No.3 is 07/10/2014, therefore it cannot be said that
the applicant No.3 was not at all concerned with the affairs of the
Company on the date of agreement. The said fact is required to be
proved at the time of trial by the prosecution. It is for the
applicants to prove, at the time of trial, that as a matter of fact, the
applicants have resigned from the affairs of the Company before
the transaction which is subject matter of present application. At
the stage of quashing of First Information Report, at its threshold,
it will be difficult to accept such contention in absence of
unimpeachable proof produced by the applicants.
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15. It is further submitted by the learned Advocate for
the applicants that the applicants have already been declared as
insolvent by the National Company Law Tribunal under the
provisions of the Insolvency and Bankruptcy Code, 2016. We have
given thoughtful consideration to the submission. In our opinion,
if the applicants are declared as insolvent, there is no impediment
in proceeding with the criminal complaint under Section 406 of
Indian Penal Code 1860, which has been already filed against the
applicants. In our opinion, the said fact insolvency would not
entitle the applicants to raise challenge to the continuation of
present proceedings.
16. Having considered the facts and circumstances of
the present case and in particular, the allegations made in the First
Information Report, we are satisfied that the applicants are
required to face trial and it will be for the prosecution to prove his
case during the trial. We are satisfied that this is not a case which
can be thrown out at its threshold. We, therefore, find no merit in
the present application and the same is dismissed.
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CRIMINAL APPLICATION (APPP) NO.943 OF 2018
In view of disposal of Criminal Application (APL)
No.423/2018, the application for dispensing with the filing of
certified copy of FIR does not survive. It is disposed accordingly.
JUDGE JUDGE
Choulwar
