Hindustan Insecticides Ltd. & Ors vs Global Adsorbents Pvt. Ltd
2023 Latest Caselaw 32 Cal

                  IN THE HIGH COURT AT CALCUTTA
                     (Criminal Revisional Jurisdiction)
                              Appellate Side

Present:
The Hon'ble Justice Rai Chattopadhyay


                           C.R.R No.3033 of 2016

                      Hindustan Insecticides Ltd. & Ors.
                                     Vs.
                         Global Adsorbents Pvt. Ltd.


For the Petitioners                        : Mr. Biswajit Manna,
                                           : Mr. Somnath Roy.

For the Opposite Party                     : Mr. Shahjahan Hossain,
                                           : Ms. Sanjida Sultana,
                                           : Mr. Prithwiraj Biswas.


Hearing concluded on: 22/12/2022

Judgment on: 03/01/2023


Rai Chattopadhya,J.

(1) This revision is directed against the proceedings which was initiated

against the present petitioners pursuant to a complaint filed by the de

facto complainant on 16th June 2016, in the court of Chief Metropolitan

Magistrate at Calcutta. Petitioners are the directors/government servants

working for gain with the opposite party No.1 company, that is,

Hindustan Insecticides Limited having its registered office at New Delhi.

(2) Crux of the allegation against the petitioners as enumerated in the 6 page

long complaint may be stated to be that the complainant once were

induced by the petitioners to deliver goods. Subsequently the petitioners

floated tenders when the defecto complainant participated and emerged to

be the 'LI' bidder. Pursuant to the work order, the defacto complainant

supplied goods. Allegedly the petitioners refused to accept the supplied

goods on the pretext of that being of inferior quality. Quality was

ascertained after quality control checking tests. The de facto complainant

has supplied goods of a sum of Rs. 1,75,440/-. However even after

rejecting the goods, those were not returned back to the defacto

complainant. The money was also not paid. The goods are still in the

custody of the petitioners. Accordingly the defecto complainant was

aggrieved of the deceitful manner in which they have been treated by the

petitioners and the accused company. Also they are aggrieved of the

breach of trust committed to them by present petitioners. Hence the

complaint. Magistrate has taken cognizance of the same, examined two

witnesses under section 200 Cr.P.C, 1973 and issued summons against

the present petitioners.

(3) Mr. Biswajit Manna along with Mr. Somnath Roy, appearing on behalf of

the petitioners submits that the de facto complainant participated in the

tender process for supply of goods (active carbon) floated on 25th June

2015. Defacto complainant participated in the process by sending

quotation dated 1st July 2015 and ultimately obtained the tender. A

written purchase order was issued to them on 7th July 2015. Allegations

of deceitfully compelling them to supply goods to the accused company

is denied.

(4) It is submitted and accepted that on 6th August 2015 the complainant has

supplied 2 metric tons of activated carbon to the factory of the petitioner

company at Rasayani, District - Raigad, Maharashtra. It is further

submitted that quality control check was done of the goods supplied at the

said factory and those were found of inferior quality than was

requisitioned. It is submitted that as the goods did not confirm with the

specified quality requisitioned, those were not accepted and the work

order was terminated.

(5) According to him the entire transaction happened pursuant to a

commercial affair and no element of any criminality is at all involved in

the same. He says that the complaint does not reveal any element or

ingredient of offense as alleged against the petitioners. He further says

that no cognizable case is at all made out in the said complaint against the

petitioners. According to him pursuant to the laws settled to govern the

field the instant complaint should not be maintained against the

petitioners. He says that committing the petitioners to trial pursuant to the

said complaint dated 16th June, 2016, would in one way prejudice the

petitioners and in the other way shall abuse the process of court.

According to him on this count the entire proceedings against the

petitioners should be quashed, being illegal.

(6) The second point raised by the petitioners is that to make the directors,

that is, the petitioners liable for any action of the accused company, their

involvement as to the day to day affairs of the company at the time of

commission of the alleged offence should have been specifically pleaded

in the complaint. Their role as to the affairs and management of the

company should have been brought on record in specific terms in the

complaint to make the same maintainable in the eyes of law. The

complaint has again been gone into, to show that the same is devoid of

any mention about the petitioners involvement or role as to the day to day

affairs of the company at the time of commission of the alleged offense. It

is submitted that mere mentioning the petitioners to be the directors of the

company would not be sufficient for their implication for an act of

culpable nature, if any, committed by the company.

(7) The other point argued on behalf of the petitioners is of illegality and

unsustainability of the process of issuance of summons by the magistrate.

This Court's attention is drawn to the complaint to show that the seat of

the accused company and the other accused persons is at New Delhi and

also at Rasayani Maharashtra. It is mandated under section 202 Cr.P.C,

1973, that the Magistrate is to compulsorily postpone issuance of process

against the accused persons in case their place of residence appears to be

beyond the area in which he exercises his jurisdiction. Instead he is to

either enquire by himself into the case or direct an investigation to be

made by a police officer or by any other person of his consideration, for

the purpose of deciding whether or not there is sufficient ground for

proceeding. It is submitted that in this case there has been no such

enquiry/investigation as envisaged in the above stated provision of law

before issuance of process by the magistrate. Hence issuance of process

in this case suffers from blatant and manifest illegality.

(8) On behalf of the petitioners quashment of the complaint and all

subsequent proceedings thereto has been prayed for.

(9)The following judgements have been referred to by Mr. Biswajit Manna

along with Mr. Somnath Roy, in support of his case:

(i) Inder Mohan Goswami and Another vs State of Uttaranchal

and Others, reported in (2007) 12 SCC 1;

(ii) Zandu Pharmaceutical Works Limited and Others vs Md.

SharafulHaque and Another reported in (2005) 1 SCC 122;

(iii) Sushil Sethi and Another vs State of Arunachal Pradesh and

Others reported in (2020) 3 SCC 240; and

(iv) GHCL Employees Stock Option Trust vs India Infoline Limited

reported in (2013) 4 SCC 505.

(9) Mr. Shahjahan Hossain along with Ms. Sanjida Sultana and Mr.

Prithwiraj Biswas, on behalf of the opposite party No.2 has raised strong

objection as to the contentions and prayer of the petitioners as mentioned

above. His first submission is that the complaint is eloquent enough to

content the illegal acts of cheating and deception by the petitioners. By

referring to the complaint it has been submitted that the complainant in

unequivocal terms has described as to how cheating has been committed

upon him by the petitioners to procure goods from his end. It is also

categorically submitted that the goods once delivered to the petitioners

have been kept in their custody since then. No money has been remitted

as against the same. Accordingly, once entrusted and not returned back

by the petitioners, neither have paid for the same, the petitioners are

holding the goods unauthorisedly and has committed an offence of

criminal breach of trust.

(10) By relying on a judgment of the Hon'ble Supreme Court reported

in 2014 2 Crimes (SC) 99 [Vijay Dhanuka vs NajimaMamtaz etc]

arguments have been advanced on behalf of the said opposite party that

the enquiry conducted by the Magistrate in this case would come under

the purview of section 202 Cr.P.C, 1973 and there is no infirmity in the

same.

(11) The scope for a revision court to exercise extraordinary jurisdiction

under section 482 Cr.P.C, 1973, has been illustrated in the judgments

referred to by the petitioner in the manner as stated herein bellow.

(12) In the judgment of Inder Mohan Goswami the Hon'ble Supreme

Court has been pleased to hold that:-

"46. 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 pressurise the accused.

On analysis of the aforementioned cases, we are of the opinion that it is neither possible nor desirable to lay down an inflexible rule that would govern the exercise of inherent jurisdiction. Inherent jurisdiction of the High Courts under Section 482 CrPC though wide has to be exercised sparingly,

carefully and with caution and only when it is justified by the tests specifically laid down in the statute itself and in the aforementioned cases. In view of the settled legal position, the impugned judgment cannot be sustained."

The Court went on to analyze the ingredients of offence of

'cheating' under section 415 IPC and if the prima facie materials

disclosed in the FIR would constitute the same along with the other

offence alleged therein and came to the finding that no such

offences were prima facie revealing.

Hon'ble Court further held:-

"23. This Court in a number of cases has laid down the scope and ambit of courts' powers under Section 482 CrPC. Every High Court has inherent power to act ex debito justitiae to do real and substantial justice, for the administration of which alone it exists, or to prevent abuse of the process of the court. Inherent power under Section 482 CrPC can be exercised:

(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.

24. Inherent powers under Section 482 CrPC though wide have to be exercised sparingly, carefully and with great caution and only when such exercise is justified by the tests specifically laid down in this section itself. Authority of the court exists for the advancement of justice. If any abuse of the process leading to injustice is brought to the notice of the court, then the court would be justified in preventing injustice by invoking inherent powers in absence of specific provisions in the statute."

The Hon'ble Court relied on amongst many other judgments, that

of State of Haryana vs. Bhajanlal [ reported in AIR 1992 SC 604],

which may profitably be relied on in this case too.

"102. (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 Act concerned (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 Act concerned, 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."

(13) In Zandu's judgment the Hon'ble Apex Court has been pleased to

hold that:-

"36. This Court in Zandu Pharmaceutical Works Ltd. v. Mohd. Sharaful Haque observed thus : (SCC p. 128, para 8) "8. ... It would be an abuse of process of the court to allow any action which would result in injustice and prevent promotion of justice. In exercise of the powers, court would be justified to quash any proceeding if it finds that initiation/continuance of it amounts to abuse of the process of court or quashing of these proceedings would otherwise serve the ends of justice. When no offence is disclosed by the complaint, the court may examine the question of fact. When a complaint is sought to be quashed, it is permissible to look into the materials to assess what the complainant has alleged and whether any offence is made out even if the allegations are accepted in toto."

(14) These authorities as mentioned above has clearly laid down the law

as to how and in what manner a court may exercise its inherent and

extraordinary power under section 482 Cr.P.C, 1973. The reason to

justify exercise of this power would be to do real and substantial justice

or to prevent abuse of the process of the court. Such inherent power shall

also be exercised to give effect to an order under the Code or to otherwise

secure the ends of justice. A complaint can be quashed by exercise of

such power of a court when the allegations made therein, taken at their

face value, do not prima facie constitute any offence or make out a case

against the accused person, or that a cognizable case is not disclosed

justifying an investigation and also when the criminal proceeding is

encumbered with mala fide or malice and instituted with an ulterior

motive for wreaking vengeance on the accused.

(15) The law having been settled as above it is now the duty of this

court to apply its mind as to whether the complaint filed in this case has

at all disclosed any cognizable offence or made out any case against the

present petitioners/accused persons. Facts which are revealing from the

complaint in this case are that the complainant responded to a tender

notice issued by the petitioner company and obtained the bid. Goods were

supplied but rejected by the petitioner on account of its being of lower

quality than sought for. For this reason the goods supplied by the

complainant were rejected by the accused company. The obvious

conclusion to be drawn from these facts as discussed above is that the

connection and relationship between the parties here is only due to

commercial transaction between them. A very committed effort has been

shown on behalf of the opposite party/ complainant that he has been

induced by false representation and deception by the petitioners to enter

into to a business transaction with the the accused company and the entire

part of it was spare headed by these accused persons/ petitioners. Such

submission however has failed to raise any confidence of this court, on

the ground that complainant's participation in the tender process and

emerging as a lowest bidder cannot be a result of any inducement from

anybody. Or else it would have been a case of larger conspiracy and

malpractice which as a matter of fact is not there in this case. Therefore

the materials available suggest in this case about existence, if any, of a

civil dispute only between the parties. No element of culpable intention or

motive is apparent against the petitioners, who acted on behalf of the

company, in discharge of their official duties. There should not be any

hesitation to hold in this case that allegations against the present

petitioners in the complaint do not prima facie constitute any offence or

make out a case against the accused person. Also that, no cognizable case

is made out against the petitioners justifying them to be committed to

trial. The complainant at best, should have taken recourse in a civil court,

if at all. So far as petitioner's involvement in a criminal offence under

section 420 or 406 IPC is concerned, the ingredients thereof are not at all

substantiated and validated from the facts, circumstances and allegations

expressed.

(16) Argument of the opposite party, though forceful, is still not

acceptable that the petitioners have kept the so called rejected goods with

them till date, without even remitting any payment for the same,

attracting thereby the provisions of 406 IPC to constitute an offence there

under. 'Entrustment' is the key word and the determining factor as to

whether provisions under section 406 IPC would attract or not. There

should be 'entrustment' of the property by the transferor to the transferee,

that is a conscious and voluntary making over thereof. The Hon'ble

Supreme Court in its judgment of Ramaswami Nadar vs. State of

Madras reported in AIR 1958 SC 56 has been pleased to hold that the

word 'entrusted' in the section is very important, unless there is

entrustment there can be no offence under the section. In this case there

has been no 'entrustment' as per law, but only a commercial transaction

between the parties.

(17) Also considering the definition of 'cheating' as envisaged under

section 415 IPC, the Apex Court held in the judgment of Inder Mohan as

follows:-

"42. On a reading of the aforesaid section, it is manifest that in the definition there are two separate classes of acts which the person deceived may be induced to do. In the first class of acts he may be induced fraudulently or dishonestly to deliver property to any person. The second class of acts is the doing or omitting to do anything which the person deceived would not do or omit to do if he were not so deceived. In the first class of cases, the inducing must be fraudulent or dishonest. In the second class of acts, the inducing must be intentional but need not be fraudulent or dishonest. Therefore, it is the intention which is the gist of the offence. To hold a person guilty of cheating it is necessary to show that he had a fraudulent or dishonest intention at the time of making the promise. From his mere failure to subsequently keep a

promise, one cannot presume that he all along had a culpable intention to break the promise from the beginning."

(18) As it has already been discussed earlier, that no element of

inducement is available in complaint against the petitioners, much less of

either any fraudulent or dishonest or intentional inducement by the

petitioners of the complainant. At the time of participating in the tender

process by the complainant, there could be no promise or intention of the

petitioners as the directors of the company to induce the complainant

fraudulently or dishonestly. The complainant having won the bid in

tender to receive work order for supply of goods is a fact admitted in this

case. Tender is a process which is open for all and premeditating the bid,

particularly the lowest bid is farfetched and not viable at all. So the

petitioner's inducing the complainant, his participation in the tender

process for that and also winning the same appears to be a cock and bull

story and nothing else. A simple commercial transaction between two

business houses are being tried to be adorned with the veil of criminality,

which is not maintainable in the eyes of law.

(19) The concept of vicarious liability is unknown to criminal law

unless specifically provided. In this case it has already been discussed

that provisions of Section 420 or 406 IPC are not attracted the

allegations/complaint being devoid of the necessary components thereof.

Findings of the Hon'ble Apex Court in the judgment of GHCL

Employees Stock Option Trust may profitably be relied on in this

context:-

"Summoning of accused in a criminal case is a serious matter. Hence, the criminal law cannot be set into motion as a matter of course. The order of the Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto. The Magistrate has to record his satisfaction with regard to the existence of a prima facie case on the basis of specific allegations made in the complaint supported by satisfactory evidence and other material on record. In the present case, in the summoning order the Magistrate has not recorded his satisfaction about a prima facie case as against Respondents 2 to 7 and the role played by them in the capacity of Managing Director, Company Secretary or Directors of the accused Company which is sine qua non for initiating criminal action against them."

(20) The other judgment that of Sushil Sethi as relied on by the

petitioners as also elaborating the same point in the following words:-

"Considering the averments and the allegations in the FIR and even the charge-sheet the main allegations are that the company, namely supplied sub-standard materials - runner bucket turbines and the supplied runner bucket turbines were not as per the technical specifications. It is also required to be noted that there is no FIR/complaint/charge- sheet against the company - and the appellants are arrayed as an accused as the Managing Director and Director of S respectively. From a bare reading of the FIR and even the charge-sheet, there are no allegations that there was a

fraudulent and dishonest intention to cheat the Government from the very beginning of the transaction. Even there are no specific allegations and averments in the FIR/charge-sheet that the appellants were in-charge of administration and management of the company and thereby vicariously liable. In light of the aforesaid, the prayer of the appellants to quash the criminal proceedings against the appellants for the offence under Section 420 IPC is required to be considered."

(21) It is therefore for the complainant to narrate in the complaint about

the specific actions of the accused persons to fulfil the criteria under the

law to attract the applicable provisions thereof. The entire discussion as

above should go to show absence of the same against each of the accused

persons. This aspect was to be considered and dealt with by the

Magistrate while taking cognizance of offence as per the complaint made

before it. In this case it is found that the Magistrate has failed to

discharge his such a vital statutory duty, instead has accepted the

complaint in a routine manner and as the matter of course only. The

consequent action of the Magistrate of taking cognizance of the said

complaint dated 16th June, 2016, is therefore should not have sanction of

law.

(22) Mandate under Section 202 Cr.P.C, 1973, after its amendment in

the year 2005 are to be followed unfailing by the Magistrate - is the

principle decided in various cases. The case referred to on this point on

behalf of the opposite parties, i.e, of Vijay Dhanuka is one of those. The

following words may be quoted from there:-

"We have no doubt in our mind that inquiry or the investigation, as the case may be, is mandatory before summons are issued against the accused living beyond the territorial jurisdiction of the Magistrate."

(23) It is further noted in this case that the complaint being not

maintainable in accordance with the settled legal principles the arguments

regarding the following steps undertaken by the Magistrate to be rectified

by remand of the case or not, assumes less importance. No doubt if any

cognizable case would have been made out by the complaint against the

petitioners justifying trial to prove the same and if materials could have

been made available in the complaint to disclose prima facie offensive act

by the petitioners, this court could have necessarily gone into the question

if or not any curable irregularity or breach of law has been committed by

the Magistrate while issuing of summons. However, in this case in view

of the facts and circumstances there would be no necessity at all to go

into that question, since no case has been made out here against the

petitioners by the complaint itself.

(24) Accordingly on the basis of the entire discussions as made above it

is found that the challenge by the petitioners of the criminal proceedings

initiated against them is sustainable. Therefore the present revision case

is found legible to be allowed.

(25)     Hence, CRR 3033 of 2016 is allowed.

(26)     Urgent certified website copies of this judgment, if applied for, be

supplied to the parties subject to compliance with all the requisite

formalities.

(Rai Chattopadhyay, J.)