Wolfgang Reim & Ors vs State & Anr
2012 Latest Caselaw 3776 Del

*             IN THE HIGH COURT OF DELHI AT NEW DELHI

+                      CRIMINAL M.C. NO.1942 OF 2004

                                         Decided on : 2nd July, 2012

WOLFGANG REIM & ORS.           ...... Petitioners
           Through: Mr. S.S. Gandhi, Sr. Advocate with
                    Mr. Abhinav Verma, Advocate.

                                Versus

STATE & ANR.                              ......    Respondents
                     Through: Mr. Satish Aggarwal, Advocate for
                              respondent No.2.

                                      AND

+                      CRIMINAL M.C. NO.2005 OF 2004

ANANT SHRIDHAR BHATT           ...... Petitioner
           Through: Mr. S.S. Gandhi, Sr. Advocate with
                    Mr. Abhinav Verma, Advocate.

                                Versus

STATE & ANR.                              ......    Respondents
                     Through: Mr. Satish Aggarwal, Advocate for
                              respondent No.2.
CORAM:
HON'BLE MR. JUSTICE V.K. SHALI

V.K. SHALI, J.

1. This order shall dispose of aforementioned two petitions

which are arising from the same matter except that so far as

the first petition being Criminal M.C. No.1942 of 2004 is

concerned, it is filed by five petitioners while as the second

petition being Criminal M.C. No.2005 of 2004 is filed by the

sixth accused person in the same FIR in question. The prayer

in the first petition is for quashing of the Complaint Case

No.507/2001 and the impugned order dated 9.6.2004 passed

by the learned Metropolitan Magistrate, New Delhi under

Sections 156 (3) Cr.P.C. on the basis of which FIR

No.411/2004 dated 24.6.2004, under Sections

381/403/406/408/417/420/427/500 IPC read with Section

120-B IPC was registered at Police Station Badarpur and the

consequent proceedings are being taken in pursuance to the

same. It may be pertinent here to mention that presently the

investigations of the aforesaid FIR are stayed in terms of the

order dated 12.2.2004.

2. Briefly stated, the facts of the case are that the

respondent No.2 filed a complaint under Sections

381/403/406/408/417/420/427/500 IPC read with Section

120-B IPC before the learned ACMM, Delhi, against the

petitioners in both the petitions. Along with the said

complaint, an application under Section 156 (3) Cr.P.C. was

also filed. It was alleged in the complaint that the

complainant, M/s. Usha Drager Pvt. Ltd. was a private limited

company, having its registered office at B-II/94, Mohan Co-

operative Industrial Estate, Badarpur, New Delhi. It is a Joint

Venture Company between Draegerwerk Aktiengesellschaft of

Germany and Usha Group of India. It was alleged that the

Joint Venture Company is incorporated pursuant to a Joint

Venture Agreement dated 9.5.1987 and a foreign collaboration

agreement dated 20.2.1990. The newly incorporated company

was to engage itself in the business activities of manufacturing

and sale of medical equipments and appliances for machines,

by developing their own design, drawing, catalogues and

brochures as well as to import the machine from Draeger

Company, Germany. It is alleged that the company had made

a data bank of customers for installations throughout the

country in terms of the prospective clients. This entire

information was confidential in nature and was in the form of

soft and hard copies with the company. It is alleged that the

complainant company soon built an enviable reputation and

image throughout the country in the field of medical products.

It is alleged that the German Directors, namely, Wolfgang

Reim, Rainhard Frick, Jens Altmann, Alain Rastouil and Claus

Grabowsky, in pursuance to a criminal conspiracy and in a

planned way pilfered the abovementioned confidential

information with the help of ex-employees. The names of

these employees of the Joint Venture Company were A.S.

Bhat, CEO, Dinesh Singh, Product Manager, Neelesh Thakur,

Sanjay Sinha, P.B.C. Paul and Ravi Sharma, Assistant

Manager, Marketing.

3. The learned ACMM on the basis of an application under

Section 156 (3) Cr.P.C. directed registration of an FIR by

observing that this is a matter which cannot be investigated or

where evidence cannot be produced by the complainant

himself. Therefore, he gave a direction to the SHO, Police

Station Badarpur to register an FIR. As a consequence of this

direction, FIR No.411/2004 under various sections, detailed

above, was registered on 24.6.2004. It is this FIR and the

consequent investigations which have been assailed by the

petitioners in two separate petitions and they have prayed for

quashing of the complaint as well as the impugned order

directing registration of the aforesaid FIR.

4. The main thrust of the petitioners, who are the

respondent/accused in the complaint, has been, firstly, that

the complaint in question is liable to be quashed on the ground

that essentially there is a dispute between the parties which is

of civil nature and which is sought to be given a criminal

colour, only with a view to bring to bear pressure on the

petitioners. Extending the said submission further, it is

alleged that the complaint is not only actuated with mala fides

but is also based on concealment of material facts. Secondly,

it is contended that even if it is assumed that the averments

made in the complaint and the consequent registration of the

FIR, which has been registered under various sections, is

assumed to be correct, even then no offence under various

sections, as detailed above, is made out against the

petitioners.

5. The petitioners have stated that in the year 1987, a 50-

50 Joint Venture Agreement was executed between one

Draegerwerk Aktiengesellschaft (hereinafter referred in short

as „Drager AG‟) and M/s. Usha Services & Consultants (P) Ltd.

(hereinafter referred in short as „USCL‟) and a new company

by the name of M/s. Usha Draeger Pvt. Ltd. (hereinafter

referred as prayer „AG‟) was incorporated. The material terms

and conditions of the Joint Venture Agreement, which will have

bearing on the present petitions, are as under :-

"Clause 7 (A) of the said Joint Venture Agreement Drager AG was to make available its know-how to the complainant company.

Clause 7 (B) of the Joint Venture Agreement the first batch of the products manufactured by the complainant company under the Drager know-how are to be reviewed by Drager.

Clause 7 (C) of the Joint Venture Agreement the complainant company was liable to bear the expenses for translation of drawings, manufacturing instructions or other information, not available in English at Drager.

Clause 8 of the said Joint Venture Agreement Drager-patents were to be used for the manufacture and sale in India of the products manufactured by the complainant company.

Clause 9 (A) of the Joint Venture Agreement, Drager would be liable to assist the complainant company in procuring special machinery and tools for the manufacture of the products. Further Clause 8 (B) laid down that Drager would be supplying components to the complainant company for the products for manufacture by the complainant company."

6. On 5.10.1998, the Joint Venture Company, M/s. Usha

Draeger Pvt. Ltd. was incorporated with the objective of

carrying out development, manufacture and sale in India, the

products and equipments manufactured by Draeger AG

company. The first dispute between the two groups, namely,

Usha Group and the Draeger Group of the company allegedly

started on 26.9.2003 when in a Board meeting of the

company, the removal of the Company Secretary of the Joint

Venture Company was discussed. The decision of the meeting

was not given effect to as the nominees of the Draeger Group

objected to such removal of the Company Secretary. It is

alleged that the Minutes of the meeting were not correctly

recorded at the instance of Usha Group of company nominees.

On 19.12.2003, the Draeger Group nominees are purported to

have sent an e-mail objecting to the recordings of the Minutes

of the meetings, however, no recourse had been taken in this

regard.

7. On 22.12.2003, the Indian Directors belonging to Usha

Group are alleged to have taken over the entire management

of the company and passed a resolution pertaining to the

suspension of petitioner No.5 as the CEO of the company and

appointed A.S. Rajput, respondent No.2, as the new CEO of

the company. It is alleged that this was in breach of an Article

143 of the Articles of the company, which clearly laid down

that any affirmative vote of at least one Director of Draeger

Group was essential for passing a resolution pertaining to the

appointment and vesting of powers of Managing Director,

Directors or alteration in the Board. Further A.S. Rajput was

authorized to file a complaint against some of the officers of

the Joint Venture Company for any serious charges.

8. On 29.1.2004, the Usha Group of companies is alleged to

have filed the first criminal complaint bearing CC No.144/2001

against Claus Grabowsky, respondent No.5, and Rakhee Garg,

the Company Secretary of the Usha Group of companies,

under Sections 403/408/34 IPC. The said complaint was

allegedly disposed of by the learned Metropolitan Magistrate,

Delhi, who passed an order dismissing the application under

Section 156 (3) Cr.P.C. observing that it will not be necessary

to send the case for investigation by the police. A revision

petition was filed against the said order of the learned

Metropolitan Magistrate, Delhi, to bring on record the

application filed under Section 156 (3) Cr.P.C., which was also

dismissed.

9. In the meantime, the Draeger Group filed a civil suit

bearing C.S. (OS) No.118/2004 before the High Court of Delhi

seeking declaration that the board resolutions dated 26.9.2003

and 22.12.2003 are null and void. On the said suit, a notice

was issued by the High Court and the defendants were

restrained from taking any decision in regard to the

management and functioning of the company.

10. It is alleged that after the dismissal of the first complaint

under Section 156 (3) Cr.P.C. by the learned Metropolitan

Magistrate on 9.6.2004, the Usha Group filed second complaint

bearing CC No.507/2001 against the present petitioners under

Sections 381/403/406/408/417/419/420/427/500 read with

Section 120-B IPC with the intention of getting the petitioners

arrested under the alleged conspiracy held on 4.6.2009. The

petitioners were supposed to be present in India during that

time. In the said criminal complaint, on 9.6.2004, the learned

Metropolitan Magistrate is purported to have issued a direction

to the police under Section 156 (3) Cr.P.C. on the basis of

which the aforesaid FIR bearing No.411/2004 was registered

on 24.6.2004 by Police Station Badarpur. It has been alleged

that the entire exercise has been carried out by the Usha

Group and its officers in a mala fide manner, not only for

postponing the schedule of the Board meeting, which was

likely to be held from 4.6.2004 to 29.6.2004, but also with a

view to seek arrest of the petitioners.

11. On 17.8.2004, the High Court of Delhi in C.S. (OS)

No.118/2004, appointed Mr. Justice A.B. Saharya, a retired

Judge of this Court and former Chief Justice of Punjab and

Haryana High Court, as the Chairman to preside over the

meeting of the Board of Directors to decide upon the issues

raised in the suit Nos.117, 118/2004 and 239/2004, which

were pending at that point of time between the parties holding

two groups. On 8.12.2004, the counsel for the complaintant

wrote a letter to the learned senior counsel appearing for the

accused persons intimating that they were ready to withdraw

the complaint No.507/2001, which was initiated at their

instance. In this regard, on 8.12.2004, the High Court is

purported to have passed a direction in the present petition

directing that the complainant shall also submit an affidavit in

response to the averments of the petitioners that the

complainant has intimated Justice A.B. Saharya, the Chairman

of the Board of Directors appointed by this court, his intention

to withdraw the criminal proceedings.

12. On the basis of these facts, the petitioners have prayed

for quashing of the complaint as has been mentioned

hereinabove on three broad grounds.

13. I have heard Mr. S.S. Gandhi, the learned senior counsel

for the petitioners and Mr. Satish Aggarwal, the learned

counsel on behalf of respondent No.2/complainant. The area

of controversy between the parties is very narrow one. The

main controversy which arises for adjudication in the instant

case is as to whether the nature of dispute, which was existing

at a given point of time between the parties, was a criminal

offence or essentially a civil dispute? If it was a civil dispute

between the parties, then the complaint which has been

registered by way of an FIR deserves to be quashed. If not,

then the criminal complaint must continue against the present

petitioners and culminate into an appropriate finding.

14. The second point which needs to be considered is as to

whether the action by the respondent No.2 has been initiated

against the petitioners with a mala fide intention. In this

regard, though the allegation is made that the action was

initiated with a mala fide intention but the question to be seen

by this court is as to whether not only averments are made by

the petitioners in the petition that there are mala fides on the

part of the complainant but they must prima facie bring on

record the evidence which establishes that fact.

15. The third point which will arise for consideration is as to

whether, even if the averments made in the complaint and the

consequent FIR, which is registered against the petitioners,

are assumed to be correct, whether the individual offences, as

enumerated in the Indian Penal Code, are prima facie made

out or not?

16. There are catena of judgments by now which lay down

that a civil dispute cannot be converted into criminal dispute

with a view to bring pressure on the respondent/accused

persons. It will be worthwhile to refer to some of the reported

judgments of the Apex Court dealing with the subject of the

criminal proceedings having been quashed on the ground that

the dispute between the parties was essentially civil in nature.

17. In a case titled M/s. Indian Oil Corporation vs. NEPC

India Ltd. & Ors.; AIR 2006 SC 2780, the respondent/NEPC,

owner, had hypothecated its two aircrafts with all parts and

accessories to IOC, appellant, creditor by way of charge and as

security for payment of the amounts due regarding supply of

fuel. The respondent committed default. Apprehending that

respondent, NEPC may remove the hypothecated aircraft from

Airport to a place outside its reach, the appellant, IOC,

obtained injunction restraining NEPC India from removing the

aircraft from the Airport. Subsequently, IOC filed two

complaints against the respondent, NEPC India and two of its

Directors under Sections 405, 415 and 425 IPC, alleging

unauthorized removal of the engines and certain other parts

from the two hypothecated aircrafts. The possession of the

aircrafts all along remained with the respondent, NEPC India in

its capacity as the owner though the Hypothecation

Deed was with the petitioner.

18. It was in this background that the proceedings against

the NEPC were quashed by the High Court holding that this

was essentially a civil dispute between the parties. It could

not be converted into a criminal dispute. The observations of

the Apex Court were 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 offence, by applying pressure through criminal prosecution should be deprecated and discouraged.

While no one with a legitimate cause or grievance should be prevented from seeking remedies available in criminal law, a complainant who initiates or persists with a prosecution, being fully aware that the criminal proceedings are unwarranted and his remedy lies only in civil law, should himself be made accountable, at the end of such misconceived criminal proceedings, in accordance with law. One positive step that can be taken by the Courts, to curb un necessary prosecutions and harassment of innocent parties, is to exercise their power under Section 250 Cr.P.C. more frequently, where they discern malice or frivolousness or ulterior motives on the part of the complainant."

19. In the case of V.Y. Jose & Anr. Vs. State of Gujarat &

Anr.; (2009) 3 SCC 78, there was a dispute between the

appellants and the respondent No.2 regarding supply of a

machine which would serve a specific purpose of purifying and

desalting the dyes to a particular level as indicated by

respondent No.2. Price of the machine was settled at Rs.17

lakhs plus, out of which advance payment of Rs.3 lakhs was

also made. The machine, when ready, was inspected by

respondent No.2 but it was found that it did not achieve the

specified level of purifying and desalting the dyes. The

respondent No.2 filed a criminal complaint against the

appellants. The criminal court took cognizance of the offences

under Sections 417, 420 read with Section 114 of the Penal

Code, 1860. The appellants filed the petition before the High

Court under Section 482 Cr.P.C. that no criminal offence was

made out and the High Court dismissed the petition, which

was allowed by the Supreme Court on the ground that the

dispute between the parties was essentially, at best, breach of

contract which was a civil dispute and they could not have

been proceeded criminally. The observations of the Apex

Court were as under :-

"Only because civil law can be taken recourse to would not necessarily mean that criminal proceedings should be barred. However, there exists a distinction between pure contractual

dispute of a 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, yet in the 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 Cr.P.C. Section 482 serves a salutary purpose that a person should not undergo harassment of litigation for a number of years although no case has been made out against him. A matter which essentially involves dispute of a civil nature should not be allowed to be the subject-matter of a criminal offence, the latter being a short cut of executing a decree which is non-existent. The superior courts, with a view to maintain purity in the administration of justice, should not allow abuse of the process of court. They have a duty in terms of Section 483 to supervise functioning of trial courts."

20. Two more authorities which may be of relevance in the

facts of the present case are Ira Juneja & Anr. vs. State and

Anr.; 2004 Crl. L.J. 3664 and Velji Raghavji Patel vs. State;

AIR 1965 SC 1433. Both these authorities have been

referred to on account of the fact that the petitioners have

been summoned for offence of breach of trust, cheating, etc.

For offence of breach of trust, there must be dominion over

the property handed over to the accused persons by the

respondent/complainant by way of entrustment. In the first

case, it has been held that in a case of partnership firm where

there is no specific terms and conditions settled in the

partnership deed itself with regard to the dominion over the

property of the partnership, a case under Section 415/420 IPC

for cheating or Section 403/405 IPC for criminal breach of

trust will not be made out. The second case is also on the

same lines, though in different language, it lays down that for

proving the criminal breach of trust, not only the dominion

over the property is to be established but entrustment must

also be proved. Correspondingly, one of the main ingredients

in an offence of cheating is that there must be dishonest

intention at the time of the commission of the offence. If

there was no dishonest intention on the part of any of the

party at the time when the transaction was entered into and

merely because subsequently the transaction has fallen

through, as there is a breach of contract, that will not result in

commission of an offence of cheating.

21. Both these authorities have been referred to on account

of the fact that in the instant case, the entire thrust of the

respondent No.2/complainant‟s case in the FIR is with the

petitioners who were the foreign directors or the employees of

the Joint Venture Company have committed the offence of

breach of trust, cheating and a conspiracy in this regard by

stealing designs, software and data of the Joint Venture

Company. Once the petitioners were established to be the

directors and the employees of the company obviously, they

were to handle the said products and it could not be said that

they only enjoy dominion over the property or that there was

entrustment. By virtue of their proximity or holding of a

particular position in the Joint Venture Company, they have

the access to the same. Therefore, these ingredients which

are essentially to be established in the case of criminal offence

prima facie are not satisfied. In addition to this, the entire

dispute between the parties also establishes that essentially

this was at best a Joint Venture Agreement which failed to

take off on account of various acts of omission or commission

or differences attributable to the petitioners or to the parties.

Even if it is assumed to be so, at best, it resulted in breach of

contract or breach of agreement between the parties for which

the criminal offence ought not to have been registered. More

so, when one of the parties have already gone to the civil

court, this clearly shows that the registration of the criminal

offence against the petitioners was only with a view to bring to

bear pressure on them to settle the matter according to their

dictates. This is all the more prima facie established on

account of the fact that the respondent No.2/complainant had

filed this complaint on the basis of which FIR has been

registered for the second time when the first attempt by them

to get the FIR registered had failed and this fact was also not

disclosed. Therefore, all these facts not only show that the

petitioners have converted a civil dispute into a criminal

dispute with a mala fide intention but have also indulged in

gross abuses of the processes of law. The powers of the High

Court or the courts for that matter are not limited to stop such

abuse of the processes of law or to pass an order which will be

further in the interest of justice. Two notable cases in this

regard are M/s. Pepsi Foods Ltd. vs. Special Judicial

Magistrate; AIR 1998 SC 128 and G. Sagar Suri vs. Special

Judicial Magistrate; 2000 (2) SCC 363 in which the Apex

Court has clearly laid down that the High Court will be well

within its right to quash the criminal proceedings in exercise of

its power under Section 482 Cr.P.C. to prevent the abuse of

the processes of law.

22. I feel that all these parameters which have been laid

down by the Apex Court in the judgments of M/s. Pepsi Foods

Ltd. (supra) as well as in M/s. Indian Oil Corporation (supra)

and V.Y. Jose‟s case (supra) are fully satisfied by the

petitioners in the instant case, because the dispute between

the complainant and the petitioners, who are forming parties

of two groups of the joint venture are essentially having civil

dispute because of the attempt of both the parties to control

the Joint Venture Company and accordingly, the complaint as

well as registration of the FIR deserves to be quashed. So far

as the question of mala fides of the complainant in getting the

FIR registered are concerned, no doubt the petitioners have

made these allegations but I feel that the petitioners have not

been able to produce any prima facie evidence in terms of the

judgment of State of Bihar vs. P.P. Sharma, IAS & Anr; AIR

1991 SC 1260 to establish that the FIR is registered in a mala

fide manner.

23. The third point, namely, whether the allegation made in

the complaint and which are reproduced in the FIR, make out

a criminal case against the petitioners prima facie or not? The

complaint against the petitioners has been registered under

Sections 381/403/406/408/417/419/420/427/500/120-B IPC.

A perusal of the aforesaid sections would clearly show that the

respondent/complainant has registered the complaint

against the petitioners for offences of breach of trust,

cheating, defamation and the criminal conspiracy.

24. I am proceeding hereunder to analyze as to whether the

broad parameters/ingredients of these offences are satisfied or

not.

25. Section 381, IPC defines „theft by clerk or servant of

the property in possession of master‟ and to make a case

under this Section, the accused must be a clerk or servant and

employed in such capacity by the person in whose possession

the stolen property was. In the present case, the accused

persons are the directors of the Joint Venture Company. Being

the directors of a Joint Venture Company does not create a

master servant relationship. Hence, prima facie the

requirements of Section 381 are not satisfied. So far as the

other employees are concerned, it can conveniently be said

that these senior ranking officials of the Joint Venture

Company have been enroped only because they may have

been owing allegiance to the petitioners‟ group. They cannot

be said to be the Clerk or the servant in the sense in which the

term is used.

26. Section 403, IPC defines „Dishonest misappropriation of

property‟ and to make a case under this section the essential

ingredients are that the person is alleged to have

misappropriated or converted to his own use any moveable

property must have a dishonest intention. Another essential

ingredient is that the property must belong to a person other

than the accused. In the present case, the petitioner company

being a partner in the Joint Venture Company was the owner

of the property. In Ira Juneja‟s case (supra), it has already

been held that in cases of partnerships unless and until it is

specifically stated that the partnership deed as to who is in

possession of the property in question, each of the partner

cannot be prosecuted for the offence of breach of trust as

there is no entrustment. Thus, even if the petitioner company

or its nominees converts the property for their own use they

would do so with full rights over the property. Hence the

requirements of Section 403 IPC, in my view, prima facie are

not met in this case.

27. Sections 405 and 406 IPC defines the offence of

"Criminal Breach of Trust". It is a well settled principle that

before a person can be said to have committed criminal breach

of trust within the meaning of Section 405 of IPC, it must be

established that the accused was either entrusted with the

property or entrusted with the dominion over the property

which he is said to have converted to his own use or disposed

off in violation of direction of law, etc. Further the petitioners

herein were the Directors of the Joint Venture Company on

behalf of the Draeger Group, one of the groups forming the

joint venture.If that be so, they could not be said to be

entrusted with the property in question or it could not be said

that they were given dominion over the property as being the

Directors, that was a natural thing to flow from the discharge

of their duties. Accordingly, the petitioners cannot be charged

for the offence under Section 405 IPC. As it is settled in the

reported judgment of Ira Juneja (supra) that in the case of

Joint Venture or Partnership, every partner has the dominion

over the property by the reason of the fact that he is a

partner. In Ira Juneja‟s case (supra) the following words are

used:-

"The essential ingredients of the offence of criminal breach of trust are (1) entrustment with property or with any dominion over property and (2) dishonest misappropriation thereof. Partners of the firm do not hold property in trust for each other ............. In order to establish „entrustment of dominion‟ over property to an accused person the mere existence of that person‟s dominion over the property is not enough. It must be further shown that his dominion was the result of entrustment."

28. Similarly in Velji Raghavji Patel‟s case (supra), the

Hon‟ble Supreme Court held as under :-

"(6)...........Upon the plain reading of section 405 I.P.C., it is obvious that before a person can be said to have committed criminal breach of trust it must be established that he was either entrusted with or entrusted with dominion over property which he is said to have converted to his own use or disposed of in

violation of any direction of law etc. Every partner has dominion over property by reason of the fact that he is a partner. This is a kind of dominion which every owner of property has over his property. But it is not dominion of this kind which satisfies the requirements of Section 405. In order to establish "entrustment of dominion" over property to an accused person the mere existence of that person's dominion over property is not enough. It must be further shown that his dominion was the result of entrustment. Therefore, as rightly pointed out by Harris C.J., the prosecution must establish that dominion over the assets or a particular asset of the partnership was, by a special agreement between the parties, entrusted to the accused person."

29. Thus, no offence of breach of trust or theft can be made

under Sections 405 or 408 or 381 IPC. The Supreme Court in

Chandi Prasad Singh vs. The State of Uttar Pradesh; AIR

1956 SC 149 has held as under:-

"A servant is a person who acts under the direct control and supervision of another and who is bound to obey all reasonable orders given to him in the course of his work and duties. An „agent‟ is a person who takes his instructions from another in the performance of his work and acts accordingly. He is not bound to obey the

orders of the principal and is not subject to his control or supervision."

30. The Hon‟ble Supreme Court of India further held in

Shivnarayan Laxminarayan Joshi & Ors. vs. State of

Maharashtra, 1980 (2) SCC 465 as under :-

".......Director of a company is not only an agent but is in the position of a Trustee. Being so, he has dominion and control over the assets which come into his hands as a trustee."

Thus, the aforesaid analysis of the allegations cannot be

said to be prima facie constituting the offence with which he

was charged.

31. So far as Sections 417, 419 and 420 IPC are

concerned, there must be dishonest intention at the inception

of delivery or retention of property is the gist of the offence

and in absence thereof there can be no offence of cheating.

The Hon‟ble Supreme Court has held in Sukhdeo Jha Utpal vs.

The State of Bihar; AIR 1957 SC 466 as under :-

"On charge of cheating, the fact that the accused made a false representation with the knowledge, that it was false and that

he had a dishonest intention to induce the person deceived to part with his property, at the very time when he made a false representation, is an essential ingredient of the offence. On such a charge, the burden lies on the prosecution to prove affirmatively, not only that the accused has made a false representation, but also he made it with a dishonest intention, knowing that the representation he was making was false."

32. It was further held by the Hon‟ble Supreme Court of

India in S.W. Palanitkar vs. State of Bihar; (2002) 1 SCC 241

as under:-

"........In order to constitute an offence of cheating, the intention to deceive should be in existence at the time when the inducement was made. it is necessary to show that a person had fraudulent or dishonest intention at the time of making the promise, to say that he committed an act of cheating. A mere failure to keep up promise subsequently cannot be presumed as an act leading to cheating."

33. In the present case, there is nothing on record to show

that the petitioners knowingly made any false representation,

much less dishonestly or fraudulently any representation.

Therefore, one of the basic ingredients of Sections 415 or 420

IPC is not made out.

34. Further, a person cannot be charged with the offence of

cheating and criminal breach of trust simultaneously for the

same transaction because for the offence of cheating, it is a

prerequisite that dishonest intention must exist at the

inception of any transaction whereas in case of criminal breach

of trust, there must exist a relationship between the parties

whereby one party entrusts another with property as per law,

therefore, for commission of criminal breach of trust, the

dishonest intention comes later, i.e, after obtaining dominion

over the property by the accused person whereas for

commission of cheating, dishonest intention of the accused has

to be present at the inception of the transaction.

35. So far as Section 120-B IPC is concerned, it is not

applicable in the present case as the essential ingredients of

this Section are (1) that there should be an agreement

between the persons who are alleged to conspire; and (2) that

the agreement should be : (i) for doing an illegal act, or (ii) for

doing by illegal means an act which may not itself be illegal.

There is nothing in the allegations which can be construed to

show that there was a meeting of minds amongst the

Directors, who were away from India, with the officials of the

Joint Venture Company posted in India, to commit an offence.

36. Similarly, Section 500 IPC is not applicable in the

present case as the essential ingredients of this section are (1)

making or publishing any imputation concerning any person,

(2) such imputation must have been made by words, by signs

or by visible representations and (3) such imputation must

have been made with the intention of harming the reputation

of the person concerning whom it is made. In the present

case, the complainants have failed to place any material on

record to prove that the petitioners herein had by any means

made or published anything with the intention or knowledge of

harming the reputation of the complainants.

37. Thus, a superficial analysis of the averments made in the

complaint or the FIR, in the light of the aforesaid sections, will

clearly show that even if the allegations are considered on its

face value and are assumed to be correct, even then no

offences under various sections pertaining to theft, breach of

trust, cheating, defamation or the criminal conspiracy is made

out. Moreover, in the light of the facts of the case, if the Joint

Venture Agreement was itself able to work out for some time,

without any problem between the petitioners and the

complainant that clearly shows that there was no dishonest

intention at the time when the Joint Venture Agreement was

entered into. Facts clearly reflect that there was no dishonest

intention inasmuch as not only the Joint Venture Agreement

was worked upon, but there were some differences which

culminated into the filing of the civil litigation between the

parties. This clearly shows that there was absence of dishonest

intention on the part of the petitioners and accordingly, no

criminal offence against the petitioners could be made out.

38. In the State of Haryana & Ors. vs. Ch. Bhajan Lal & Ors.;

AIR 1992 SC 604, the Apex Court has laid down seven

illustrative contingencies in which an FIR can be quashed. It

has also been observed that in case a reading of the complaint

or the FIR does not make out prima facie ingredients of the

offence, then the FIR is liable to be quashed. In the instant

case, I have hereinabove dealt with the allegations to show

that even if the allegations which are made in the complaint,

are assumed to be correct and they are taken on its face

value, they do not constitute a criminal offence under the

various Sections for which an FIR has been registered and the

complaint is liable to be quashed.

39. No doubt, in Bhajan Lal‟s case (supra), the Court has

struck a note of caution and observed that the filing of the

complaint or the FIR should not be done as a matter of course

but, at the same time, the Apex Court has also taken note of

the fact that in case a complaint or an FIR is lodged as an

engine of oppression with the sole purpose of restraining a

party from pursuing its remedy, which in the instant case

would be the prevention of the petitioners in participating in

the Management of the Joint Venture Company or by

browbeating and terrorizing the petitioners of repeated

criminal prosecution in case they land in India, then it beats all

the parameters which have been enunciated and visualized in

Bhajan Lal‟s case (supra). Similarly, it can be very

conveniently said that registration of the FIR against the

petitioner and two of its Directors is a gross abuse of the

processes of law. In M/s. Pepsi Food Ltd. case (supra) and G.

Sagar Suri‟s case (supra), the court has power to quash the

proceedings.

40. Similarly, in another judgment titled CBI vs Duncans

Agro Industries Ltd., Calcutta; AIR 1996 SC 2452, the Apex

Court has observed as under:-

"After giving our careful consideration to the facts and circumstances of the case and the submissions made by the respective counsel for the parties, it appears to us that for the purpose of quashing the compliant, it is necessary to consider whether the allegations in the complaint prima facie make out an offence

or not. It is not necessary to scrutinize the allegations are likely to be upheld in the trial. Any action by way of quashing the complaint is an action to be taken at the threshold before evidences are led in support of the complaint. For quashing the complaint by way of action at the threshold, it is, therefore, necessary to consider whether on the face of the allegations, a criminal offence is constituted or not."

41. In the instant case, the learned Magistrate, in its

impugned order, has observed that this is a matter which

cannot be investigated by the complainant and, therefore, it

directed the registration of the FIR against the petitioners. I

find this reasoning of the learned Magistrate totally illogical

and without any basis. The entire thrust of the complaint was

that there was a Joint Venture Company floated in which there

were certain foreign Directors of one of the participating Joint

Venture Companies. Apart from that, there were some of the

employees of the Joint Venture Company itself who had

conspired together to pilfer, steal, or cheat with regard to

various designs and patents etc. which were developed by the

Joint Venture Company. All these facts were specially within

the knowledge of the complainant and it did not require any

expertise to establish that such an offence had been

committed by the petitioners or its other co-conspirators.

Therefore, it was essential for the complainant to have

adduced the evidence before the learned Trial Court rather

than a direction being obtained by it against the petitioners for

registration of an FIR. The reason to find out as to why the FIR

was got registered against the petitioners is not far to see.

Once the FIR has been registered, obviously the petitioners

were avoiding their landing in India, inasmuch as they would

have got arrested on the landing itself within the shores of the

country. In addition to this, the other employees and the

office-bearers of the Joint Venture Company, who are alleged

to have committed the offence, have also to run in order to

insulate their liberty and, therefore, this would have served

very well the purpose of the complainant in suing the

petitioners and all other persons siding with at the negotiation

table to settle the disputes. I, therefore, feel that this was a

gross abuse of the process of law by the complainant by

converting not only the civil dispute into criminal dispute with

a view to bring to bear pressure on the petitioners to succumb

to their dictates, but also the fact that they had indulged in

concealment of material facts of having filed a similar

complaint earlier before the District Court, Karkardooma,

Delhi, where a similar prayer for registration of an FIR was

made, which was turned down. Mr. Gandhi, the learned senior

counsel for the petitioners has few other grounds also

including the competence of the person, who initiated the

complaint for the purpose of quashing the same, however, I do

not consider it to be necessary to deal with the same.

42. For the aforementioned reasons, I am of the considered

opinion that the invocation of Section 156 (3) Cr.P.C. by the

complainant /respondent in the instant case was a gross abuse

of the processes of law. As a matter of fact, the very filing of

the complaint and the consequent registration of the FIR

against

the petitioners was a gross abuse of the processes of law,

inasmuch as a civil dispute was sought to be converted into a

criminal dispute. I, accordingly, in exercise of the powers

under Section 482 Cr.P.C., quash the Complaint No.507/2001

titled A.S. Rajput vs. Wolfgang Reim as well as the FIR

No.411/2004 and the consequent proceedings.

43. Parties to bear their respective costs.

V.K. SHALI, J.

JULY 02, 2012 'AA'/tp