Ramesh Chandra Parida & Ors. vs Sachdeva College Ltd. & Ors.
2012 Latest Caselaw 2036 Del

*             HIGH COURT OF DELHI AT NEW DELHI

+                 CRL. M.C. No. 4994-96/2005

                                 Date of Decision : 26.03.2012
RAMESH CHANDRA PARIDA & ORS.         ...... Petitioners
                    Through: Mr. P.N. Misra, Sr. Adv. with Mr. S.
                               Mohanty, Adv.
                         Versus

SACHDEVA COLLEGE LTD. & ORS.                           ......   Respondents
                      Through: None

CORAM :
HON'BLE MR. JUSTICE V.K. SHALI

V.K. SHALI, J. (Oral)

1. This is a petition under Section 482 Cr.P.C. for quashing of the

proceedings arising out of the complaint titled Sachdeva College Ltd. -

vs- Sachdeva New P.T. College & Ors. bearing No.185/99 and the

order dated 5.7.2000 passed by the learned Magistrate, Tis Hazari

Courts, Delhi, taking cognizance against the petitioners for an offence

under Section 403/406/420/34 read with Section 120B of the Indian

Penal Code (IPC).

2. Briefly stated, the facts of the case are that a Franchise Agreement,

having an Arbitration Clause, was entered into between the

respondent no.1 and the petitioner no.1 on 7.5.1992 for running a

tutorial centre at Cuttack, Orissa under the name and style of

Sachdeva New P.T. College which was renewed from time to time

which continued uninterrupted upto 10.4.1997. On account of

differences and disputes between the parties having arisen as well as

because of the alleged poor health condition of the petitioner no.1., he

informed the respondent no.1, vide letter dated 25.3.1999, that he

wanted to withdraw from the said Franchise Agreement. He stated that

he is prepared to surrender the said Centre to the respondent no.1.

The respondent no.1 accepted the withdrawal request of the petitioner

no.1 with effect from 31.3.1999. It is alleged that the petitioner no.1

wrote letters dated 29.4.1999 and 31.5.1999 for the settlement of

accounts and requested the respondent no.1 to take back the study

materials, stationery etc. from the Cuttack Centre in terms of the

Agreement. It is alleged that the respondent no.1, instead of acceding

to the request of the petitioner no.1, insisted that the latter should

come down to Delhi and return the study materials at Delhi and also

settle the accounts. Since this was not done by the petitioner no.1, the

respondent no.1 chose to file a suit for declaration and permanent

injunction against the petitioner nos.1 to 3 and others for allegedly

running a tutorial centre in the name of N.M. Tutorial at Cuttack,

alleging that they were using the study materials and the stationery of

Sachdeva New P.T. College. It is alleged that during the pendency of

the said suit, a petition was filed on 16.9.1999, alleging that the

petitioners were playing fraud upon the public and the complainant by

misrepresenting to the public at large that the Sachdeva New P.T.

College is being managed by PERT Pvt. Ltd. It is alleged that this

was being done in violation of Clause 21 of the Franchise

Agreement and accordingly, feeling aggrieved, the respondent

no.1 chose to file a complainant under Section

403/406/420/34 read with Section 120B of the IPC. It is alleged that

after the recording of pre-summoning evidence, the petitioners were

summoned for the aforesaid offences.

3. Feeling aggrieved by the said summoning order, the petitioners have

preferred the present petition seeking quashing of the complaint as

well as the summoning order dated 5.7.2000 on various grounds.

4. I have heard Mr. P.N. Misra, the learned Senior Counsel on behalf of

the petitioners.

5. It has been contended by him that the complaint, on the basis of

which the petitioners had been summoned, could not be entertained

by the Delhi Courts on account of lack of jurisdiction, inasmuch as the

entire alleged offence, even if it is assumed to have been committed,

was committed in Cuttack, Orissa. It was contended that Section 177

of the Cr.P.C. confers the jurisdiction to try a criminal offence at a

Court only where the said offence has been committed and this being

so, the Delhi Courts did not have the jurisdiction.

6. The second submission which has been urged by the learned Senior

Counsel is that the dispute between the petitioners and the

respondents was essentially a civil dispute pertaining to the settlement

of accounts and this is evident from the fact that the Agreement was

entered into in the year 1992 and it worked well for a period of nearly

five years whereupon the petitioners wanted to terminate the

Agreement and settle the accounts. It was urged that one of the

essential ingredients for an offence of breach of trust or even cheating

is that there should be dishonest intention at the threshold when the

transaction has taken place. Therefore, it was contended that this was

essentially a civil dispute pertaining to the settlement of accounts for

which an arbitration clause was also provided in the Agreement but it

is alleged that the petitioner, in addition to the invoking the

jurisdiction of the Civil Court by filing a suit for declaration and

permanent injunction, had also chosen to use criminal proceedings

only with a view to bring to bear pressure on the petitioners. It has

been contended that this practice of converting the civil disputes into

criminal disputes has been also deprecated by the Hon'ble Supreme

Court in a number of cases. In this regard, the learned Senior Counsel

has placed reliance on Indermohan Goswami -vs- State of

Uttarakhand, 2007(12) SCC 1, Sharon Michael -vs- State of

Tamilnadu, 2009(3) SCC 375 and Joseph Salvaraj -vs- State of

Gujarat, 2011(7) SCC 59.

7. It has also been contended by the learned Senior Counsel, Mr. Mishra

that such a continuance of the proceedings is a gross abuse of the

process of law and if it be so, the Court should not feel powerless to

quash the proceedings, including the order of summoning in order to

stop the action of the respondent no.1/complainant in witch-hunting

the petitioners.

8. There was no appearance on behalf of the respondent no.1 despite the

case having been passed-over three times. The order sheets show that

on the previous two occasions also, there was no appearance on behalf

of the respondent no.1. So far as the State is concerned, it did not

contest the proceedings and left it to the Court to decide for itself as to

whether any order is to be passed by this Court or not.

9. I have carefully considered the submissions made by the learned

Senior Counsel for the petitioners and have also gone through the

record carefully.

10. Section 177 Cr.P.C. lays down as under:-

Section 177.-- Ordinary place of inquiry & trial- Every offence shall ordinarily be inquired into and tried by a Court within whose local jurisdiction it was committed.

11. In the instant case, admittedly, the Franchise Agreement is stated to

have been signed in Cuttack. It envisaged that the tutorial classes to

be run by the petitioners were at Cuttack. A Notice of Termination of

that Franchise Agreement was sent by the petitioners from Cuttack.

Even the respondents had claimed that the petitioners were allegedly

using their study materials for the purpose of running their

unauthorized tutorial classes after termination of the Franchise

Agreement at Cuttack. Therefore, it could be very safely said that the

entire cause of action in respect of the alleged commission of offence

of cheating or the breach of offence of trust arose at Cuttack and it

was only the Cuttack Courts which had the jurisdiction, while as the

respondents had chosen to file the complaint in Delhi.

12. Keeping in view the aforesaid facts, this filing of the complaint by the

respondents in Delhi was, in my view, done purposely so as to put the

petitioners to inconvenience of coming to Delhi and facing the

prosecution and thus bring them to a negotiating table. This cannot be

permitted to be done. Therefore, so far as this submission, which has

been made by the learned Senior Counsel, Mr. Mishra is concerned, it

has merit and on this ground itself, the complaint filed by the

respondents deserves to be quashed.

13. There are a catena of judgments expressing concern that there has

been a growing tendency on the part of the litigants to convert civil

proceedings into criminal disputes only with a view to do arm twisting

of the opposite side so as to bring them to negotiating table or compel

them to settle the matter. In all such cases, not only the High Court

has come to the rescue of such unfortunate parties by quashing the

proceedings, but also even the Apex Court has clearly demarcated the

areas or cases where it can be conveniently said that a civil dispute

was sought to be converted into criminal dispute. (See : Joseph

Salvaraj (supra), Indian Oil Corporation Vs. NEPC India Ltd. & Ors.,

AIR 2006 SC 2780, Sharon Michael (supra), Kishan Singh Vs. Gurpal

Singh & Ors., 2010 (10) SCC 775) and Indermohan Goswami (supra).

14. A perusal of the aforesaid judgments would clearly show that one of

the important ingredients in respect of an offence of cheating is that at

the time of entering into an agreement, there must be dishonest

intention on the part of the persons who are intending to cheat. In the

instant case, admittedly, the Franchise Agreement was entered into

between the petitioners and the respondents in the year 1992. This

Franchise Agreement had admittedly worked well between the parties

for the purpose of running the New Sachdeva P.T. College at Cuttack

till 1997. It was only in 1997 that the petitioners are purported to have

issued notice to the respondents to terminate the Agreement which

had culminated into differences/disputes between the parties

regarding the settlement of their accounts which further resulted in

filing of a suit for declaration and permanent injunction by the

respondents against the petitioners at Delhi, alleging that the

petitioners are using their study materials for the purpose of

advancing their own interests. If such be the conspectus of the facts,

then in such a case it can clearly be stated that in 1992, when the

Franchise Agreement was entered into, the petitioners did not have a

dishonest intention and accordingly, the petitioners could not have

been summoned for the offence of cheating. Moreover, this is further

fortified by the fact that the petitioners had already chosen to file a

suit for declaration and permanent injunction against the respondents

in Delhi in the first instance and it is only after filing of the said suit

and obtaining an injunction that the petitioners had woken up to file a

complaint under various offences of the IPC. This clearly shows the

contemporaneous conduct of the respondents and that they had full

knowledge that the case against the petitioners was essentially a civil

dispute and it had to be settled in a Civil Court.

15. In view of the aforesaid facts, I am of the considered opinion that the

continuation of the proceedings against the present petitioners, being

civil proceedings, is a gross abuse of the processes of law as the

dispute between the parties is essentially a civil dispute. Therefore, in

exercise of its powers under Section 482 Cr.P.C., the Court needs to

cut short the agony and the harassment of the petitioners by putting

an end to their trial in Delhi.

16. I, accordingly, quash the complaint and set aside the order of

summoning dated 5.7.2000 against the petitioners filed under Section

482 Cr.P.C.

17. File be consigned to the Record Room.

V.K. SHALI, J.

MARCH 26, 2012 tp