Sameer Kumar S/O. Sushilkumar ... vs State Of Gujarat
2021 Latest Caselaw 12708 Guj

R/CR.MA/20134/2015                             CAV JUDGMENT DATED: 27/08/2021




            IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

            R/CRIMINAL MISC.APPLICATION NO. 20134 of 2015


FOR APPROVAL AND SIGNATURE:

HONOURABLE MR. JUSTICE B.N. KARIA
==========================================================

1 Whether Reporters of Local Papers may be allowed NO to see the judgment ?

2    To be referred to the Reporter or not ?                         NO
3    Whether their Lordships wish to see the fair copy               NO
     of the judgment ?
4    Whether this case involves a substantial question               NO

of law as to the interpretation of the Constitution of India or any order made thereunder ?

========================================================== SAMEER KUMAR S/O. SUSHILKUMAR SHARMA Versus STATE OF GUJARAT & 1 other(s) ========================================================== Appearance:

MR DIPAK R DAVE(1232) for the Applicant(s) No. 1 MR ANKIT Y BACHANI(5424) for the Respondent(s) No. 2

==========================================================

CORAM:HONOURABLE MR. JUSTICE B.N. KARIA

Date : 27/08/2021

CAV JUDGMENT

By way of present application, applicant has prayed to quash and set aside the FIR being CR No. I-69 of 2015 registered with Ghogha Police Station, Bhavnagar for the offence punishable under Sections 406 and 420 of the Indian Penal Code and consequential proceedings thereto.

Short facts leading to file present application are summarized as under:

R/CR.MA/20134/2015 CAV JUDGMENT DATED: 27/08/2021

That Gujarat Mineral Development Corporation, Ahmedabad (hereinafter referred to as "GMDC") and one M/s. Shiva Industrial Security Agencies (Gujarat) Private Limited, Surat (hereinafter referred to as the "SISA") entered into a contract for providing Security Services to GMDC for its ongoing projects at Bhavnagar, Ambaji, Bhatia and Ahmedabad and work order for the same was issued on 01.09.2012 and such contract was continued till 31.10.2015 but it was terminated by GMDC on 11.08.2015. On the occasion of terminating the contract, original complainant-respondent no.2 lodged impugned complaint on 01.10.2015 at Ghogha Police Station, Bhavnagar alleging that through a sum of Rs. 9,84,774/- has been deposited to the account of the applicant in Axis Bank which was meant for salary to be paid for security guards for the month of July 2015, however, the same has not been paid to the guards.

Heard learned advocate for the applicant and learned advocate for the respondent no.2 as well as learned APP for the respondent-State.

Learned advocate for the applicant has submitted that SISA was awarded contract to provide security guards at four different projects of GMDC viz. Bhavnagar, Ambaji, Bhatia and Ahmedabad and the dispute pertains to non payment of salary to the guards which was working at the project of GMDC at

R/CR.MA/20134/2015 CAV JUDGMENT DATED: 27/08/2021

village Tagadi, Bhavnagar. That, no case is made out against the applicant much less any offence punishable under Sections 406 and 420 of IPC as the basic ingredients so as to constitute the offence of breach of trust and cheating are lacking. That, the allegations in the FIR do not spell out any essential ingredients for commission of offence under Section 406 and 420 of Indian Penal Code. That, it is settled position in law that when an offence under section 406 of IPC is alleged to have been committed, then there cannot be any question of committing an offence of cheating punishable under Section 420 of the Indian Penal Code. That, no specific role is stated in the FIR so far as the applicant is concerned as to how he is involved in commission of alleged offence and it is only stated therein that the applicant is a Managing Director and holding the responsible position. That, the impugned complaint has been lodged with some oblique motive as even otherwise the record of SISA in the past is dot-less and at no point of time there has been any default in making payment of wages to its guards. That, payment and/or non payment of salary to the guards of SISA would be the liability of SISA only and that the GMDC would not be answerable for the same. That, sum of Rs. 31,71,534/- towards bill amount and EMD of Rs. 9,07,095/- both aggregating to Rs. 40,78,.629/- is still pending to be cleared by the GMDC and is retained by it. Therefore, when

R/CR.MA/20134/2015 CAV JUDGMENT DATED: 27/08/2021

the legitimate bill amount raised is not being paid by GMDC and is retained by it, the complainant cannot make a grievance that the salary is not paid to the guards of Bhavnagar Project for the month of July 2015. In support of his arguments, learned advocate for the applicant has placed reliance on the following judgments:

(1) 2009(1) SCC 516 (2) 2020 AIR (SC) 765 (3) 2003(3) SCC 11 (4) 2009(3) SCC 78 (5) 2020 AIR (SC) 626 (6) 2007(12)SCC 1 At the end, it was submitted by learned advocate for the applicant to allow present application by quashing and setting aside the impugned complaint lodged against the applicant.

On the other hand, learned advocate for the respondent no.2 has strongly objected the submissions made by learned advocate for the applicant and submitted that as per the directions and norms of RLC (Central) of Contract Labour Act (Regulation and Abolition) Act 1970 especially Section 21 provides very precise specification that if the contractor fails to make salary to their employees, then the full responsibility would be upon the shoulders of Principal employer (GMDC Limited) and thus the Corporation was required to interfere

R/CR.MA/20134/2015 CAV JUDGMENT DATED: 27/08/2021

and indulge into the payment of salary is being done or not; or else; the corporation would be the sufferer and therefore, the arguments of SISA is baseless that the payment and non payment of salary to the guards of SISA would be the liability of SISA only and GMDC would not be answerable for the same. That, the applicant is forcefully raising unnecessary substantiations to clear his image and set free himself from the complaint lodged against him. There had been no blunder on the part of the Corporation and they had disbursed payments on prescribed time duration. But the applicant with malicious intentions is doing fraud with the payment and had attempted to grab the entire sum for his personal use. That, the averments made by the applicant in this application are totally baseless, erroneous, false and without any substance and the applicant has intentionally not disclosed the material facts and documents, with the evil intention to grab huge amount from the respondent no.2. That, for other projects, the HR department of concerned projects must be contacted and the payment must be released. But, agency of the applicant is frequently and repetitively claiming money from the Bhavnagar Project for all the running projects of agency. That, looking to the norms and conditions in the contract agreement clause no.22(k), service tax, PF challan amount is to be reimbursed against the submission of original challans, but the

R/CR.MA/20134/2015 CAV JUDGMENT DATED: 27/08/2021

same was never come to be submitted by the agency of the applicant. Hence, payment of the same has not been made yet. Further, the respondent no.2 has not directly lodged the impugned complaint against the applicant but prior thereto, several letters, reminders and representations were made. At the end, it was submitted by learned advocate for the respondent no.2 to dismiss present application with heavy costs.

Learned APP for the respondent no.1-State has strongly objected the submissions made by learned advocate for the applicant and supported the arguments advanced by the learned advocate for the respondent no.2.

Having heard learned advocates for the respective parties and learned APP for the respondent-State and having considered the documents produced on record, it appears that SISA agency is involved in providing security services by engaging its security personnel whenever required. The GMDC accepted the offer of SISA and awarded the contract to it by issuing work order on 01.09.2012 for deployment of Armed and without Armed (Ex-servicemen) and Guard and Security Coordinator at different project of Zone-4 in Gujarat Districts. Initially the duration of the contract was for 1 year from 1 st October 2012 and thereafter, it came to be extended up to 31.10.2013 by the GMDC vide its letter dated 27 th September

R/CR.MA/20134/2015 CAV JUDGMENT DATED: 27/08/2021

2013. Thereafter, fresh tenders were issued by the GMDC and offer of SISA was accepted, and therefore, contract was also awarded vide work order dated 19.10.2013 for the same purpose. Initially, the duration of the contract was for one year and thereafter, it was extended upto 31st October 2015 by GMDC. Thereafter, GMDC terminated the above stated contract vide letter dated 11th August 2015. It appears that the complainant namely Ashokbhai Nanjibhai Chasiya, who wa serving as an administrative officer of GMDC, terminated the contract of SISA and lodged an FIR on 1 st October 2015 with Ghogha Police Station, District: Bhavnagar against the applicant for the alleged offence. As per the allegation made in the complaint that the GMDC has made payment of Rs. 9,84,744/- to the applicant in terms of the agreement for the month of July 2015 on 8th August 2015 by depositing the same in the account of Axis Bank and that salary was to be paid to the Security Guards out of the amount so deposited. It was further alleged in the complaint that he came to know from the letter written by the Security Guard that contractor has not made the payment of salary to the Guards for the month of July 2015 and amount deposited by GMDC was retained by the applicant and was utilized for his personal use. That, assurance was given by the applicant that the payment so made to it by the GMDC would be paid to the Security Guards and in turn,

R/CR.MA/20134/2015 CAV JUDGMENT DATED: 27/08/2021

did not pay the same to the Security Guards, and therefore, committed the offence of breach of trust and cheating punishable under Section 406 and 420 of the Indian Penal Code.

This Court, while issuing notice on 28th October 2015, was pleased to pass an order of granting ad-interim relief in terms of para 6(B) to the petition. Thereafter, vide order dated 21st June 2021, rule was issued and ad-interim relief granted vide order dated 28th October 2015 of staying further proceedings with regard to the impugned complaint was confirmed till final disposal of the petition. It further appears from the record that SISA was awarded the contract to provide Security Guards at about four projects of GMDC viz., Bhavnagar, Ambaji, Bhatia and Ahmedabad. The dispute pertains to non payment of salary to the Securty Guards, who were working at the project of GMDC at Tagdi, Bhavnagar. It appears that bill for the month of July 2015 in respect of Bhavnagar project was raised by SISA vide Bill No. 1560 to the tune of Rs. 15,67,556/- and as against the same, an amount of Rs. 9,84,744/- was made available and the shortfall of Rs. 5,51,461/-was not paid by the GMDC. It also appears that the applicant also submitted bill for other projects of GMDC at Ambaji, Bhatiya and Ahmedabad for the month of July 2015, but however, they were not cleared by the GMDC and this

R/CR.MA/20134/2015 CAV JUDGMENT DATED: 27/08/2021

amount was retained. It also appears that after receiving amount of Rs. 9,84,744/- from the GMDC, SISA made the payment of Rs. 4,49,232/- towards PF and ESIC for GMDC and service tax of Rs. 2,95,874/- was also paid against the total billing amount of GMDC for the month of July 2015. It cannot be said that the said amount was utilized by the present applicant for his personal use.

Contract Clause 15 provides that "The agency shall ensure that the security personnel to be engaged in connection with this contract will be the personnel of your agency and they shall not be having any claim whatsoever as GMDC is awarding the contract to your agency for providing the security services only"

If we consider clause 15 of the contract, the question of payment and/or non payment of salary to the Guards of SISA would be the liability of SISA and thus, GMDC would not be answerable for the same. If we accept this position, making payment of salary by the applicant would be dispute between the SISA and its Security Guards and would be in the realm of civil nature. By filing criminal complaint by the respondent no.2, a colour has been given to the said transaction of non payment of salary to the Guards as commission of criminal offence as alleged in the FIR.

From the documents produced vide Annexure-E in this

R/CR.MA/20134/2015 CAV JUDGMENT DATED: 27/08/2021

petition ie., letter dated 19.10.2015, it appears that it was addressed to Chief General Manager, GMDC, Ahmedabad stating that the payment qua the bills raised by SISA for Bhavnagar, Bhatia and Ahmedabad projects amounting to Rs. 28,97,987/- and earnest money deposit amount of Rs. 9,07,095/- was pending with GMDC and it was not feasible to pay the wages to the Security Guards working at Bhavnagar for the month of July 2015. It was requested that the wages be made available to the guards from the pending bill amount retained by GMDC.

It further appears that after making request by the applicant for releasing the bill by the GMDC, the impugned complaint was filed on acount of non payment of the bill, which appears to be abuse of process of law. It is settled position in law that when the offence punishable under Section 406 of Indian Penal Code is alleged to have been committed, there cannot be any question of committing an offence of cheating punishable under Section 420 of the Indian Penal Code. It appears that SISA is a company registered under the Companies Act and the entire allegation in the FIR is against the company namely SISA. Present applicant, being the Managing Director, was made an accused in the complaint. It is settled law that when the offence is alleged to have been committed by the company, it must necessarily be arraigned as

R/CR.MA/20134/2015 CAV JUDGMENT DATED: 27/08/2021

an accused in the FIR and the Managing Director of the company cannot be tried in the trial. If we consider the contents of FIR, no specific role is stated in the FIR so far as the applicant is concerned as to how he is involved in the commission of the alleged offence, but only it is stated in the FIR that the applicant is a Managing Director and holds responsible position. Copies of the certificate of incorporation and relevant abstract of the bank account statements are produced on record vide Anmnexure-F (collectively) by the applicant.

In case of R. Kalyani versus Janak C Mehta reported in 2009(1) SCC 516, in para 27, it is observed that if a person, thus, has to be proceeded with as being variously liable for the acts of the company, the company must be made an accused. In any event, it would be a fair thing to do so, as legal fiction is raised both against the Company as well as the person responsible for the acts of the Company.

In another case of Sushil Sethi and Another versus State of Arunachal Pradesh and Others, reported in 2020 AIR (SC) 765, in para 8.2, Hon'ble Apex Court has observed as under:

8.2 It is also required to be noted that the main allegations can be said to be against the company. The company has not been made a party. The allegations are restricted to the Managing Director and the Director of the company respectively. There are

R/CR.MA/20134/2015 CAV JUDGMENT DATED: 27/08/2021

no specific allegations against the Managing Director or even the Director. There are no allegations to constitute the vicarious liability. In the case of Maksud Saiyed v. State of Gujarat(2008) 5 SCC 668, it is observed and held by this Court that the penal code does not contain any provision for attaching vicarious liability on the part of the Managing Director or the Directors of the company when the accused is the company. It is further observed and held that the vicarious liability of the Managing Director and Director would arise provided any provision exists in that behalf in the statute. It is further observed that statute indisputably must contain provision fixing such vicarious liabilities. It is further observed that even for the said purpose, it is obligatory on the part of the complainant to make requisite allegations which would attract the provisions constituting vicarious liability. In the present case, there are no such specific allegations against the appellants being Managing Director or the Director of the company respectively. Under the circumstances also, the impugned criminal proceedings are required to be quashed and set aside.

In another case of Ajay Mitra versus State of Madhya Pradesh reported in 2003(3) SCC 11, it is held that guilty intention is an essential ingredient of the offence of cheating and words mens rea on the part of the accused must be established before a person can be convicted of an offence of cheating.

If we consider again the contents of the FIR, it is nowhere

R/CR.MA/20134/2015 CAV JUDGMENT DATED: 27/08/2021

alleged that the accused/petitioner had dishonest or fraudulent intention at the time the complainant parted with the money it would not amount to an offence under Section 420 of IPC and it may only amount to breach of contract.

In case of V. Y. Jose versus State of Gujarat, reported in 2009(3) SCC 78, in para 18, 19 and 20, it was observed that:

18. 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 not a shortcut 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. It has a duty in terms of Section 483 of the Code of Criminal Procedure to supervise the functioning of the trial courts.

19. An offence of cheating may consist of two classes of cases :

(1) where the complainant has been induced fraudulently or dishonestly. Such is not the case here;

(2) When by reason of such deception, the complainant has not done or omitted to do anything which he would not do or omit to do if he was not deceived or induced by the accused.

20. It is in that sense, a distinction between a mere breach of contract and the offence of cheating should be borne in mind. We, having regard to the facts and circumstances of the case, are of the opinion that no case has been made out and against the appellant so as to hold that he should face the criminal trial.

R/CR.MA/20134/2015 CAV JUDGMENT DATED: 27/08/2021

Having regard to serious factual disputes, which are of civil in nature allowing the respondent no.2 to pursue his complaint in criminal proceedings is nothing, but abuse of process of law.

For the aforesaid reasons, this Court is of the considered view that the criminal proceedings are fit to be quashed by allowing this application filed under Section 482 of Code of Criminal Procedure. Consequently, present application is hereby allowed by quashing proceedings in complaint being CR No. I-69 of 2015 registered with Ghogha Police Station, Bhavnagar for the offence punishable under Sections 406 and 420 of the Indian Penal Code and subsequent proceedings thereto.

It is made clear that the observations and findings recorded in this order are only for the purpose of disposal of this application arising out of the application filed under Section 482 of the Code of Criminal Procedure.

Rule is made absolute to the aforesaid extent.

(B.N. KARIA, J) K. S. DARJI