Jharkhand High Court
Jai Prakash Jaiswal vs The State Of Jharkhand on 1 March, 2021
1
IN THE HIGH COURT OF JHARKHAND AT RANCHI
Cr. M.P. No. 4364 of 2019
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1. Jai Prakash Jaiswal
2. Dhiraj Kumar Jaiswal ... Petitioners
-versus-
1. The State of Jharkhand
2. Harendra Rai ... Opposite Parties
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CORAM : HON'BLE MR. JUSTICE ANANDA SEN
THROUGH VIDEO CONFERENCING
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For the Petitioners :Mr. Birendra Kumar, Advocate
For the State: Ms. Snehlika Bhagat, A.P.P.
For the O.P. No.2 : Mr. Pradeep Kumar Deomani, Advocate
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6/ 01.03.2021 Heard learned counsel for the petitioner, learned counsel
appearing for the State and the learned counsel appearing for the opposite
party No.2 through Video Conferencing. The lawyers have no objection with
regard to the proceeding, which has been held through Video Conferencing
today at 11.00 a.m. They have no complain in respect to the audio and video
clarity and quality.
2. In this criminal miscellaneous petition, petitioners have prayed to
quash the entire criminal proceeding including the First Information Report
registered as Nirsa Police Station Case No.155 of 2019 for offences
punishable under Sections 420, 406 read with Section 34 of the Indian Penal
Code.
3. Counsel for the petitioners submits that even if the allegations
made in the First Information Report are taken on its face value, no offence
under Sections 420, 406 of the Indian Penal Code is made out as against the
petitioners. He submits that there are no ingredients of any misappropriation of
money. It is his contention that the dishonest intention since the very
beginning, which is a basic ingredient of Section 420 of the Indian Penal Code
is missing in the instant case. He submits that the entire dispute is in respect
of settlement of accounts, which cannot be said to attract any criminal offence.
It is submitted that C.P. Case No.42 of 2012 has been initiated before the
Hon'ble High Court of Judicature at Kolkata, praying therein to wind up the
petitioners' company and the official liquidator has prepared the list of
inventory. It is submitted that the petitioner company is suffering huge financial
problem and is shut down, thus, the bank accounts have been declared as
non-performing. On these grounds, the First Information Report is sought to be
quashed.
4. Counsel appearing on behalf of the opposite party No.2 submits
that the offence under Sections 406, 420 of the Indian Penal Code is made
out. Opposite party No.2 has been cheated. He submits that an amount of
Rs.4,07,90,904/- is lying due and has not been paid and has been
misappropriated by the petitioners company, thus, an offence is made out.
5. I have gone through the First Information Report. The First
Information Report has been registered pursuant to an order passed under
Section 156(3) of the Code of Criminal Procedure. A complaint was filed by the
opposite party No.2. It has been alleged in the complaint that the complainant
is a director of M/s. Ravindra Enterprises (Pvt.) Ltd. and he deals in sponge
iron. Accused persons were in need of spong iron and approached the
opposite party No.2. After discussions, it was decided to supply sponge iron to
the accused on credit to the tune of Rs.9,61,38,904/-. It has been mentioned
that the accused paid Rs.5,22,48,000/-. Thereafter, again on request, an
amount of Rs.31 lakh was paid. Thus, total amount of Rs.5,53,48,000/- was
paid and the balance, which fell due, is Rs.4,07,90,904/-. It has been stated
that since the amount has not been paid, complainant has been cheated and
the balance amount has been misappropriated.
6. The aforesaid has been narrated in the First Information Report,
which, according to the complainant, makes out a criminal offence.
7. The Hon'ble Supreme Court, in the case of State of Haryana &
Others versus Bhajan Lal & Others reported in 1992 Supp(1) SCC 335 has
laid down guidelines for exercising inherent powers to quash a First
Information Report. After discussing the law and several judgments, the
Hon'ble Supreme Court, in paragraph 102 of the said judgment has laid down
the following principles: -
(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 concerned
Act (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 concerned Act, 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.
8. In the case of Union of India versus Prakash P. Hinduja &
Another reported in (2003) 6 SCC 195, the Hon'ble Supreme Court, after
considering the judgments, including the judgment of Bhajan Lal (supra) has
held that Section 482 of the Code can be exercised to quash the criminal
proceeding in following cases: -
1. Where the allegations made in the FIR or 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 uncontroverted allegations made in the
FIR or the 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
3. Where there is an express legal bar engrafted in any
of the provisions of the Code of Criminal Procedure
or the Act concerned to the institution and
continuance of the proceedings. But this power has
to be exercised in a rare case and with great
circumspection.
9. From the aforesaid judgments and also from several judgments of
the Hon'ble Supreme Court, wherein the law has been laid down in relation to
quashing of First Information Report, it is now settled principle that if any
offence is made out from bare perusal of a First Information Report, the First
Information Report cannot be quashed.
10. Considering the aforesaid provision of law, I have to see as to
whether from bare perusal of the First Information Report any offence has
been made out or not. When I go through the First Information Report, I find
that it is an admitted fact that there was business transaction between the
parties. Sponge iron was agreed to be sold on credit. Admittedly, out of
Rs.9,61,38,904/-, an amount of Rs. Rs.5,22,48,000/- has been paid. Nowhere
in the First Information Report, it has been stated that there was intention of
the accused persons to cheat the complainant since the inception of the
transactions. Merely not keeping up the promise or failure to keep up the
promise cannot be presumed to be an act leading to cheating. Aforesaid
proposition of law has been held by the Hon'ble Supreme Court in the case of
S.W. Palanitkar & Others versus State of Bihar & Another reported in
(2002) 1 SCC 241.
11. The Hon'ble Supreme Court in the case of G.V. Rao versus
L.H.V Prasad & Others reported in (2000) 3 SCC 693 has held that Section
415 has two parts. While in the first part the person must dishonestly or
fraudulently induce the complainant to deliver any property, in the second part
the person should intentionally induce the complainant to do or omit to do a
thing. That is to say, in the first part inducement must be dishonest or
fraudulent. In the second part the inducement should be intentional. The
Hon'ble Supreme Court has also held that the mens-rea on the part of the
persons, must also be established.
12. Section 406 of the Indian Penal Code provides for punishment for
criminal breach of trust. Criminal breach of trust is defined in Section 405 of
the Indian Penal Code. Section 403 defines dishonest misappropriation of
property. The Hon'ble Supreme Court in the case of U. Dhar and Another
versus State of Jharkhand & Another reported in (2003) 2 SCC 219 has
held that Section 403 of the Indian Penal Code uses the word "dishonestly"
and "misappropriate". These are the necessary ingredients of an offence under
Section 403 of the Indian Penal Code. Applying the aforesaid provision of law
and the facts of this case, I find that neither of these ingredients are satisfied in
the facts and circumstances of this case. In this case I find that the
transactions arose out of ongoing business transaction between the parties
which continued and ultimately at a point of time the dues escalated and the
accused company failed to repay the same. Mere failure to repay the dues
cannot be said to be a criminal offence.
13. The Hon'ble Supreme Court in the case of Binod Kumar &
Others versus State of Bihar & Another reported in (2014) 10 SCC 663 has
held that civil liability cannot be converted to criminal liability and had also held
that criminal proceedings are not a shortcut for other remedies.
14. Further, the Hon'ble Supreme Court in the case of Anand Kumar
Mahatta versus State (NCT of Delhi) reported in (2019) 11 SCC 706 had
taken note of the growing trend in business circle to convert purely civil dispute
into a criminal case. In the aforesaid judgment, reliance was placed on Indian
Oil Corporation versus NEPC India Ltd. & Others reported in (2006) 6 SCC
736 wherein the Hon'ble Supreme Court at paragraph 13 observed as follows:-
"13. ............ 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."
15. Considering the aforesaid proposition of law and the facts
narrated in the First Information Report, as discussed hereinbefore, I find that
the allegations do not make out any criminal offence, rather the claim is a
simple money claim, which has been given colour of a criminal case.
16. Thus, in terms of what has been discussed and held above, there
being merits in this criminal miscellaneous petition I am inclined to allow the
same. Accordingly, the First Information Report registered as Nirsa Police
Station Case No.155 of 2019 for offences punishable under Sections 420, 406
read with Section 34 of the Indian Penal Code and all the proceedings in
relation thereto are hereby quashed.
17. This criminal miscellaneous petition is, accordingly, allowed.
(Ananda Sen, J.)
Kumar/Cp-03
