M/S Usha Martin Limited vs The State Of Jharkhand
2022 Latest Caselaw 2920 Jhar

                                       1

      IN THE HIGH COURT OF JHARKHAND AT RANCHI
                    Cr.M.P. No. 690 of 2022

   M/s Usha Martin Limited, a company registered under the Companies Act, 1956
   having its registered office at 2A, Shakesphere Sarani, P.O. and P.S.
   Shakesphere Sarani, District-Kolkata, West Bengal represented through its
   Authorized Signatory Mr. Subhendu Kumar Lal aged about 46 years, son of
   Nibaran Chandra Lal, resident of village Habichak, P.O. Nandapur, P.S.
   Chandipur, District-Purba Medinipur, West Bengal.
                                             ...... Petitioner
                           Versus
1.The State of Jharkhand
2. Abhijeet Banerjee, aged about 46 years, son of Dhirendranath Banerjee,
resident of Rani Baug Colony, P.O. Ramgarh Cantt. Near Ganinath School, Rani
Baug, P.S. Ramgarh, District-Ramgarh, Jharkhand-829122.
                                                       .....Opp. Parties.
                               With
                         Cr.M.P. No. 714 of 2022

   G.D. Lakhotia @ Ghanshyam Das Lakhotia, aged about 52 years, son of Suraj
   Ratan Lakhotia resident of Lake Town, P.O. and P.S. Laketown, District North 24
   Pargana, West Bengal                                  ...... Petitioner
                         Versus
1.The State of Jharkhand
2. Abhijeet Banerjee @ Abhijit Banerjee, aged about 46 years, son of
Dhirendranath Banerjee, resident of Rani Baug Colony, P.O. Ramgarh Cantt. Near
Ganinath School, Rani Baug, P.S. Ramgarh, District-Ramgarh, Jharkhand-829122


                                                     ......     Opposite Parties
                    ---------

CORAM:        HON'BLE MR. JUSTICE SANJAY KUMAR DWIVEDI
                            ---------
For the Petitioners : Mr. Kaushik Sarkhel Advocate
                      (in Cr.M.P. No. 690/2022)
                     Mr. Indrajit Sinha, Advocate
                    (in Cr.M.P. No.714/2022)
For the State       : Mr. Ashutosh Anand, A.A.G.-III
                      Mr. Sharad Kaushal, A.C. to A.A.G.-III
                      Mr. Ashish Kumar Thakur, A.C. to A.A.G.-III
                      Mr. Binit Chandra, A.C. to A.A.G.-III
                     Ms. Rishi Bharti, A.C. to A.A.G.-III
                     (Cr.M.P. No. 690/2022)

Mrs. Priya Shrestha, Spl. P.P. (Cr.M.P. No. 714/2022) For the O.P. No. 2 : Mr. Mahesh Tewari, Advocate (in both cases) ..........

05/Dated: 29/07/2022 In both the cases common question of facts and law are involved that

is why both the petitions are being heard together with the consent of the parties.

2. Heard Mr. Kaushik Sarkhel and Mr. Indrajit Sinha, learned counsels for

the petitioners, Mr. Ashutosh Anand and Mrs. Priya Shrestha learned counsel for the

State and Mr. Mahesh Tewari, learned counsel for the O.P. No. 2.

3. These criminal miscellaneous petitions have been filed for quashing of

entire criminal proceeding in connection with Gamharia P.S. Case No. 13 of 2022 as

well as order dated 21.01.2022 whereby the learned C.J.M., Saraikella has been

pleased to transmit the C.C. No. 40/2022 under section 156(3) Cr.P.C. for institution of

F.I.R., pending in the Court of learned Chief Judicial Magistrate, Saraikella.

4. The complaint was filed alleging therein that complainant is one of the

partners of M/s Sai Metaliks Ltd., a business firm having its head office at quarter no.

1161, sector 12 F, Bokaro Steel City, Bokaro, and the factory situated in plot nos. 132,

145, 127, 126, 125, Khata No. 9, in mouza Reghadih, P.O. and P.S. Gamharia, District

Saraikella-Kharsawan, Jharkhand-832108. The other partners of the complainant

company M/s Sai Metaliks are Rajiv Kumar Singh, Sanjay Kumar Rai and Ramesh

Chandra Bansal are also in control and administration of the complainant company.

It is further alleged that there was an agreement with Usha Martin Ltd.

with respect to 7,70,000/- tons of slag materials which were to be lifted by the

complainant company from the premises of Usha Martin Ltd. and accordingly, an

agreement was executed between the parties with specific terms and conditions on

05.08.2019. As per the terms of the agreement, said 7,70,000/- tons of slag materials

were agreed to be lifted by the complainant company from the present Tata Steel

Long Product Ltd., previously known as M/s Tata Sponge Iron Ltd, Phase 2, Adityapur

Industrial Area, Gamharia, More fully known as Galaxy and Vedanta Dump Yards. As

per terms the accused persons agreed to pay at the rate of Rs. 454/- per ton and the

assignment was to be completed by the complainant by March, 2021. As per terms

no. 4.5 and 4.6 of the agreement, it was agreed that the accused company in

coordination with M/s Tata Long Products Ltd. will accommodate the transporting

vehicles of complainant through a specific gate connecting to Tata-Kandra main road

and so also it was agreed that the accused persons would provide separate

weighbridge for the purpose.

It is further alleged that due to non-cooperation by the accused company

and its officials, the slag materials could not be lifted within the stipulated time. In

the meanwhile, due to Covid-19 lockdown situation from the period 22.03.2020 to

16.06.2020, no business could be carried out by the complainant. Thereafter from the

period from 16.07.2020 to 09.11.2020 i.e for about 4 months, the lifting of the slag

materials job remained suspended in view of the fact that the accused company did

not coordinate with Tata Steel deliberately so as to put the complainant into wrongful

loss.

It is further alleged that the accused company should have allowed

extension of 1 year's time to the complainant for the completion of the job but due to

negligence and deliberate inaction and evil design the accused company did not act as

per the terms causing irreparable loss and injury to the complainant company.

It is further alleged that as per the terms 2.3.1 and 2.3.2, it was stipulated

that in the event of more than 100 tons of non metallic slag is found in the entire slag

dump of quantity 7,70,000 tons in such case the non metallic slag had to be removed

by the complainant for which no payment would be charged by the accused company

from the complainant, rather the accused company would pay for the transportation

and loading charges to the complainant.

It is further alleged that as per the terms the complainant informed M/s

Usha Martin Ltd. and its officials on 02.03.2020 via email apprising them about lifting

of non metallic slag at which the accused company advised the complainant for lab

test with condition that in the event of presence of less than 3% of metallic slag then

it would be treated as non-metallic slag which as per the terms of the agreement are

liable for lifting. As per the lab test report, the non metallic slag was found to be less

than 3 % to the knowledge of the accused company and its officials. It is further

alleged that on the belief, the payment should be made by the accused company as

per the terms the complainant company lifted total 1,77,954.37 tons of non metallic

slag from the dump yard and claimed Rs. 2,34,89,976/- towards loading and

transporting charges but the accused persons misappropriated the amount payable to

complainant and in turn revoked the agreement without informing the complainant

with a view to contract with third party for the same job.

It is further alleged that on the basis of the agreement, terms and conditions

stipulated therein, the complainant company had to invest Rs. 1,25,00,000/- towards

commissioning of a slag processing plant of their own but due to the evil design of

the accused persons the complainant had to sustain huge loss as the plant became

useless in spite of considerable investment made in installing the same.

It is further alleged that on 28.10.2021 a legal notice was served upon the

accused company, their senior representatives and officers demanding the payment of

Rs. 2,34,89,976/- to which an evasive reply was received from the accused persons. It

is further alleged that the accused persons with common intention and deep rooted

conspiracy cheated the complainant grossly by making blank agreements and

subsequently revoked the agreement by themselves in order to misappropriate the

legitimate demands of the complainant but inspite of receiving the legal notice, the

accused persons avoided to pay the complainant and abide by the terms of the

agreement and the matter was informed to the Gamharia Police on 10.01.2022 so also

the S.P. Saraikella-Kharsawan was requested in this matter for taking appropriate

action against the accused persons but so far no steps could be taken by the

concerned authorities and hence, the complainant filed the complaint under sections

406, 420, 467, 468, 471, 120B/34 of the I.P.C.

5. Mr. Kaushik Sarkhel, learned counsels appearing for the petitioner in

Cr.M.P. No. 690 of 2022 and Mr. Indrajit Sinha, learned counsel appearing for the

petitioner in Cr.M.P. No. 714 of 2022 submit that the dispute is arising out of an

agreement for lifting of the slag materials. They further submit that O.P. No. 2 agreed

to purchase the slag weighing about 7,70,000 tons approximately and

lift/clear/remove the same from Tata Premises on certain terms and conditions. By

way of referring Clause 2.3, 2.3.1 and 2.3.2 of the agreement, learned counsels for

the petitioners submit that how the slag was to be lifted and transported, have been

disclosed in the said clauses. They further submit that O.P. No. 2 failed to perform

the terms and conditions of the agreement on several occasions and for that notice

has been issued on 28.10.2021 by the O.P. No. 2 which was replied by the petitioners

on 12.11.2021. They further submit that petitioners' company in the reply has

indicated that company is also willing to initiate proceeding. They submit that as only

to frustrate the intention of the company of legal proceedings, the complaint has been

filed which was sent under section 156(3) Cr.P.C. for institution of F.I.R.. They further

submit that there is no ingredient of section 420 I.P.C. as there was no intention of

cheating from the very beginning hence, the said section is not applicable. To buttress

their argument, they relied on judgment in the case of "Vijay Kumar Ghai & Ors.

Vs. The State of West Bengal & Others" reported in Manu/SC/0348/2022

wherein para 26, 27, 29, 30, 33, 38 and 40 the Hon'ble Supreme Court has held as

under:-

"26. In Sudhir Shantilal Mehta v. CBI it was observed that the act of criminal breach of trust would, Interalia mean using or disposing of the property by a person who is entrusted with or has otherwise dominion thereover. Such an act must not only be done dishonestly but also in violation of any direction of law or any contract express or implied relating to carrying out the trust.

27. Section 415 of IPC define cheating which reads as under:-- "415. Cheating.--Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to "cheat".

The essential ingredients of the offense of cheating are:

1. Deception of any person

2. (a) Fraudulently or dishonestly inducing that person-

(i) to deliver any property to any person : or

(ii) to consent that any person shall retain any property; or

(b) intentionally inducing that person to do or omit to do anything which he would not do or omit if he were no so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property.

29. Section 420 IPC defines cheating and dishonestly inducing delivery of property which reads as under:--

"420. Cheating and dishonestly inducing delivery of property.--Whoever cheats and thereby dishonestly induces the person deceived to deliver any property to any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and which is capable of being converted into a valuable security, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine."

30. Section 420 IPC is a serious form of cheating that includes inducement (to lead or move someone to happen) in terms of delivery of property as well as valuable securities. This section is also applicable to matters where the destruction of the property is caused by the way of cheating or inducement. Punishment for cheating is provided under this section which may extend to 7 years and also makes the person liable to fine.

33. The following observation made by this Court in the case of Uma Shankar Gopalika v. State of Bihar with almost similar facts and circumstances may be relevant to note at this stage:-- "6. Now the question to be examined by us is as to whether on the facts disclosed in the petition of the complaint any criminal offence whatsoever is made out much less offences under Section 420/120-B

IPC. The only allegation in the complaint petitioner against the accused person is that they assured the complainant that when they receive the insurance claim amounting to Rs. 4,20,000, they would pay a sum of Rs. 2,60,000 to the complainant out of that but the same has never been paid. It was pointed out that on behalf of the complainant that the accused fraudulently persuaded the complainant to agree so that the accused persons may take steps for moving the consumer forum in relation to the claim of Rs. 4,20,0000. It is well settled that every breach of contract would not give rise to an offence of cheating and only in those cases of breach of contract would amount to cheating where there was any deception played at the very inception. If the intention to cheat has developed later on, the same cannot amount to cheating. In the present case, it has nowhere been stated that at the very inception that there was intention on behalf of the accused person to cheat which is a condition precedent for an offence under 420 IPC.

"7. In our view petition of complaint does not disclose any criminal offence at all much less any offence either under Section 420 or Section 120-B IPC and the present case is a case of purely civil dispute between the parties for which remedy lies before a civil court by filing a properly constituted suit. In our opinion, in view of these facts allowing the police investigation to continue would amount to an abuse of the process of court and to prevent the same it was just and expedient for the High Court to quash the same by exercising the powers under Section 482 Cr.P.C which it has erroneously refused."

38. Respondent No. 2 filed a complaint u/s 156(3) Cr.P.C on 06.06.2012, wherein his prayer for registration of an FIR was rejected vide order dated 28.02.2013 by the MM, Tis Hazari Court, immediately after which he filed his complaint on 28.03.2013 at P.S Bowbazar, Calcutta. The timeline of filing complaints clearly indicates the malafide intention of Respondent No. 2 which was to simply harass the petitioners so as to pressurise them into shelling out the investment made by Respondent No. 2.

40. The MM, Tis Hazari while dismissing the application under Section 156(3) Cr.P.C categorically observed that:-- "....In case the complainant had suffered any loss on account of the same, the necessary civil remedy lied in the form of damages, compensation and recovery. In case of breach of any term or condition of the contract, the necessary proceedings for injunction or specific performance can be initiated. But that by itself would not mean that the accused had misappropriated the amount of complainant for a year. There is nothing to show any conversion or misappropriation of money as the shares had been allotted subsequently. The parties have themselves agreed on clauses as to failure to honor their commitments providing for levy of interest on delayed payments.

There is no prima facie element of deception or dishonest inducement or misappropriation or conversion or entrustment or forgery in this case.

There is no requirement of police interference in this case. Even otherwise, the evidence in the present case is well within the reach of the complainant itself and it is well aware of the identity of accused persons and no investigation of technical nature is required which could warrant police intervention. The necessary record is withing the possession of the complainant itself and the same can always be proved on record by examining the witnesses. There is no necessity of any custodial interrogation at this stage and nothing identifiable is to be recovered from anyone.

In these circumstances, I do not deem it appropriate to exercise my discretion and get the FIR registered against the accused persons, especially when there is no necessity for police interference. The present application under Section 156(3) Cr.P.C is thus dismissed."

6. Learned counsels for the petitioners further submit that for civil liability,

criminal colour cannot be allowed to prevail. To buttress their argument, they relied on

judgment in the case of "Mitesh Kumar J. Sha Vs. The State of Karnataka &

Others" reported in 2021 SCC Online SC 976. They further submit that for civil

wrong criminal case has been lodged. They further submit that in the entire

complaint which has been converted into F.I.R., is with regard to non-compliance of

terms and condition of the agreement. They further submit that the entire complaint

converted into F.I.R. speaks of civil wrong but criminal colour has been given and the

entire criminal proceeding may be quashed at this stage itself.

7. Per contra Mr. Mahesh Tewari, learned counsel for the O.P. No. 2 draws

the attention of the Court to para 14 of the counter-affidavit filed on behalf of the O.P.

No. 2 and submits that the complainant's company lifted total 1,77,954/- tons of

metallic slag from the dump yard and claimed Rs. 2,34,89,976/- towards loading and

transporting charges but the petitioners misappropriated the amount payable to

complainant and in turn revoked the agreement without informing the complainant

with a view to contract with third party for the same job. He elaborated his argument

by way of submitting that in criminal case mens rea is required to be considered in

deciding the case. He further submits that O.P. No. 2 has been cheated by the

petitioners in view of the fact that he has lifted non-metallic slag and when the

complainant was willing to lift metallic slag all on a sudden agreement was cancelled

which shows that from the very beginning intention was there to cheat the

complainant that is why section 420 I.P.C. is applicable. He refers to para 21 of the

counter-affidavit and submits that on several dates the O.P. No. 2 has taken efforts to

obtain gate pass which was not allowed and the petitioners have not complied part of

their contract. Learned counsel for the O.P. No. 2 relied on judgment in the case of "

Indian Oil Corpn. Vs. NEPC India Ltd. & Ors." reported in (2006) 6 SCC 736

and submits that in order to breach of contract if the criminality is there, the

complaint can be instituted under the relevant sections of I.P.C. He further submits

that at this stage when the investigation is still going on the Court may not exercise

its power under section 482 Cr.P.C.

8. In the light of the above submissions of the learned counsel for the

parties, the Court has gone through the materials on record. Perusing the contents of

complaint which has been converted into F.I.R., admittedly it appears that this

complaint is arising out of an agreement entered into between the petitioners and

complainant for lifting of slag in terms of certain terms and conditions disclosed in the

agreement which has been brought on record. Admittedly, the dispute is arising out

of lifting of the slag and for non-payment of money by the petitioners. In para 17 of

the complaint it has been stated that the accused persons with common intention

and deep-rooted conspiracy cheated the complainant grossly by making blank

agreements and subsequently, revoked the agreement by themselves in order to

misappropriate the legitimate demands of the complainant. It is apparent that both

the parties have signed the agreement with open eye and what are the terms and

conditions of the agreement, both the parties were knowing. There is arbitration

clause in the agreement. Clause 7 of the agreement speaks that any dispute arises

with regard to agreement, shall be subject matter of arbitration and the arbitration

proceedings shall be governed by the Arbitration and Conciliation Act, 1996. It is well

settled that for the dispute arising out agreement, how the ingredient of sections 406

and 420 I.P.C. are made out, are required to be disclosed in the complaint/F.I.R.

Reference may be made to the case of "Mitesh Kumar J. Sha(supra) wherein para

16, 27, 28, 36, 41, 42, 43 and 44 the Hon'ble Supreme Court has held as under:-

"16. The Appellants placed reliance on the judgment of this Court in case of Prof. R.K. Vijayasarathy v. Sudha Seetharam, to substantiate the above stated argument. The relevant paras referred are as hereunder:-- "23. The jurisdiction under Section 482 of the Code of Criminal Procedure has to be exercised with care. In the exercise of its jurisdiction, a High Court can examine whether a matter which is essentially of a civil nature has been given a cloak of a criminal offence. Where the ingredients required to constitute a criminal offence are not made out from a bare reading of the complaint, the continuation of the criminal proceeding will constitute an abuse of the process of the court.

24. In the present case, the son of the appellants has instituted a civil suit for the recovery of money against the first respondent. The suit is pending. The first respondent has filed the complaint against the appellants six years after the date of the alleged transaction and nearly three years from the filing of the suit. The averments in the complaint, read on its face, do not disclose the ingredients necessary to constitute offences under the Penal Code. An attempt has been made by the first respondent to cloak a civil dispute with a criminal nature despite the absence of the ingredients necessary to constitute a criminal offence. The complaint filed by the first respondent against the appellants constitutes an abuse of process of court and is liable to be quashed."

27. In order to ascertain the veracity of contentions made by the

parties herein, it is imperative to firstly examine whether the relevant ingredients of offences which the appellants herein had been charged with, are prima facie made out. The relevant sections read as follows:--

"405. Criminal breach of trust--Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or wilfully suffers any other person so to do, commits "criminal breach of trust". [Explanation [1].--A person, being an employer [of an establishment whether exempted under section 17 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952), or not] who deducts the employee's contribution from the wages payable to the employee for credit to a Provident Fund or Family Pension Fund established by any law for the time being in force, shall be deemed to have been entrusted with the amount of the contribution so deducted by him and if he makes default in the payment of such contribution to the said Fund in violation of the said law, shall be deemed to have dishonestly used the amount of the said contribution in violation of a direction of law as aforesaid.] [Explanation 2.--A person, being an employer, who deducts the employees' contribution from the wages payable to the employee for credit to the Employees' State Insurance Fund held and administered by the Employees' State Insurance Corporation established under the Employees' State Insurance Act, 1948 (34 of 1948), shall be deemed to have been entrusted with the amount of the contribution so deducted by him and if he makes default in the payment of such contribution to the said Fund in violation of the said Act, shall be deemed to have dishonestly used the amount of the said contribution in violation of a direction of law as aforesaid.]

406. Punishment for criminal breach of trust-- Whoever commits criminal breach of trust shall be punished with imprisonment of either description for a term which may extend to three years, or with fine, or with both.

419. Punishment for cheating by personation-- Whoever cheats by personation shall be punished with imprisonment of either description for a term which may extend to three years, or with fine, or with both.

420. Cheating and dishonestly inducing delivery of property-- Whoever cheats and thereby dishonestly induces the person deceived to deliver any property to any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and which is capable of being converted into a valuable security, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine."

28. In the instant case, the complaint levelled against the Appellants herein is one which involves commission of offences of criminal breach of trust and cheating. While a criminal breach of trust as postulated under section 405 of the Penal Code, 1860, entails misappropriation or conversion of another's property for one's own use, with a dishonest intention, cheating too on the other hand as an offence defined under section 415 of the Penal Code, 1860, involves an ingredient of having a dishonest or fraudulent intention which is aimed at inducing the other party to deliver any property to a specific person. Both the sections clearly prescribed 'dishonest intention', as a pre-condition for even prima facie establishing the commission of said offences. Thus, in order to assess the relevant contentions made by the parties herein, the question whether actions of the Appellants were committed in furtherance of a dishonest or fraudulent scheme is one which requires scrutiny.

36. At this stage, by placing reliance on the judgment of this Court in Priti Saraf v. State of NCT of Delhi (Supra) and Sri Krishna Agencies v.

State of Andhra Pradesh (Supra), it has been further submitted by Respondent No. 2 that Appellants cannot evade a criminal case by merely contending that the person whose property has been sold has filed a civil suit for recovery of the property, or that the dispute had been referred to arbitration.

41. Having considered the relevant arguments of the parties and decisions of this court we are of the considered view that existence of dishonest or fraudulent intention has not been made out against the Appellants. Though the instant dispute certainly involves determination of issues which are of civil nature, pursuant to which Respondent No. 2 has even instituted multiple civil suits, one can by no means stretch the dispute to an extent, so as to impart it a criminal colour. As has been rightly emphasised upon by this court, by way of an observation rendered in the case of Indian Oil Corporation v. NEPC India Ltd., as under:--

"14. 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."

42. It was also observed:--

"13. While on this issue, it is necessary to take notice of a growing tendency in business circles to convert purely civil disputes into criminal cases. This 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....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 though criminal prosecution should be deprecated and discouraged."

43. On an earlier occasion, in case of G. Sagar Suri v. State of UP, this Court has also observed:-- "8. Jurisdiction under Section 482 of the Code has to be exercised with a great care. In exercise of its jurisdiction High Court is not to examine the matter superficially. It is to be seen if a matter, which is essentially of civil nature, has been given a cloak of criminal offence. Criminal proceedings are not a short cut of other remedies available in law. Before issuing process a criminal court has to exercise a great deal of caution. For the accused it is a serious matter. This Court has laid certain principles on the basis of which High Court is to exercise its jurisdiction under Section 482 of the Code. Jurisdiction under this Section has to be exercised to prevent abuse of the process of any court or otherwise to secure the ends of justice."

44. Furthermore, in the landmark judgment of State of Haryana v. Ch. Bhajan Lal regarding exercise of inherent powers under section 482 of CrPC, this Court has laid down following categories of instances wherein inherent powers of the can be exercised in order to secure the ends of justice. These are:--

"(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 F.I.R. 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 noncognizable 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."

In the aforesaid judgment the Hon'ble Supreme Court has considered that it

is necessary to take notice of a growing tendency in business circles to convert purely

civil disputes into criminal cases. This 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. That is why instead of civil remedy criminal cases

are being filed in commercial transaction. It is settled law that the High Court sitting

under section 482 Cr.P.C. is not exercising its power as an appellate court. The High

Court is only required to look into the contents of the F.I.R. to find out whether

criminality is involved or not. If the High Court comes to the conclusion that for civil

wrong criminal case has been filed, can quash the proceeding at the initial stage

itself. Reference may be made to the case of " Vineet Kumar & Others Vs. State

of Uttar Pradesh & Another" reported in (2017) 13 SCC 369 wherein

paragraphs 22, 23, 24, 26, 27, 28, 29, 30 and 41 the Hon'ble Supreme Court has held

as under:-

"22. Before we enter into the facts of the present case it is necessary to consider the ambit and scope of jurisdiction under Section 482 CrPC vested in the High Court. Section 482 CrPC saves the inherent power of the High Court to make such orders as may be necessary to give effect to any order under this Code, or to prevent abuse of the process of any court or otherwise to secure the ends of justice.

23. This Court time and again has examined the scope of jurisdiction of the High Court under Section 482 CrPC and laid down several principles which govern the exercise of jurisdiction of the High Court under Section 482 CrPC. A threeJudge Bench of this Court in State of Karnataka v. L. Muniswamy held that the High Court is entitled to quash a proceeding if it comes to the conclusion that allowing the proceeding to continue would be an abuse of the process of the court or that the ends of justice require that the proceeding ought to be quashed. In para 7 of the judgment, the following has been stated:

(SCC p. 703) "7. ... In the exercise of this wholesome power, the High Court is entitled to quash a proceeding if it comes to the conclusion that allowing the proceeding to continue would be an abuse of the process of the court or that the ends of justice require that the

proceeding ought to be quashed. The saving of the High Court's inherent powers, both in civil and criminal matters, is designed to achieve a salutary public purpose which is that a court proceeding ought not to be permitted to degenerate into a weapon of harassment or persecution. In a criminal case, the veiled object behind a lame prosecution, the very nature of the material on which the structure of the prosecution rests and the like would justify the High Court in quashing the proceeding in the interest of justice. The ends of justice are higher than the ends of mere law though justice has got to be administered according to laws made by the legislature. The compelling necessity for making these observations is that without a proper realisation of the object and purpose of the provision which seeks to save the inherent powers of the High Court to do justice, between the State and its subjects, it would be impossible to appreciate the width and contours of that salient jurisdiction."

24. The judgment of this Court in State of Haryana v. Bhajan Lal has elaborately considered the scope and ambit of Section 482 CrPC. Although in the above case this Court was considering the power of the High Court to quash the entire criminal proceeding including the FIR, the case arose out of an FIR registered under Sections 161, 165 IPC and Section 5(2) of the Prevention of Corruption Act, 1947. This Court elaborately considered the scope of Section 482 CrPC/Article 226 of the Constitution in the context of quashing the proceedings in criminal investigation. After noticing various earlier pronouncements of this Court, this Court enumerated certain categories of cases by way of illustration where power under Section 482 CrPC can be exercised to prevent abuse of the process of the Court or secure the ends of justice.

26. A three-Judge Bench in State of Karnataka v. M. Devendrappa had the occasion to consider the ambit of Section 482 CrPC. By analysing the scope of Section 482 CrPC, this Court laid down that authority of the Court exists for advancement of justice and if any attempt is made to abuse that authority so as to produce injustice the Court has power to prevent abuse. It further held that 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. The following was laid down in para 6: (SCC p. 94) "6. ... All courts, whether civil or criminal possess, in the absence of any express provision, as inherent in their constitution, all such powers as are necessary to do the right and to undo a wrong in course of administration of justice on the principle quando lex aliquid alicui concedit, concedere videtur et id sine quo res ipsae esse non potest (when the law gives a person anything it gives him that without which it cannot exist). While exercising powers under the section, the court does not function as a court of appeal or revision. Inherent jurisdiction under the section though wide has to be exercised sparingly, carefully and with caution and only when such exercise is justified by the tests specifically laid down in the section itself. It is to be exercised ex debito justitiae to do real and substantial justice for the administration of which alone courts exist. Authority of the court exists for advancement of justice and if any attempt is made to abuse that authority so as to produce injustice, the court has power to prevent abuse. 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."

27. Further in para 8 the following was stated: (Devendrappa case,

SCC p. 95) "8. ... Judicial process should not be an instrument of oppression, or, needless harassment. Court should be circumspect and judicious in exercising discretion and should take all relevant facts and circumstances into consideration before issuing process, lest it would be an instrument in the hands of a private complainant to unleash vendetta to harass any person needlessly. At the same time the section is not an instrument handed over to an accused to short- circuit a prosecution and bring about its sudden death. The scope of exercise of power under Section 482 of the Code and the categories of cases where the High Court may exercise its power under it relating to cognizable offences to prevent abuse of process of any court or otherwise to secure the ends of justice were set out in some detail by this Court in State of Haryana v. Bhajan Lal."

28. In Sunder Babu v. State of T.N., this Court was considering the challenge to the order of the Madras High Court where application was under Section 482 CrPC to quash criminal proceedings under Section 498-A IPC and Section 4 of the Dowry Prohibition Act, 1961. It was contended before this Court that the complaint filed was nothing but an abuse of the process of law and allegations were unfounded. The prosecuting agency contested the petition filed under Section 482 CrPC taking the stand that a bare perusal of the complaint discloses commission of alleged offences and, therefore, it is not a case which needed to be allowed. The High Court accepted the case of the prosecution and dismissed the application. This Court referred to the judgment in Bhajan Lal case and held that the case fell within Category 7. The Apex Court relying on Category 7 has held that the application under Section 482 deserved to be allowed and it quashed the proceedings.

29. In another case in Priya Vrat Singh v. Shyam Ji Sahai, this Court relied on Category 7 as laid down in State of Haryana v. Bhajan Lal. In the above case the Allahabad High Court had dismissed an application filed under Section 482 CrPC to quash the proceedings under Sections 494, 120-B and 109 IPC and Sections 3 and 4 of the Dowry Prohibition Act. After noticing the background facts and parameters for exercise of power under Section 482 CrPC the following was stated in paras 8 to 12:

"8. Further, it is pointed out that the allegation of alleged demand for dowry was made for the first time in December 1994. In the complaint filed, the allegation is that the dowry torture was made sometime in 1992. It has not been explained as to why for more than two years no action was taken.

9. Further, it appears that in the complaint petition apart from the husband, the mother of the husband, the subsequently married wife, husband's mother's sister, husband's brother-in-law and Sunita's father were impleaded as party. No role has been specifically ascribed to anybody except the husband and that too of a dowry demand in February 1993 when the complaint was filed on 6-12-1994 i.e. nearly after 22 months. It is to be noted that in spite of service of notice, none has appeared on behalf of Respondent 1.

10. The parameters for exercise of power under Section 482 CrPC have been laid down by this Court in several cases.

11. '19. The section does not confer any new power on the High Court. It only saves the inherent power which the Court possessed before the enactment of the Code. It envisages three circumstances under which the inherent jurisdiction may be exercised, namely, (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. It is neither possible nor desirable to lay down any inflexible rule which would govern the exercise of inherent jurisdiction. No legislative enactment dealing with procedure can provide for all cases that may possibly arise. Courts, therefore, have inherent powers apart from express provisions of law which are necessary for proper discharge of functions and duties imposed upon them by law. That is the doctrine which finds expression in the section which merely recognises and preserves inherent powers of the High Courts. All courts, whether civil

or criminal, possess, in the absence of any express provision, as inherent in their constitution, all such powers as are necessary to do the right and to undo a wrong in course of administration of justice on the principle quando lex aliquid alicui concedit, concedere videtur id sine quo res ipsa esse non potest (when the law gives a person anything it gives him that without which it cannot exist). While exercising powers under the section, the Court does not function as a court of appeal or revision. Inherent jurisdiction under the section though wide has to be exercised sparingly, carefully and with caution and only when such exercise is justified by the tests specifically laid down in the section itself. It is to be exercised ex debito justitiae to do real and substantial justice for the administration of which alone courts exist. Authority of the court exists for advancement of justice and if any attempt is made to abuse that authority so as to produce injustice, the court has power to prevent abuse. 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.

20. As noted above, the powers possessed by the High Court under Section 482 of the Code are very wide and the very plenitude of the power requires great caution in its exercise. Court must be careful to see that its decision in exercise of this power is based on sound principles. The inherent power should not be exercised to stifle a legitimate prosecution. The High Court being the highest court of a State should normally refrain from giving a prima facie decision in a case where the entire facts are incomplete and hazy, more so when the evidence has not been collected and produced before the Court and the issues involved, whether factual or legal, are of magnitude and cannot be seen in their true perspective without sufficient material. Of course, no hard-and-fast rule can be laid down in regard to cases in which the High Court will exercise its extraordinary jurisdiction of quashing the proceeding at any stage.' 12. The present case appears to be one where Category 7 of the illustrations given in State of Haryana v. Bhajan Lal is clearly applicable."

30. From the material on records, the following facts are disclosed from the sequence of events which preceded the registration of FIR on 6-11-2015. The complainant, her husband and son had taken different amounts totalling Rs 22 lakhs 50 thousand in the month of May 2015 for business/shop purposes from the accused. Three agreements were written on non-judicial stamp papers on 29-5-2015, 1-6- 2015 and 31-8-2015 wherein the complainant, her husband and son have acknowledged receipt of the money in cash as well as by cheque. Cheques of Rs 6 lakhs, Rs 14 lakhs 50 thousand were given to the accused for ensuring the repayment. Cheques were drawn on Prathama Bank, Kanth Branch, District Moradabad. Cheques were deposited in the bank which were returned with endorsements "No Sufficient Balance". After cheques having been dishonoured, complaints under Section 138 of the Negotiable Instruments Act were filed by the accused against the husband and son of the complainant which were registered in the month of September/October and were pending before alleged incident dated 22-10-2015.

41. Inherent power given to the High Court under Section 482 CrPC is with the purpose and object of advancement of justice. In case solemn process of Court is sought to be abused by a person with some oblique motive, the Court has to thwart the attempt at the very threshold. The Court cannot permit a prosecution to go on if the case falls in one of the categories as illustratively enumerated by this Court in State of Haryana v. Bhajan Lal. Judicial process is a solemn proceeding which cannot be allowed to be converted into an instrument of operation or harassment. When there are materials to indicate that a criminal proceeding is manifestly attended with mala fide and proceeding is maliciously instituted with an ulterior motive, the High Court will not hesitate in exercise of its jurisdiction under

Section 482 CrPC to quash the proceeding under Category 7 as enumerated in State of Haryana v. Bhajan Lal3, which is to the following effect: (SCC p. 379, para 102) "102. (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." Above Category 7 is clearly attracted in the facts of the present case. Although, the High Court has noted the judgment of State of Haryana v. Bhajan Lal, but did not advert to the relevant facts of the present case, materials on which final report was submitted by the IO. We, thus, are fully satisfied that the present is a fit case where the High Court ought to have exercised its jurisdiction under Section 482 CrPC and quashed the criminal proceedings."

9. The judgment relied by the Mr. Tewari in the case of "Indian Oil

Corporation (supra) wherein it was considered whether the existence or averment

of civil remedy in respect of disputes arising from breach of contract, bars remedy

under criminal law, whether the allegations made in the complaint, when taken on

their face value as true and correct, constitute offences under sections 378, 403, 405,

415 and 425 I.P.C. or not, and considering this aspect, the Hon'ble Court held in para

13 of that judgment that there is growing tendency in business circles to convert

purely civil disputes into criminal cases. This judgment is also helping the petitioner.

10. In case solemn process of Court is sought to be abused by a person

with some oblique motive, the Court has to thwart the attempt at the very threshold.

The Court cannot permit a prosecution to go on if the case falls in one of the

categories as illustratively enumerated in the case of "State of Haryana & Ors. Vs.

Bhajan Lal & Ors." Repoted in 1992 Supp. (1) SCC 335. Admittedly the case is

arising out of agreement for lifting of slag on certain terms and conditions of the

agreement as has been disclosed in the said agreement. Arbitration clause is also

there which speaks that any dispute arises out of said agreement shall be subject

matter of the arbitration which shall be governed by the Arbitration and Conciliation

Act, 1996 and rules framed there under. It is well settled that under business

transaction criminality is found, criminal case is alleged, criminal and civil case can go

simultaneously. In the case in hand the dispute is arising out of an agreement and for

non-implementation of the agreement, complaint has been filed which amounts to

abuse of process of law.

11. In view of the aforesaid facts, reasons and analysis, entire criminal

proceeding in connection with Gamharia P.S. Case No. 13 of 2022 as well as order

dated 21.01.2022 whereby the learned C.J.M., Seraikella has been pleased to

transmit the C.C. No. 40/2022 under section 156(3) Cr.P.C. for institution of F.I.R.,

pending in the Court of learned Chief Judicial Magistrate, Seraikella, are hereby

quashed.

12. It is made clear that the Court has not expressed any opinion on the

merit of recovery of money and availing the civil remedy and if that is filed that will be

decided in accordance with law without being prejudiced by this order.

13. Both these petitions stands allowed and disposed of. Pending I.A, if any,

stands disposed of. Interim orders are vacated.

( Sanjay Kumar Dwivedi, J.) Satyarthi/