Jharkhand High Court
Ameesha Patel Productions Having ... vs The State Of Jharkhand on 5 May, 2022
-1-
Cr.M.P. No. 3785 of 2019
IN THE HIGH COURT OF JHARKHAND AT RANCHI
Cr.M.P. No. 3785 of 2019
with
I.A. No. 1776 of 2022
1. Ameesha Patel Productions having address at A-401, 3rd Floor,
Reyn Basera, Plot No. 24, Juhu Scheme, Opposite Cooper Hospital,
Vile Parle (West), P.O.-Vile Parle, P.S.-Juhu Police Station, Mumbai,
400056.
2. Ameesha Patel, age 43 years, daughter of Amit Patel, having
address at A-401, 3rd Floor, Reyn Basera, Plot No. 24, Juhu Scheme,
Opposite Cooper Hospital, Vile Parle (West), P.O.-Vile Parle, P.S.-
Juhu Police Station, Mumbai, 400056.
3. Kuunal Goomer @ Kumal Goomer, age 43 years, son of Vinod
Goomer having address at Lav Kush, Ground Floor, Gulmohar Cross
Road No. 5, Juhu Scheme, P.O.-Vile Parle, P.S.-Juhu Police Station,
Mumbai, 400056.
..... ... Petitioners
Versus
1. The State of Jharkhand.
2. Ajay Kumar Singh, son of Late Ramadhar Singh, Proprietor of
'Lovely World Entertainment', having office at Singh Bhawan,
Sarweshwari Nagar, Hehal, P.O.-Hehal, P.S.-Pandra OP, District-
Ranchi, Jharkhand.
..... ... Opposite Parties
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CORAM : HON'BLE MR. JUSTICE SANJAY KUMAR DWIVEDI
------
For the Petitioners : Mr. R.S. Mazumdar, Sr. Advocate
: Mr. Nishant Roy, Advocate.
For the State : Ms Nehala Sharmin, A.P.P.
For the O.P. No. 2 : Mr. G.K. Sinha, Advocate.
------
06/ 05.05.2022 Heard Mr. R.S. Mazumdar, learned senior counsel appearing
for the petitioners, Ms Nehala Sharmin, learned A.P.P. for the State and
Mr. G.K. Sinha, learned counsel appearing for the O.P. No. 2.
2. This criminal miscellaneous petition has been filed for
quashing and setting aside the order dated 16.05.2019, passed by the
learned Judicial Magistrate, 1st Class, Ranchi, in connection with
Complaint Case No. 4724 of 2018, whereby cognizance has been taken
against the petitioners, for the offences under Sections 406, 420, 34 of the
Indian Penal Code and Section 138 of Negotiable Instruments Act
[hereinafter referred to "NI Act"], pending in the Court of learned Judicial
Magistrate, 1st Class, Ranchi.
3. The O.P. No. 2 filed a complaint stating therein that the O.P.
No. 2 and petitioner No. 1 entered into a Term Sheet dated 22.01.2018.
As per Term Sheet, O.P. No. 2 agreed to invest a sum of Rs.
2,50,00,000/- (rupees two crores and fifty lakhs only) for production
of cinematograph film titled "Desi Magic" produced by petitioner
Cr.M.P. No. 3785 of 2019
No. 1. O.P. N. 2 contributed his investment in accordance with Term
Sheet.
The opposite party's investment was to be repaid within six
months with a grace period of 60 days and after such expiry, the
petitioner no. 1 did not repay the opposite party's investment.
On opposite party's insistence, in month of August, 2018,
petitioner no. 1 issued two cheques amounting to Rs. 2,50,00,000/-
and Rs. 50,00,000/-. The above mentioned cheques issued by the
petitioner no. 1 were returned on account of stop payment.
Therefore, the opposite party was deceived, cheated and fraudulently
and dishonestly made to execute Term Sheet.
For reasons above, complaint was filed before the learned trial
court and the learned trial court recorded opposite party's statement
on 27.02.2019 and 22.04.2019.
4. The learned Court has taken cognizance under Sections 406,
420, 34 of the Indian Penal Code and Section 138 of the NI Act by order
dated 16.05.2019.
5. Mr. R.S. Mazumdar, learned senior counsel appearing for the
petitioners submits that looking into the complaint, no case under Sections
406, 420, 34 of the Indian Penal Code and Section 138 of the NI Act is
made out against the petitioners. He submits that in view of Section 141 of
the NI Act, if the Directors are discharging their day to day affairs for the
company / firm, then only they are liable to be punished and cognizance
has to be taken against them. He further submits that the cheque in
question was issued by the petitioner No. 3, as such, no other than that
person are liable to be proceeded under the said Sections, as they have not
been the drawer of the cheque. To buttress his arguments, he relied in the
case of Aparna A. Shah Versus Sheth Developers Private Limited &
Anr., reported in (2013) 8 SCC 71, wherein the Hon'ble Supreme Court in
para-27 and 28 held as follows:-
"27. In the light of the above discussion, we hold that
under Section 138 of the Act, it is only the drawer of the
cheque who can be prosecuted. In the case on hand,
admittedly, the appellant is not a drawer of the cheque
and she has not signed the same. A copy of the cheque
was brought to our notice, though it contains name of
the appellant and her husband, the fact remains that
her husband alone put his signature. In addition to the
same, a bare reading of the complaint as also the
affidavit of examination-in- chief of the complainant
Cr.M.P. No. 3785 of 2019
and a bare look at the cheque would show that the
appellant has not signed the cheque.
28. We also hold that under Section 138 of the N.I. Act,
in case of issuance of cheque from joint accounts, a
joint account holder cannot be prosecuted unless the
cheque has been signed by each and every person who
is a joint account holder. The said principle is an
exception to Section 141 of the N.I. Act which would
have no application in the case on hand. The
proceedings filed under Section 138 cannot be used as
an arm twisting tactics to recover the amount allegedly
due from the appellant. It cannot be said that the
complainant has no remedy against the appellant but
certainly not under Section 138. The culpability
attached to dishonour of a cheque can, in no case
"except in case of Section 141 of the N.I. Act" be
extended to those on whose behalf the cheque is issued.
This Court reiterates that it is only the drawer of the
cheque who can be made an accused in any proceeding
under Section 138 of the Act. Even the High Court has
specifically recorded the stand of the appellant that she
was not the signatory of the cheque but rejected the
contention that the amount was not due and payable by
her solely on the ground that the trial is in progress. It
is to be noted that only after issuance of process, a
person can approach the High Court seeking quashing
of the same on various grounds available to him.
Accordingly, the High Court was clearly wrong in
holding that the prayer of the appellant cannot even be
considered. Further, the High Court itself has directed
the Magistrate to carry out the process of
admission/denial of documents. In such circumstances,
it cannot be concluded that the trial is in advanced
stage."
6. Learned senior counsel further submits that there is no
allegation in the complaint that how the petitioner Nos. 1 and 2 are
responsible for day to day affairs of the firm in question. To buttress his
submission, he relied in the case of A.K. Singhania Versus Gujarat State
Fertilizer Company Limited & Anr., reported in (2013) 16 SCC 630,
wherein the Hon'ble Supreme Court in paras-14, 15, 16, 17 and 18 held as
follows:-
"14. From a plain reading of the aforesaid provision it
is evident that every person who at the time the offence
was committed is in charge of and responsible to the
Company shall be deemed to be guilty of the offence
under Section 138 of the Act. In the face of it, will it be
necessary to specifically state in the complaint that the
Cr.M.P. No. 3785 of 2019
person accused was in charge of and responsible for
the conduct of the business of the Company? In our
opinion, in the case of offence by Company, to bring its
Directors within the mischief of Section 138 of the Act,
it shall be necessary to allege that they were in charge
of and responsible to the conduct of the business of the
Company. It is necessary ingredient which would be
sufficient to proceed against such Directors. However,
we may add that as no particular form is prescribed, it
may not be necessary to reproduce the words of the
section. If reading of the complaint shows and
substance of accusation discloses necessary averments,
that would be sufficient to proceed against such of the
Directors and no particular form is necessary.
However, it may not be necessary to allege and prove
that, in fact, such of the Directors have any specific
role in respect of the transaction leading to issuance of
cheque. Section 141 of the Act makes the Directors in
charge and responsible to Company "for the conduct of
the business of the Company" within the mischief
of Section 138 of the Act and not particular business
for which the cheque was issued. We cannot read more
than what has been mandated in Section 141 of the Act.
15. A large number of authorities of this Court have
been cited by the counsel representing the party to
bring home their point. We deem it inexpedient to refer
to all of them. Suffice it to say that this question has
been answered eloquently by a three-Judge Bench
decision of this Court in the case of S.M.S.
Pharmaceuticals Ltd. v. Neeta Bhalla, (2005) 8 SCC
89, in the following words:
"19. In view of the above discussion, our answers to
the questions posed in the reference are as under:
(a) It is necessary to specifically aver in a
complaint under Section 141 that at the time the
offence was committed, the person accused was
in-charge of, and responsible for the conduct of
business of the company. This averment is an
essential requirement of Section 141 and has to
be made in a complaint. Without this averment
being made in a complaint, the requirements
of Section 141 cannot be said to be satisfied."
16. This Court in the case of National Small Industries
Corpn. Ltd. v. Harmeet Singh Paintal, (2010) 3 SCC
330, after reviewing all its earlier judgments
summarized the legal position as follows:
"39. From the above discussion, the following
principles emerge:
(i) The primary responsibility is on the
complainant to make specific averments as are
Cr.M.P. No. 3785 of 2019
required under the law in the complaint so as to
make the accused vicariously liable. For
fastening the criminal liability, there is no
presumption that every Director knows about the
transaction.
(ii) Section 141 does not make all the Directors
liable for the offence. The criminal liability can
be fastened only on those who, at the time of the
commission of the offence, were in charge of and
were responsible for the conduct of the business
of the company.
(iii) Vicarious liability can be inferred against a
company registered or incorporated under
the Companies Act, 1956 only if the requisite
statements, which are required to be averred in
the complaint/petition, are made so as to make
the accused therein vicariously liable for offence
committed by the company along with averments
in the petition containing that the accused were in
charge of and responsible for the business of the
company and by virtue of their position they are
liable to be proceeded with.
(iv) Vicarious liability on the part of a person
must be pleaded and proved and not inferred.
(v) If the accused is a Managing Director or a
Joint Managing Director then it is not necessary
to make specific averment in the complaint and by
virtue of their position they are liable to be
proceeded with.
(vi) If the accused is a Director or an officer of a
company who signed the cheques on behalf of the
company then also it is not necessary to make
specific averment in the complaint.
(vii) The person sought to be made liable should
be in charge of and responsible for the conduct of
the business of the company at the relevant time.
This has to be averred as a fact as there is no
deemed liability of a Director in such cases."
17. In Harshendra Kumar D. v. Rebatilata Koley,
(2011) 3 SCC 351, after referring to its earlier
decisions in S.M.S. Pharmaceuticals Ltd.(supra),
National Small Industries Corpn. Ltd.(supra), N.
Rangachari v. Bharat Sanchar Nigam Ltd., (2007) 5
SCC 108 and K.K. Ahuja v. V.K. Vora, (2009) 10 SCC
48, this Court reiterated the same view.
18. We have found on fact that there is no averment that
the two accused herein were in charge of and
responsible for the conduct of the business of the
company at the time the offence was committed. Hence,
there is no essential averment in the complaints. In
Cr.M.P. No. 3785 of 2019
view of what we have observed above, the prosecution
of accused A.K. Singhania and accused Vikram
Prakash cannot be allowed to continue. Accordingly,
the order of the High Court quashing the prosecution of
the accused Vikram Prakash is not fit to be interfered
with. For the same reason the order passed by the High
Court declining the prayer of A.K. Singhania for
quashing of the prosecution cannot be sustained and
the appeals preferred by him deserve to be allowed."
7. Learned senior counsel draws the attention of this Court
towards the explanation of Section 141 of the NI Act and submits that the
company has been defined and in view of the amendment of company, the
firm is also coming in the definition of the company. He submits that so
far as Sections 406 and 420 of the Indian Penal Code are concerned,
ingredients of those Sections are not attracted against the petitioners. He
further submits that entire allegation is made from the strength of Term
Sheet, which is a document that acts upon both the parties. He also
submits that the entire case is civil in nature, where criminal colour has
been given to the dispute. To buttress his arguments, he relied in the
case of Vinod Natesan Versus State of Kerala & Ors. reported in
(2019) 2 SCC 401, wherein on the point of criminal breach of trust, the
Hon'ble Supreme Court in para-10 held as follows:-
"10. Having heard the appellant as party in person and
the learned advocates appearing on behalf of the
original accused as well as the State of Kerala and
considering the judgment1 and order passed by the
High Court, we are of the opinion that the learned
High Court has not committed any error in quashing
the criminal proceedings initiated by the complainant.
Even considering the allegations and averments made
in the FIR and the case on behalf of the appellant, it
cannot be said that the ingredients of Sections 406 and
420 are at all satisfied. The dispute between the parties
at the most can be said to be the civil dispute and it is
tried to be converted into a criminal dispute. Therefore,
we are also of the opinion that continuing the criminal
proceedings against the accused will be an abuse of
process of law and, therefore, the High Court has
rightly quashed the criminal proceedings. Merely
because the original accused might not have paid the
amount due and payable under the agreement or might
not have paid the amount in lieu of one month's notice
before terminating the agreement by itself cannot be
said to be a cheating and/or having committed offence
under Sections 406 and 420 IPC as alleged. We are in
Cr.M.P. No. 3785 of 2019
complete agreement with the view taken by the High
Court."
8. Learned senior counsel further submits that there is no
intention from the very beginning to cheat the O.P. No. 2 and the entire
transaction is with regard to film production, for which, the O.P. No. 2 has
invested the amount in question. He submits that the statement on the
point of investment, has come on the solemn affirmation by the O.P. No. 2.
He further submits that for criminal breach of contract, the provisions of
Indian Penal Code are not attracted. He relied in the case of
Satishchandra Ratanlal Shah Versus State of Gujarat & Anr., reported in
(2019) 9 SCC 148, wherein the Hon'ble Supreme Court in paras-11 to 14
held as follows:-
"11. Having observed the background principles
applicable herein, we need to consider the individual
charges against the appellant. Turning to Section 405
read with Section 406 IPC, we observe that the dispute
arises out of a loan transaction between the parties. It
falls from the record that Respondent 2 knew the
appellant and the attendant circumstances before
lending the loan. Further it is an admitted fact that in
order to recover the aforesaid amount, Respondent 2
had instituted a summary civil suit which is still
pending adjudication. The law clearly recognises a
difference between simple payment/investment of
money and entrustment of money or property. A mere
breach of a promise, agreement or contract does not,
ipso facto, constitute the offence of the criminal breach
of trust contained in Section 405 IPC without there
being a clear case of entrustment.
12. In this context, we may note that there is nothing
either in the complaint or in any material before us,
pointing to the fact that any property was entrusted to
the appellant at all which he dishonestly converted for
his own use so as to satisfy the ingredients of Section
405 punishable under Section 406 IPC. Hence the
learned Magistrate committed a serious error in
issuing process against the appellant for the said
offence. Unfortunately, the High Court also failed to
correct this manifest error.
13. Now coming to the charge under Section 415
punishable under Section 420 IPC. In the context of
contracts, the distinction between mere breach of
contract and cheating would depend upon the
fraudulent inducement and mens rea. (See Hridaya
Ranjan Prasad Verma v. State of Bihar.) In the case
before us, admittedly the appellant was trapped in
Cr.M.P. No. 3785 of 2019
economic crisis and therefore, he had approached
Respondent 2 to ameliorate the situation of crisis.
Further, in order to recover the aforesaid amount,
Respondent 2 had instituted a summary civil suit
seeking recovery of the loan amount which is still
pending adjudication. The mere inability of the
appellant to return the loan amount cannot give rise to
a criminal prosecution for cheating unless fraudulent
or dishonest intention is shown right at the beginning
of the transaction, as it is this mens rea which is the
crux of the offence. Even if all the facts in the
complaint and material are taken on their face value,
no such dishonest representation or inducement could
be found or inferred.
14. Moreover, this Court in a number of cases has
usually cautioned against criminalising civil disputes,
such as breach of contractual obligations (refer to
Gian Singh v. State of Punjab). The legislature intended
to criminalise only those breaches which are
accompanied by fraudulent, dishonest or deceptive
inducements, which resulted in involuntary and
inefficient transfers, under Section 415 IPC.
9. Learned senior counsel further submits that for civil liability
criminal case is unwarranted. Reference has been made by the learned
senior counsel appearing for the petitioners in the case of Binod Kumar &
Ors. Versus State of Bihar & Anr., reported in (2014) 10 SCC 663,
wherein the Hon'ble Supreme Court in paras-16, 17 and 18 held as
follows:-
"16. Section 406 IPC prescribes punishment for
criminal breach of trust as defined in Section
405 IPC. For the offence punishable under Section
406 IPC, prosecution must prove:
(i) that the accused was entrusted with property or
with dominion over it and
(ii) that he (a) misappropriated it, or (b) converted
it to his own use, or (c) used it, or (d) disposed of
it.
The gist of the offence is misappropriation done in a
dishonest manner. There are two distinct parts of the
said offence. The first involves the fact of entrustment,
wherein an obligation arises in relation to the
property over which dominion or control is acquired.
The second part deals with misappropriation which
should be contrary to the terms of the obligation
which is created.
Cr.M.P. No. 3785 of 2019
17. Section 420 IPC deals with cheating. Essential
ingredients of Section 420 IPC are:- (i) cheating; (ii)
dishonest inducement to deliver property or to make,
alter or destroy any valuable security or anything
which is sealed or signed or is capable of being
converted into a valuable security, and (iii) mens rea
of the accused at the time of making the inducement.
18. In the present case, looking at the allegations in
the complaint on the face of it, we find no allegations
are made attracting the ingredients of Section
405 IPC. Likewise, there are no allegations as to
cheating or the dishonest intention of the appellants
in retaining the money in order to have wrongful gain
to themselves or causing wrongful loss to the
complainant. Excepting the bald allegations that the
appellants did not make payment to the second
respondent and that the appellants utilized the
amounts either by themselves or for some other work,
there is no iota of allegation as to the dishonest
intention in misappropriating the property. To make
out a case of criminal breach of trust, it is not
sufficient to show that money has been retained by the
appellants. It must also be shown that the appellants
dishonestly disposed of the same in some way or
dishonestly retained the same. The mere fact that the
appellants did not pay the money to the complainant
does not amount to criminal breach of trust."
10. Learned senior counsel further submits that the cheque in
question was issued by the petitioner No. 3 and no notice has been issued
against the drawer of the cheque i.e. petitioner no. 3 and since the
mandatory provision under Section 138(B) of the NI Act has not been
complied with, the entire proceeding is fit to be quashed. By way of
referring Annexure-5 of the petition, he submits that so far as the interest
part is concerned, that has been returned back to the O.P. No. 2 and that
has been happily accepted by the O.P. No. 2. He submits that on the
aforesaid grounds, this is a fit case to quash the entire criminal
proceedings so far as the petitioners are concerned.
11. Per contra, Mr. G.K. Sinha, learned counsel appearing for the
O.P. No. 2 submits that there are direct allegations against the petitioners
of cheating the O.P. No. 2 and stopping the payment of cheque, as such the
learned Court has rightly taken the cognizance against the petitioners. He
submits that there is no illegality in the cognizance order and this Court
may not interfere at this stage under Section 482 Cr.P.C. He draws the
attention of this court to the cognizance order dated 16.05.2019 and
Cr.M.P. No. 3785 of 2019
submits that in the cognizance order, the entire aspect of the matter has
been considered by the learned court and there is no illegality in the
impugned order. He further submits that these petitioners have criminal
antecedents. By way of referring I.A. No. 1776 of 2022, he submits that
other persons have also been cheated by the petitioners, which has also
been supported by the O.P. No. 2. He refers to the supplementary counter
affidavit and submits that the accused-petitioners had induced the
complainant-O.P. No. 2 for the purpose of making movie. He disclosed the
dates of payment by way of referring the said supplementary counter
affidavit. He also submits that there are allegations against the petitioners
and this court may not interfere in the matter at this stage. He relied in the
case of Akhay Kumar Mohanty & Anr. Versus The State of Jharkhand &
Anr., in Cr.M.P. No. 1322 of 2020, which was decided by this Court on
21.02.2022 and submits that this Court has held that if the ingredients of
criminal and civil are disclosed in the complaint, both the proceedings can
proceed simultaneously, for which, he refers to para-8 of the said
judgment.
12. He further submits that civil nature of case and criminal
nature of case were the subject matters before the Hon'ble Supreme Court
in the case of Priti Saraf & Anr. Versus State of NCT of Delhi & Anr., in
Criminal Appeal No. 296 of 2012 [arising out of SLP (Crl.) No. 6364 of
2019] wherein the Hon'ble Supreme Court in paras-12 and 17 held as
follows:-
"12. Learned counsel further submits that the exercise
of inherent power of the High Court under Section
482 CrPC is an exceptional one. Great care should be
taken by the High Court before embarking to scrutinise
the complaint/FIR/charge-sheet in deciding whether
the rarest of the rare case is made out to scuttle the
prosecution in its inception. It was expected from the
High Court to prima facie consider the complaint,
charge-sheet and the statement of witness recorded in
support thereof which was recorded by the
Investigating Officer in arriving at a conclusion
whether court could take cognizance of the offence, on
that evidence and proceed further with the trial. If it
reaches a conclusion that no cognizable offence is
made out, no further act could be done except to quash
the FIR/charge- sheet. But only in exceptional cases,
i.e., in rarest of rare cases of mala fide initiation of the
proceedings to wreak private vengeance process is
availed of in laying a complaint or FIR itself does not
disclose any cognizable offence.
Cr.M.P. No. 3785 of 2019
17. Learned counsel further submits that the present
case is of civil dispute as earnest money was forfeited
by the 2nd respondent when the 1st appellant was not
ready to fulfil and perform the terms and conditions of
agreement to sell dated 24th December, 2011 and
after the arbitral proceedings were initiated, criminal
proceedings were initiated just to harass the
respondent with criminal charge under Sections
420, 406 and 34 IPC and further submits that no
offence under Section 406 is made out as the earnest
money was paid in terms of the contract and there was
no restriction in the agreement as to how this money
was to be utilised therefore, there is no
misappropriation."
Relying on the judgments of Hon'ble Supreme Court, he
submits that even in the civil nature, if the criminality is there in the
petition / complaint, both the cases can run simultaneously.
13. He further submits that in the similar circumstance, the
Hon'ble Supreme Court in the case of K. Jagadish Versus Udaya Kumar
G.S. & Anr., in Criminal Appeal No. 56 of 2020 [arising out of S.L.P.
(Crl.) No. 3304 of 2017] has quashed the order of the High Court,
wherein the High Court has interfered in the matter under Section 482
Cr.P.C. He submits that in the case of K. Jagadish, the Hon'ble Supreme
Court has held that civil proceedings have been subsequently initiated to
get the registered sale deed set aside, but that has nothing to do with the
present criminal proceeding. He refers to Paras-8, 9, 10 and 12 of the said
judgment, which reads as under:-
"8. It is true that civil proceedings have been
subsequently initiated to get the registered Sale Deed
set-aside but that has nothing to do with the present
criminal proceedings.
9. It is thus well settled that in certain cases the very
same set of facts may give rise to remedies in civil as
well as in criminal proceedings and even if a civil
remedy is availed by a party, he is not precluded from
setting in motion the proceedings in criminal law.
0. In Pratibha Rani v. Suraj Kumar and another1this
Court summed up the distinction between the two
remedies as under:
"21. ............ There are a large number of cases
where criminal law and civil law can run side by
side. The two remedies are not mutually exclusive
but clearly coextensive and essentially differ in their
Cr.M.P. No. 3785 of 2019
content and consequence. The object of the criminal
law is to punish an offender who commits an offence
against a person, property or the State for which the
accused, on proof of the offence, is deprived of his
liberty and in some cases even his life. This does not,
however, affect the civil remedies at all for suing the
wrongdoer in cases like arson, accidents etc. It is an
anathema to suppose that when a civil remedy is
available, a criminal prosecution is completely
barred. The two types of actions are quite different
in content, scope and import. It is not at all
intelligible to us to take the stand that if the husband
dishonestly misappropriates the stridhan property of
his wife, though kept in his custody, that would bar
prosecution under Section 406 IPC or render the
ingredients of Section 405 IPC nugatory or abortive.
To say that because the stridhan of a married
woman is kept in the custody of her husband, no
action against him can be taken as no offence is
committed is to override and distort the real intent of
the law."
12. The aforesaid view was reiterated in Kamladevi
Agarwal v. State of West Bengal and others as under:
"9. Criminal prosecution cannot be thwarted at the
initial stage merely because civil proceedings are
also pending.
After referring to judgments in State of Haryana v.
Bhajan Lal4 and Rajesh Bajaj v. State NCT of
Delhi this Court in 3 (2002) 1 SCC 555 4 1992 Supp
(1) SCC 335 Trisuns Chemical Industry v. Rajesh
Agarwal5 held: (SCC p. 690, paras 7-8)
"7. Time and again this Court has been pointing out
that quashing of FIR or a complaint in exercise of
the inherent powers of the High Court should be
limited to very extreme exceptions (vide State of
Haryana v. Bhajan Lal and Rajesh Bajaj v. State
NCT of Delhi).
8. In the last referred case this Court also pointed
out that merely because an act has a civil profile is
not sufficient to denude it of its criminal outfit. We
quote the following observations:
10. It may be that the facts narrated in the present
complaint would as well reveal a commercial
transaction or money transaction. But that is hardly
a reason for holding that the offence of cheating
would elude from such a transaction. In fact, many a
Cr.M.P. No. 3785 of 2019
cheatings were committed in the course of
commercial and also money transactions."
After referring to various decisions it was finally
concluded as under:
"17. In view of the preponderance of authorities to
the contrary, we are satisfied that the High Court
was not justified in quashing the proceedings
initiated by the appellant against the respondents.
We are also not impressed by the argument that as
the civil suit was pending in the High Court, the
Magistrate was not justified to proceed with the
criminal case either in law or on the basis of
propriety. Criminal cases have to be proceeded with
in accordance with the procedure as prescribed
under the Code of Criminal Procedure and the
pendency of a civil action in a different court even
though higher in status and authority, cannot be
made a basis for quashing of the proceedings."
14. Lastly he relied in the case of M/s Laxmi Dyechem Versus
State of Gujarat & Ors. in Criminal Appeal Nos. 1870-1909 of 2012
[arising out of S.L.P. (Crl.) Nos. 1740-1779 of 2011], wherein the
Hon'ble Supreme Court in paras-16 and 17 held as follows:-
"16. In the case at hand, the High Court relied upon a
decision of this Court in Vinod Tanna's case (supra) in
support of its view. We have carefully gone through the
said decision which relies upon the decision of this
Court in Electronics Trade & Technology Development
Corporation Ltd. (supra). The view expressed by this
Court in Electronics Trade & Technology Development
Corporation Ltd. (supra) that a dishonour of the cheque
by the drawer after issue of a notice to the holder asking
him not to present a cheque would not attract Section
138 has been specifically overruled in Modi Cements
Ltd. case (supra). The net effect is that dishonour on the
ground that the payment has been stopped, regardless
whether such stoppage is with or without notice to the
drawer, and regardless whether the stoppage of payment
is on the ground that the amount lying in the account
was not sufficient to meet the requirement of the cheque,
would attract the provisions of Section 138.
17. It was contended by learned counsel for the
respondent that the respondent-company had offered to
issue new cheques to the appellant upon settlement of
the accounts and that a substantial payment has been
made towards the outstanding amount. We do not think
that such an offer would render illegal a prosecution
Cr.M.P. No. 3785 of 2019
that is otherwise lawful. The offer made by the
respondent-company was in any case conditional and
subject to the settlement of accounts. So also whether the
cheques were issued fraudulently by the authorised
signatory for amounts in excess of what was actually
payable to the appellant is a matter for examination at
the trial. That the cheques were issued under the
signature of the persons who were authorised to do so
on behalf of the respondent-company being admitted
would give rise to a presumption that they were meant to
discharge a lawful debt or liability. Allegations of fraud
and the like are matters that cannot be investigated by a
Court under Section 482 Cr.P.C. and shall have to be
left to be determined at the trial after the evidence is
adduced by the parties."
18. On behalf of the signatories of the cheques
dishonoured it was argued that the dishonour had taken
place after they had resigned from their positions and that
the failure of the company to honour the commitment
implicit in the cheques cannot be construed an act of
dishonesty on the part of the signatories of the cheques. We
do not think so. Just because the authorised signatories of
the cheques have taken a different line of defence than the
one taken by by the company does not in our view justify
quashing of the proceedings against them. The decisions of
this Court in National Small Industries Corporation
Limited v. Harmeet Singh Paintal and Anr. (2010) 3 SCC
330 and S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla &
Anr. (2005) 8 SCC 89 render the authorised signatory
liable to be prosecuted along with the company. In the
National Small Industries Corporation Limited's case
(supra) this Court observed:
"19. xxxx
(c) The answer to Question (c) has to be in the
affirmative. The question notes that the managing
director or joint managing director would be admittedly
in charge of the company and responsible to the
company for the conduct of its business. When that is so,
holders of such positions in a company become liable
under Section 141 of the Act. By virtue of the office they
hold as managing director or joint managing director,
these persons are in charge of and responsible for the
conduct of business of the company. Therefore, they get
covered under Section 141. So far as the signatory of a
cheque which is dishonoured is concerned, he is clearly
responsible for the incriminating act and will be
covered under sub-section (2) of Section 141."
15. Relying on the aforementioned decisions, learned counsel
appearing for the O.P. No. 2 submits that what have been argued on behalf
Cr.M.P. No. 3785 of 2019
of the petitioners are the subject matter of trial and this Court at this stage
may not interfere in the matter under Section 482 Cr.P.C.
16. Ms. Nehala Sharmin, learned A.P.P. appearing for the State
submits that there is no illegality in the cognizance order. She refers to the
Term Sheet and submits that there is mention that the investment of the
O.P. No. 2 was to be paid within six months with a grace period of sixty
days.
17. In the light of the submissions of learned counsel appearing
for the parties, the Court has gone through the materials available on
record. Looking into the complaint petition, it transpires that the money in
question was to the tune of Rs. 2,50,00,000/- and the same was transmitted
to the firm namely Ameesha Patel Productions and in the solemn
affirmation the O.P. No. 2, it has been disclosed how he has been invited
to invest the amount in the said firm. Looking into the Term Sheet,
particularly the repayment terms, it appears that there is no condition of
returning the amount in question after completion of the movie, rather it
has been mentioned that the same shall be returned within six months with
the grace period of sixty days time. After looking into the Term Sheet, it is
crystal clear that the amount in question shall be refunded back to the O.P.
No. 2 within six months and if not within six months, the same shall be
refunded within sixty days thereafter. Nowhere it is mentioned that due to
non-completion of the movie in question, the amount in question has not
been paid to the O.P. No. 2. Admittedly the cheque in question was issued
in favour of the O.P. No. 2, which has not been enchased, as there was a
direction to stop the payment. It is well settled that even for a direction to
stop the payment of a cheque, the case under Section 138 NI Act is made
out. Notice has been issued to the firm for non-payment of the cheque
amount in terms of Section 141 of the NI Act. The company is defined in
the explanation of Section 141 of the NI Act. It is also an admitted fact
that the petitioner No. 1 is the firm and petitioner Nos. 2 and 3 are the
partners of the said firm.
18. Prima facie, it appears that all the accused persons are liable
to refund the amount in question to the O.P. No. 2. Whether the cheques
were issued for payment of the dues to the O.P. No. 2 is the matter of
examination at the trial. This court, sitting under Section 482 Cr.P.C. is not
required to go into the investigation and comes to the conclusion whether
the case is made out or not, this is the subject matter of trial. Admittedly
the amount in question has been paid to the firm and the accused Nos. 2
Cr.M.P. No. 3785 of 2019
and 3, who are the petitioner Nos. 2 and 3 are looking into the day to day
affairs of the said firm and if this is the scenario, the holders of such
position in the company is liable to be prosecuted under Section 141 of the
NI Act, so far as the judgment relied by Mr. Mazumdar, learned senior
counsel appearing for the petitioners on the point of drawer are concerned
are not helping the petitioners in view of the provision of Section 141 of
NI Act, particularly in light of explanation of that Section.
19. In the case in hand, the accused No. 3 / petitioner no. 3 has
issued the cheque for the firm in question and in view of Section 141 of
the NI Act, all the persons are liable to be proceeded with. In this case, the
accused no. 3 has not acted in its own, as such, the judgment relied by Mr.
Mazumdar, learned senior counsel in the case of Aparna A. Shah (supra)
is not helping the accused, rather in that case the main issue was related to
joint account holder will be liable or not and the Hon'ble Supreme held
that the joint account holder cannot be liable to be prosecuted, if he has
not signed the cheque, but the case in hand, there is no such dispute that's
why this case is not helping to the petitioners. In the complaint, there is
direct allegation against the accused persons, who are the petitioners in
this case and in fact Section 141 of the NI Act has been read by this Court
hereiabove in the case of A.K. Singhania (Supra), relied upon by the
learned senior counsel appearing for the petitioners, there was no
averments with regard to other persons that's why the Hon'ble Supreme
Court has interfered in that case, that is distinguishable in the facts of this
case. Further the case relied by the senior counsel in the case of Vinod
Natesan (Supra), in that case the Hon'ble Supreme Court held that the
complaint case can be quashed when the dispute was essentially civil in
nature, but the case in hand, petitioners with the fraudulent intention
stopped the payment of the cheque of the complaint with the intention to
deceive the amount and cheated the complainant, thus this case is not
helping to the petitioners. The case of Satishchandra Ratanlal
Shah(Supra) was also on different footing and mainly related to criminal
breach of trust and cheating and in that case there was an entrustment of
the money, but the case in hand, the complainant-O.P. No. 2 has invested
the huge money on the false assurance of the petitioners. Thus, that case is
also not helping to the petitioners. The case of Binod Kumar & Ors.
(Supra) was on the point of maintainability of Section 138 of the NI Act
before the expiry period of 15 days from the receipt of the notice, but the
case in hand, statutory period was not the issue. Thus, this case is also not
Cr.M.P. No. 3785 of 2019
helping the petitioners in any manner.
20. So far the judgment relied by Mr. Mazumdar, learned senior
counsel under Section 406 and 420 of IPC is concerned, if the ingredients
of those Sections are made out and civil nature is also disclosed, both the
civil and criminal wrong are there, both the cases can go simultaneously,
the High Court will not interfere under Section 482 Cr.P.C., in this regard,
reference may be made to the case of M/s Medchl Chemicals & Pharma
P. Ltd. Versus M/s. Biological E. Ltd. & Ors., reported in (2000) 3 SCC
269, wherein the Hon'ble Supreme Court in paras-14 and 15 held as
follows:-
"14. Needless to record however and it being a settled
principle of law that to exercise powers under Section 482
of the Code, the complaint in its entirety shall have to be
examined on the basis of the allegation made in the
complaint and the High Court at that stage has no
authority or jurisdiction to go into the matter or examine
its correctness. Whatever appears on the face of the
complaint shall be taken into consideration without any
critical examination of the same. But the offence ought to
appear ex facie on the complaint. The observations in
Nagawwa v. Veeranna Shivalingappa Konjalgi lend
support to the above statement of law:
"(1) where the allegations made in the complaint or
the statements of the witnesses recorded in support of
the same taken at their face value make out absolutely
no case against the accused or the complaint does not
disclose the essential ingredients of an offence which
is alleged against the accused;
(2) where the allegations made in the complaint are
patently absurd and inherently improbable so that no
prudent person can ever reach a conclusion that there
is sufficient ground for proceeding against the
accused;
(3) where the discretion exercised by the Magistrate in
issuing process is capricious and arbitrary having
been based either on no evidence or on materials
which are wholly irrelevant or inadmissible; and
(4) where the complaint suffers from fundamental legal
defects, such as, want of sanction, or absence of a
complaint by legally competent authority and the like.
The cases mentioned by us are purely illustrative and
provide sufficient guidelines to indicate contingencies
where the High Court can quash proceedings."
15. In the matter under consideration, if we try to
analyse the guidelines as specified in Shivalingappa case
can it be said that the allegations in the complaint do not
make out any case against the accused nor do they
disclose the ingredients of an offence alleged against the
accused or the allegations are patently absurd and
inherently improbable so that no prudent person can ever
reach to such a conclusion that there is sufficient ground
Cr.M.P. No. 3785 of 2019
for proceeding against the accused? In the present case,
the complaint as noticed above does not, however, lend
credence to the questions posed. It is now well settled and
one need not dilate on this score, neither do we intend to
do so presently that the allegations in the complaint will
have to be accepted on the face of it and the truth or
falsity of which would not be gone into by the Court at
this earliest stage as noticed above: whether or not the
allegations in the complaint were true is to be decided on
the basis of the evidence led at the trial and the
observations on this score in the case of Nagpur Steel &
Alloys (P) Ltd. v. P. Radhakrishna ought to be noticed. In
para 3 of the Report this Court observed:
"3. We have perused the complaint carefully. In our
opinion it cannot be said that the complaint did not
disclose the commission of an offence. Merely because
the offence was committed during the course of a
commercial transaction, would not be sufficient to
hold that the complaint did not warrant a trial.
Whether or not the allegations in the complaint were
true was to be decided on the basis of evidence to be
led at the trial in the complaint case. It certainly was
not a case in which the criminal trial should have been
cut short. The quashing of the complaint has resulted
in grave miscarriage of justice. We, therefore, without
expressing any opinion on the merits of the case, allow
this appeal and set aside the impugned order of the
High Court and restore the complaint. The learned
trial Magistrate shall proceed with the complaint and
dispose of it in accordance with law expeditiously."
21. Reference may further be made to the case of Rathish Babu
Unnikrishnan Versus State (Govt. of NCT of Delhi) & Anr., in Criminal
Appeal No. 694-695 of 2022 [arising out of SLP (Crl). No. 5781-5782 of
2020], wherein the Hon'ble Supreme Court held that the Court should be
slow to grant relief of quashing the complaint at a pre-trial stage. Paras-16
and 17 thereof reads as under:-
"16. The proposition of law as set out above makes it
abundantly clear that the Court should be slow to
grant the relief of quashing a complaint at a pre-trial
stage, when the factual controversy is in the realm of
possibility particularly because of the legal
presumption, as in this matter. What is also of note is
that the factual defence without having to adduce any
evidence need to be of an unimpeachable quality, so
as to altogether disprove the allegations made in the
complaint.
17. The consequences of scuttling the criminal
process at a pre-trial stage can be grave and
irreparable. Quashing proceedings at preliminary
stages will result in finality without the parties having
had an opportunity to adduce evidence and the
consequence then is that the proper forum i.e., the
trial Court is ousted from weighing the material
Cr.M.P. No. 3785 of 2019
evidence. If this is allowed, the accused may be given
an un-merited advantage in the criminal process. Also
because of the legal presumption, when the cheque
and the signature are not disputed by the appellant,
the balance of convenience at this stage is in favour of
the complainant/prosecution, as the accused will have
due opportunity to adduce defence evidence during
the trial, to rebut the presumption."
22. As discussed hereinabove, in the very beginning in the Term
Sheet, it has been disclosed that the amount in question shall be returned
within six months and if the same will not be returned within that period,
the same shall be returned within sixty days thereafter, which is the grace
period. Thus, the terms and conditions are very well known to the firm as
they are required to comply the Term Sheet. For deciding this case, the
argument of G.K. Sinha, learned counsel appearing for the O.P. No. 2 with
regard to other criminal cases against this firm and particularly with regard
to bouncing of cheque are different matters. This court is not taking note
of that submission of Mr. Sinha and this court is only required to look into
the materials, available on record in the present case and to decide the
same.
23. The cognizance order is well speaking order and mens rea and
other ingredients have been argued by Mr. Mazumdar, learned senior
counsel appearing for the petitioners and not fulfilling the statutory
provisions of Section 138(B) of the NI Act are the subject matter of trial.
This Court is not inclined to quash the entire criminal proceedings. The
challenge is made that statutory provision has not been looked into,
however, it appears that the notice has been issued against the firm for
non-payment of the amount in question, which was required to be paid in
terms of the cheque, issued in favour of the O.P. No. 2.
24. In view of the above facts, reasons and analysis, this petition
fails. As such the same is dismissed. The aforesaid interlocutory
application also stands dismissed.
25. Interim order, granted earlier, also stands vacated.
(Sanjay Kumar Dwivedi, J.)
Amitesh/-
