Jharkhand High Court

Vivek Agarwalla vs The State Of Jharkhand on 4 December, 2023

Author: Sanjay Kumar Dwivedi

Bench: Sanjay Kumar Dwivedi

                                                    1                    Cr.M.P. No. 1795 of 2012
                                                                                    With
                                                                         Cr.M.P. No. 1800 of 2012



                  IN THE HIGH COURT OF JHARKHAND AT RANCHI
                            Cr.M.P. No. 1795 of 2012
                 Vivek Agarwalla                                ... Petitioner
                                       -Versus-
            1.   The State of Jharkhand
            2.   Ajit Singh                               ... Opposite Parties
                                         With
                                 Cr.M.P. No. 1800 of 2012
                 Vivek Agarwalla                          ... Petitioner
                                       -Versus-
            1.   The State of Jharkhand
            2.   Ajit Singh                              ... Opposite Parties
                                            -----

CORAM: HON'BLE MR. JUSTICE SANJAY KUMAR DWIVEDI

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            For the Petitioner       : Mr. Rishav Kumar, Advocate
            For the State            : Mrs. Ruby Pandey, A.P.P.
                                       Mrs. Shweta Singh, A.P.P.
            For O.P. No.2            : Mr. Saurav Kumar, Advocate
                                            -----

04/04.12.2023     Both the cases are arising out of same complaint case and in view of

that, both the cases have been heard together with consent of the parties.

2. Heard Mr. Rishav Kumar, learned counsel for the petitioner, Mrs. Ruby

Pandey and Mrs. Shweta Singh, learned counsel for the State and

Mr. Saurav Kumar, learned counsel for opposite party no.2.

3. In Cr.M.P. No.1795 of 2012, the prayer is made for quashing of the

entire criminal proceeding in connection with C/1 Case No.1711 of 2006

including the order taking cognizance dated 09.11.2006 passed by the

learned Chief Judicial Magistrate, Jamshedpur and also for quashing the

order dated 11.04.2008, pending in the Court of the learned Sub Divisional

Judicial Magistrate, Jamshedpur. In Cr.M.P. No.1800 of 2012, the prayer is

made for quashing the orders dated 09.06.2008, 19.08.2008, 17.01.2009,

23.03.2009, 06.07.2009, 16.11.2009, 05.01.2011 and 05.06.2012, whereby,

bailable warrant of arrest, non-bailable warrant of arrest, fresh non-bailable

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warrant of arrest, processes under Sections 82 and 83 Cr.P.C., fresh non-

bailable warrant of arrest and fresh processes under Sections 82 and 83

Cr.P.C. respectively have been directed to be issued against the petitioner in

connection with C/1 Case No.1711 of 2006, pending in the Court of the

learned Sub Divisional Judicial Magistrate, Jamshedpur.

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

a Director of one Consultancy Firm named M/s. Anjaneya Consultancy Pvt.

Ltd. (ACPL), District Seraikella-Kharsawan and who are the experts and

providers of consultancy services including know-how for installing and

commissioning of Mini Blast Furnace unique of its kind in India.

The accused Vivek Agarwala is a Director of M/s G.N. Coke Mfg. Co.

Pvt. Ltd. at Chirkunda, Dhanbad who had been in friendly terms and

previous business relations with the complainant and other Directors of

complainant company through M/s Anjaneya Ispat Ltd. another company in

which the complainants are also amongst Directors.

The abovenamed accused with others approached the complainant

and proposed to hire the consultancy services with technical know-how for

installing and commissioning of Mini blast furnace at Chirkunda, Dhanbad

and as such a written agreement between M/s Anjaneya Consultancy Pvt.

Ltd. represented by its Director Mr. Ajit Singh, the complainant and M/s G.N.

Coke Mfg. Co. Pvt. Ltd., represented by its Director Vivek Agarwalla, the

accused was duly signed and executed at Jamshedpur on 16.09.2005 to the

above effect wherein mutually agreed terms and conditions were stipulated.

In accordance with the aforesaid agreement, the accused had to pay

total amount of Rs.45,00,000/- as Consultancy Service Charges out of which

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Rs.5,00,000/- were to be paid at the time of signing the agreement termed

as down payment and Rs.2,00,000/- per month was to be paid by every 10 th

day of calendar month for next seven month, starting after one month of

signing of the agreement and the balance amount was to be paid in five

equal instalments after two months of production as stipulated vide Clause

C captioned as Consultancy Charges of the agreement.

The accused persons at the time of signing and executing the

aforesaid agreement, very cunningly with malafide intentions impressed

upon the complainant on the stake of their personal as well as previous

business relations with the complainants that they would pay the signing

amount of Rs.5,00,000/- and the subsequent instalments after obtaining the

loan from their bankers as applied for and which they would receive after

submitting the said agreement to the bank complying with other formalities

required and as such the accused requested the complainants to bear with

till such time, they receive the loan from the bank. The complainant

considering their good relations with the accused and as induced by them,

acceded to their request in good faith.

The complainants bearing with the false promise and assurances

made by the accused started providing the consultancy services including

technical know-how under their scope of work such as preparation of lay

out, Bar Chart having activities and schedule for Civil, Mechanical and

electrical work from designing stage upto commissioning of project

preparation of design of civil, structural and equipment design, Advise

regarding technical evaluation of tenders and helping to negotiate with

suppliers/ manufactuters to ensure supply of specified equipments and to

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get the equipments to be manufactured at site using drawings/consultancy

provided by the complainant. During all that time providing services, the

complainant also kept on reminding at time and again regarding the

consultancy charges, but the accused made excuses that the bank loan was

not sanctioned citing different reasons and assuring that if would be

sanctioned shortly and that the due consultancy charges amount shall be

paid. The accused also explained that they were investing in the plaint by

generating funds from their own resources as it was necessary to do so.

When the consultancy charges due to be paid to the complainants

increased to the tune of Rs.20,00,000/- then the complainants, becoming

impatient enquired from their end and came to know from their own

sources that the loan was already sanctioned to the accused long before

and it meant that accused purposely with malafide intentions were not

paying the money to the complainants and therefore, the complainants

caused to send a legal notice dated 17.08.2006 to the accused asking them

to make payment of the due amount with accrued interest within 10 days of

receipt of the notice and to resolve the matters of dispute amicably.

The accused persons sent a reply to the aforesaid notice through their

lawyer dated 06.09.2006 to the utter surprise and shock of the complainant,

denying their liability and stating that the agreement which was duly

executed on mutually agreed terms and conditions and was proposed by

the accused themselves was unenforceable and was a worthless piece of

paper for them and that the accused had repudiated it on 20.09.2005,

however, the reply of notice was dated 06.09.2006.

The accused persons from the very start of the deal acted with

With

malafide intention to cheat the complainant, they did not pay even the

down payment, which was sought to be paid at the time of signing of the

agreement, itself on the pretext of obtaining loan on which the complainant

believes good faith as the accused induced them with false promises to pay

the signing amount with monthly instalments after obtaining loan and thus

caused loss of money as well as loss of reputation to the complainant,

therefore the accused have committed offence under Section 120B/406/420

of the Indian Penal Code.

The agreement of aforesaid was duly signed and executed at Civil

Court, Jamshedpur and also in accordance of a clause stipulated in the

agreement by mutual consent the jurisdiction for any legal dispute arising

out of the said agreement shall be subject to jurisdiction of Jamshedpur.

The complainant-opposite party no.2 prayed before the learned Court to

take cognizance of the offence committed by the accused persons and to

issue process against them to take trial for the offences as aforesaid.

5. Learned counsel for the petitioner submits that the matters are arising

out of agreement between the petitioner and opposite party no.2. He

submits that the case is civil in nature and no criminality is made out and in

spite of that, the learned Court has been pleased to take cognizance and

directed to issue bailable and non-bailable warrant and issued processes

under Sections 82 and 83 Cr.P.C. He further submits that the petitioner is

the Director of the company and he cannot be vicariously liable. He submits

that no case of deception from very beginning is made out, so far as these

cases are concerned. He also submits that the agreement is alleged to be of

16.09.2005, however, the petitioner has already repudiated the said

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agreement on 20.09.2005 itself. To buttress this argument, he refers to

Annexure-2. He submits that thereafter on 17.08.2006, legal notice has

been issued and the complaint has been filed on 09.11.2006. He relied upon

the judgment passed by the Hon'ble Supreme Court in the case of M N G

Bharateesh Reddy v. Ramesh Ranganathan and another , reported in

2022 SCC OnLine SC 1061 . He refers paragraphs 13 to 17 of the said

judgment, which are quoted hereinbelow:

"13. The ingredients of the offence of cheating are spelt out in Section 415 of the IPC. Section 415 is extracted below:

"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".

Explanation - A dishonest concealment of facts is a deception within the meaning of this section."

14. The ingredients of the offence under Section 415 emerge from a textual reading. Firstly, to constitute cheating, a person must deceive another. Secondly, by doing so the former must induce the person so deceived to (i) deliver any property to any person; or (ii) to consent that any person shall retain any property; or (iii) intentionally induce 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 such an act or omission must cause or be likely to cause damage or harm to that person in body, mind, reputation or property.

15. Section 420 deals with cheating and dishonestly inducing delivery of property. It reads as follows:

"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 capable of converting 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."

16. In Hridaya Ranjan Prasad Verma v. State of Bihar, a two-judge bench of this Court interpreted sections 415 and 420 of IPC to hold that fraudulent or dishonest intention is a precondition to constitute the offence of cheating. The relevant

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extract from the judgment reads thus:

"14. On a reading of the section it is manifest that in the definition there are set forth two separate classes of acts which the person deceived may be induced to do. In the first place he may be induced fraudulently or dishonestly to deliver any property to any person. The second class of acts set forth in the section is the doing or omitting to do anything which the person deceived would not do or omit to do if he were not so deceived. In the first class of cases the inducing must be fraudulent or dishonest. In the second class of acts, the inducing must be intentional but not fraudulent or dishonest.

15. In determining the question it has to be kept in mind that the distinction between mere breach of contract and the offence of cheating is a fine one. It depends upon the intention of the accused at the time of inducement which may be judged by his subsequent conduct but for this subsequent conduct is not the sole test. Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction, that is the time when the offence is said to have been committed. Therefore it is the intention which is the gist of the offence. To hold a person guilty of cheating it is necessary to show that he had fraudulent or dishonest intention at the time of making the promise. From his mere failure to keep up promise subsequently such a culpable intention right at the beginning, that is, when he made the promise cannot be presumed."

(emphasis supplied)

17. In Dalip Kaur v. Jagnar Singh a two-judge bench of this Court held that a dispute arising out of a breach of contract would not amount to an offence of cheating under section 415 and 420. The relevant extract is as follows:

"9. The ingredients of Section 420 of the Penal Code are:

"(i) Deception of any persons;

(ii) Fraudulently or dishonestly inducing any person to deliver any property; or

(iii) To consent that any person shall retain any property and finally intentionally inducing that person to do or omit to do anything which he would not do or omit."

10. The High Court, therefore, should have posed a question as to whether any act of inducement on the part of the appellant has been raised by the second respondent and whether the appellant had an intention to cheat him from the very inception. If the dispute between the parties was essentially a civil dispute resulting from a breach of contract on the part of the appellants by non-refunding the amount of

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advance the same would not constitute an offence of cheating. Similar is the legal position in respect of an offence of criminal breach of trust having regard to its definition contained in Section 405 of the Penal Code.

(emphasis supplied)"

6. The said argument of the learned counsel for the petitioner is being

resisted by the learned counsel for opposite party no.2 and he submits that

the case against the petitioner is made out. He refers to the contents of the

complaint case and submits that even loan was there in favour of the

petitioner and in spite of that, opposite party no.2 has not paid the amount.

He further submits that the learned Court has rightly taken cognizance

against the petitioner as the case of cheating is made out. He relied upon

the judgment passed by the Hon'ble Supreme Court in the case of S.P.

Gupta v. Ashutosh Gupta, reported in (2010) 6 SCC 562.

7. The Court has gone through the contents of the complaint petition. It

is admitted position that the agreement was made on 16.09.2005 for certain

consultancy work to be taken from the petitioner by opposite party no.2.

8. Further, Annexure-2 is the document dated 20.09.2005, which

suggests that the said agreement was repudiated by the petitioner and the

agreement is said to be of 16.09.2005.

9. Further, opposite party no.2 waited for a long period and has sent

legal notice on 17.08.2006 and, thereafter, he has filed the complaint case.

When repudiation is already there after four days of the agreement, the

intention to cheat from very beginning is not made out, as has been held by

the Hon'ble Supreme Court in the case of M N G Bharateesh Reddy (supra).

10. In view of the above facts, to allow to continue the proceeding will

amount to abuse of process of law. It appears that for a civil wrong,

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criminal case has been filed and the learned Court has been pleased to take

cognizance against the petitioner.

11. The judgment relied by the learned counsel for opposite party no.2 is

not in dispute. In that case, the Hon'ble Supreme Court found that the

assurance has been given by the petitioner of that case to the complainant

that the property in question was free from all encumbrances and the

Hon'ble Supreme Court found that intention of cheating from very beginning

was there. The facts of the present case are otherwise and, thus, that

judgment is not helping opposite party no.2.

12. In view of the above facts, reasons and analysis, the entire criminal

proceeding in connection with C/1 Case No.1711 of 2006 including the order

taking cognizance dated 09.11.2006 as well as the order dated 11.04.2008,

and the orders dated 09.06.2008, 19.08.2008, 17.01.2009, 23.03.2009,

06.07.2009, 16.11.2009, 05.01.2011 and 05.06.2012, in connection with

C/1 Case No.1711 of 2006, pending in the Court of the learned Sub

Divisional Judicial Magistrate, Jamshedpur are quashed.