Maithan Steel And Power Limited ... vs The State Of Jharkhand
2023 Latest Caselaw 3595 Jhar

                                      1

       IN THE HIGH COURT OF JHARKHAND AT RANCHI
                    W.P.(Cr) No. 182 of 2023

     1. Maithan Steel and Power Limited through its Director Mritunjoy Chandra
     2. Kaushal Agarwalla
     3. Arjun Prasad Yadav
                                                    ...... Petitioners
                           Versus
     1.The State of Jharkhand
     2. Ajay Agarwal
                                             ...... Respondents

                    ---------

CORAM:        HON'BLE MR. JUSTICE SANJAY KUMAR DWIVEDI
For the Petitioners        : Mr. Sumeet Gadodia, Advocate
                            Mrs. Shilpi Sandil Gadodia, Advocate
                            Mr. Ankit Singh, Advocate
For the State              :Mr. Faisal Allam, A.C. to S.C. (Mines)-III

07/Dated: 21/09/2023

Notice upon the respondent no.2 has already been effected inspite

of that respondent no. 2 has not appeared and on 01.08.2023 with a view to

provide one more opportunity to the respondent no.2 the matter was adjourned.

Today when the matter was taken up on repeated calls, nobody responded on

behalf of the respondent no.2 which suggests that respondent no.2 has lost

interest in the matter. In view of that this matter is being heard in absence of

respondent no.2.

2. Heard Mr. Sumeet Gadodia, learned counsel for the petitioners

and Mr. Faisal Allam, learned counsel for the State.

3. This petition has been filed for quashing the entire criminal

proceeding in connection with Jugsalai P.S. Case No. 0006/2023 dated

10.01.2023 including order dated 16.11.2022 whereby direction has been given

in Complaint Case No. 5718 of 2022 for registration of F.I.R. under section

156(3) of the Cr.P.C, pending in the Court of learned Judicial Magistrate, Ist

Class, Jamshedpur.

4. The complaint case has been filed alleging therein that

Opposite Party and the accused persons were having business relationship and

the petitioner No. 2 and 3 approached the Opposite Party No.2 in the month of

April, 2018 for supply of Iron and Steel Scrap since Opposite Party No. 2 was

engaged in the business of trading and supplying of Iron and Steel Scrap.

Further, it was alleged that the price of the material was agreed

@ Rs. 21,250/- per MT and it was further agreed that on delivery of materials

the payment would be made by the accused persons

It was further alleged that on mutual understanding the

Opposite Party No. 2 from 1" April, 2018 to 16" November, 2018 supplied Iron

and Steel Scrap for a value of Rs. 63,48,007/- to the Petitioners for which

payment was to be made up to 27th November, 2018.

Further, it was admitted that out of total materials supplied of

Rs. 63,48,007/- payment was made by the Petitioners of a sum of Rs.

52,85,829/- and the balance amount of Rs. 10,63,177/- was alleged to have yet

not been paid to the Opposite Party.

On the basis of the aforesaid allegation, it has been alleged

that Petitioners have committed the offence of cheating and they had no

intention to make payment of the amount towards supply of materials.

5. Mr. Sumeet Gadodia, learned counsel for the petitioners

submits that the complaint case being Complaint Case No. 5718 of 2022 was

filed which was sent by the learned court under section 156(3) of Cr.P.C. and

pursuant to that Jugsalai P.S. Case No. 0006/2023 was registered. By way of

referring the said F.I.R. he submits that even reading of said F.I.R. no offence

under sections 406, 420 of I.P.C. is made out as there was no intention on the

part of petitioners to cheat the respondent no.2 from the very inception. He

submits that in the F.I.R. itself it has been admitted that out of total materials

supplied of Rs. 63,48,007/- payment has already made to the respondent no.2

of Rs. 52,85,829/-and only balance alleged amount of Rs. 10,63,177/- is

allegedly payable to the respondent no. 2. He submits that from the very

beginning the intention of cheating is not there and substantial amount has

already been paid, prima facie it appears that case has been filed for recovery

of a sum of Rs. 10,63,177/-. He submits that even if the entire allegations are

accepted to be true that is civil in nature for that criminal case has been filed.

He further submits that even the learned court without applying its judicial

mind has sent the complaint under section 156(3) of Cr.P.C which is against the

mandate of law as has been held by the Hon'ble Supreme Court as well as by

this Court. He submits that the case of the petitioners with regard to quashing

of F.I.R. is made out and to buttress his argument, he relied in the case of

"Vesa Holdings Private Limited and Another Vs. State of Kerala and

Others" (2015) 8 SCC 293. He refers to paras 12 and 13 which is quoted

here-in-below:-

"12. From the decisions cited by the appellant, the settled proposition of law is that every breach of contract would not give rise to an offence of cheating and only in those cases 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 other words for the purpose of constituting an offence of cheating, the complainant is required to show that the accused had fraudulent or dishonest intention at the time of making promise or representation. Even in a case where allegations are made in regard to failure on the part of the accused to keep his promise, in the absence of a culpable intention at the time of making initial promise being absent, no offence under Section 420 of the Penal Code, 1860 can be said to have been made out.

13. It is true that a given set of facts may make out a civil wrong as also a criminal offence and only because a civil remedy may be available to the complainant that itself cannot be a ground to quash a criminal proceeding. The real test is whether the allegations in the complaint disclose the criminal offence of cheating or not. In the present case there is nothing to show that at the very inception there was any intention on behalf of the accused persons to cheat which is a condition precedent for an offence under Section 420 IPC. In our view the complaint does not disclose any criminal offence at all. The criminal proceedings should not be encouraged when it is found to be mala fide or otherwise an abuse of the process of the court. The superior courts while exercising this power should also strive to serve the ends of justice. In our opinion, in view of these facts allowing the police investigation to continue would amount to an abuse of the process of the court and the High Court committed an error in refusing to exercise the power under Section 482 of the Criminal Procedure Code to quash the proceedings."

6. Relying on the said judgment, he submits that every breach of

contract cannot be subject matter of criminal proceeding. He further submits

that if a case of such nature is there and if the court is convinced, the Court is

empowered to quash the F.I.R at the initial stage itself.

7. Mr. Faisal Allam, learned counsel for the respondent-State

submits that the case is made out and in view of that this Court may not

interfere at this stage. He submits that in the case of " Jamshedpur Mineral

Wool Manufacturing Company Private Limited Works and Others Vs.

The State of Jharkhand and Another" in Cr.M.P. No. 1338 of 2021

which was decided by this Court on 20.09.2022 this Court has not interfered in

the matter and dismissed the said petition. He relied to para 9 of the said

Cr.M.P. wherein case of " Medchil Chemicals & Pharma (P) Ltd. Biological

E. Ltd & Ors. (200) 3 SCC 269 (Para. 15) was discussed. He submits that

identical is situation in the present case in view of that the F.I.R. may not be

quashed.

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

parties, the Court has gone through the contents of F.I.R. which suggests that

there is a commercial relationship between the petitioners and the respondent

no.2 with regard to supply of iron steel scraps and it was agreed to supply of

said to a total sum of Rs. 63,48,007/-. In para 4 of the complaint it has been

admitted that a sum of Rs. 52,85,829/- has already been paid out of Rs.

63,48,007/- and a sum of Rs. 10,63,177/- was not paid thereafter the

respondent no.2 issued legal notice.

9. In view of above, it is crystal clear that for commercial

transaction the said dispute if any has arisen and for that F.I.R. has been

registered. Prima facie it appears that for recovery of Rs. 10,63,177/- the said

case has been filed. If such a dispute is there the remedy of the respondent

no.2 is there by way of filing appropriate case before the Civil Court for

recovery of the said amount.

10. On receipt of said complaint the learned court has written

on the margin of the first page that police will investigate the case as per

provision of Section 156(3) of Cr.P.C for registration of F.I.R. This is not a

separate order and it has been merely endorsed on the said petition. The

Hon'ble Supreme Court in the case of " Priyanka Srivastava & Another Vs.

State of Uttar Pradesh & Others" reported in (2015) 6 SCC 287 held that

there should be application of mind by passing an order under section 156(3)

of Cr.P.C. In that case the Hon'ble Supreme Court has dealt with several

judgments and law as laid down in para 27, 29, 30 and 31 which are quoted

here-in-below:-

"27. Regard being had to the aforesaid enunciation of law, it needs to be reiterated that the learned Magistrate has to remain vigilant with regard to the allegations made and the nature of allegations and not to issue directions without proper application of mind. He has also to bear in mind that sending the matter would be conducive to justice and then he may pass the requisite order. The present is a case where the accused persons are serving in high positions in the Bank. We are absolutely conscious that the position does not matter, for nobody is above the law. But, the learned Magistrate should take note of the allegations in entirety, the date of incident and whether any cognizable case is remotely made out. It is also to be noted that when a borrower of the financial institution covered under the SARFAESI Act, invokes the jurisdiction under Section 156(3) CrPC and also there is a separate procedure under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, an attitude of more care, caution and circumspection has to be adhered to.

29. At this stage it is seemly to state that power under Section 156(3) warrants application of judicial mind. A court of law is involved. It is not the police taking steps at the stage of Section 154 of the Code. A litigant at his own whim cannot invoke the authority of the Magistrate. A principled and really grieved citizen with clean hands must have free access to invoke the said power. It protects the citizens but when pervert litigations takes this route to harass their fellow citizens, efforts are to be made to scuttle and curb the same.

30. In our considered opinion, a stage has come in this country where Section 156(3) CrPC applications are to be supported by an affidavit duly sworn by the applicant who seeks the invocation of the jurisdiction of the Magistrate. That apart, in an appropriate case, the learned Magistrate would be well advised to verify the truth and also can verify the veracity of the allegations. This affidavit can make the applicant more responsible. We are compelled to say so as such kind of applications are being filed in a routine manner without taking any responsibility whatsoever only to harass certain persons. That apart, it becomes more disturbing and alarming when one tries to pick up people who are passing orders under a statutory provision which can be challenged under the framework of the said Act or under Article 226 of the Constitution of India. But it cannot be done to take undue advantage in a criminal court as if somebody is determined to settle the scores.

31. We have already indicated that there has to be prior applications under Sections 154(1) and 154(3) while filing a petition under Section 156(3). Both the aspects should be clearly spelt out in the application and necessary documents to that effect shall be filed. The warrant for giving a direction that an application under Section 156(3) be supported by an affidavit is so that the person making the application should be conscious and also endeavour to see that no false affidavit is made. It is because once an affidavit is found to be false, he will be liable for prosecution in accordance with law. This will deter him to casually invoke the authority of the Magistrate under Section 156(3). That apart, we have already stated that the veracity of the same can also be verified by the learned Magistrate, regard being had to the nature of allegations of the case. We are compelled to say so as a number of cases pertaining to fiscal sphere, matrimonial dispute/family disputes, commercial offences, medical negligence cases, corruption cases and the cases where there is abnormal delay/laches in initiating criminal prosecution, as are illustrated in Lalita Kumari [(2014) 2 SCC 1 : (2014) 1 SCC (Cri) 524] are

being filed. That apart, the learned Magistrate would also be aware of the delay in lodging of the FIR."

11. In para 27 of the said judgment, the Hon'ble Supreme Court

has held that the learned Magistrate has to remain vigilant with regard to the

allegations made and the nature of allegations and not to issue direction

without proper application of mind. It has been further held that the said

application which has been filed under section 156(3) of Cr.P.C. should be

supported by an affidavit.

12. It appears from the complaint that there was no prior

invocation of section 154(3) of Cr.P.C. while filing the petition before the Court.

Thus prima facie it appears that 156 (3) Cr.P.C. order was passed in a routine

way without application of judicial mind and straightway the prayer is made for

sending the matter to the police under section 156(3) of Cr.P.C. which prima

facie suggests that only to avoid preliminary investigation by the police in the

light of Lalita Kumari v. State of U.P. (2014) 2 SCC 1 respondent no.2

chosen to file said complaint and in view of that it appears that the learned

court without application of judicial mind has passed order under section

156(3) of Cr.P.C.

13. It is well settled that every breach of contract would not give

rise to an offence of cheating and only in those cases breach of contract would

amount to cheating where there was any deception played at the very

inception. In the case in hand an amount of Rs. 52,85,829/- was already paid

out of agreed amount of Rs. 63,48,007/-. Thus it cannot be said that from the

very beginning the intention of cheating was there. Further the allegation is

civil in nature and the respondent no. 2 has already having remedy for a civil

wrong.

14. There is no doubt that the High Court sitting under section 482

of Cr.P.C. and under Article 226 of the Constitution of India is required to be

more vigilant and order should be passed keeping in mind circumspection

however, at the same time if such a dispute is there the Court is further

required to read the allegation in between lines as has been recently held by

the Hon'ble Supreme Court in the case of " Haji Iqbal @ Bala through

S.P.O.A. Vs. State of U.P. and Others" (2023 SCC Online 946. Haji Iqbal

15. The judgment relied by Mr. Faisal Allam, learned counsel for

the respondent-State the facts was otherwise. In the entire case the F.I.R. was

under challenge as substantial amount of Rs.38,43,051/- was not paid and only

an amount of Rs. 2,00,000/-and odd was paid and the assurance was there to

pay rest of the amount within 90 days of supply of articles however, the said

was not paid in that background the Court found that the criminality is also

made out. The facts of the present case is otherwise. There is no doubt that if

a criminality is made out, criminal and civil cases can go simultaneously but if

criminality is not made out to allow the criminal proceeding to continue will

amount the abuse of process of law.

16. In view of above facts, reasons and analysis and further

considering the judgment of the Hon'ble Supreme court in the case of "State

of Haryana and others V. Bhajan Lal and others" 1992 Supp. (1) SCC

335, the Court further finds that this is a case to exercise power under Article

226 of the Constitution of India. Accordingly, the entire criminal proceeding

arising out of Complaint Case No. 5718/2022 including the F.I.R. in connection

with Jugsalai P.S. Case No. 0006/2023 dated 10.01.2023, pending in the Court

of learned Judicial Magistrate, Ist Class, Jamshedpur, is quashed. Pending I.A,

if any, stands disposed of. Interim order is vacated.

17. It is made clear that if any civil proceeding is there that will be

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

( Sanjay Kumar Dwivedi, J.) Satyarthi/A.F.R.