Jharkhand High Court
Case New Holland Construction ... vs State Of Jharkhand on 9 January, 2024
Author: Sanjay Kumar Dwivedi
Bench: Sanjay Kumar Dwivedi
1 Cr.M.P. No. 2323 of 2019
IN THE HIGH COURT OF JHARKHAND AT RANCHI
Cr.M.P. No. 2323 of 2019
1. Case New Holland Construction Equipment (India) Pvt. Ltd., through
its Director Abhijit Gupta, Delhi
2. Abhijit Gupta
3. Avijit Samadder @ Abhijit Samadar
4. Ashish Nishikant Pradhan @ Ashish Pradhan
5. Ajay Aaneja
6. Chiranjib Kashyap
7. Dibyendu Ghosh ... Petitioners
-Versus-
1. State of Jharkhand
2. JOVE Motors Pvt. Ltd. through Rajeev Kumar Singh, Director at JOVE
Motors Pvt. Ltd., Patna ... Opposite Parties
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CORAM: HON'BLE MR. JUSTICE SANJAY KUMAR DWIVEDI
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For the Petitioners : Mr. A.K. Kashyap, Sr. Advocate
Mr. Amit Kumar, Advocate
Mrs. Rashmi Kumar, Advocate
For the State : Mr. Shiv Shankar Kumar, A.P.P.
For O.P. No.2 : Mr. P.K. Mukhopadhyay, Advocate
Mr. S.K. Dubey, Advocate
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07/09.01.2024 Heard Mr. A.K. Kashyap, learned senior counsel appearing for the
petitioners, Mr. Shiv Shankar Kumar, learned counsel for the State and
Mr. P.K. Mukhopadhyay, learned counsel for opposite party no.2.
2. This petition has been filed for quashing of the entire criminal
proceeding including the order dated 21.02.2019, whereby, Complaint Case
No.1326 of 2018 was transmitted for lodging of FIR under Section 156(3)
Cr.P.C. and for quashing the FIR being Telaiya P.S. Case No.109/2019
registered under Sections 406, 420 of the Indian Penal Code, pending in the
Court of the learned Chief Judicial Magistrate, Koderma. The cognizance
was taken on 10.05.2023 during the pendency of this petition, which was
challenged by way of filing I.A. No.7774 of 2023 and the same was allowed
vide order dated 29.09.2023. In view of that, the order taking cognizance
dated 10.05.2023 is also under challenge in this petition.
3. The complaint case was filed alleging therein that the complainant
company is engaged in the business of sales, spares and service support of
the petitioner company's construction equipment since 2015. It was alleged
that in terms of the offer letter dated 17.03.2015 spelling out specific details
Dealer Agreement dated 18.05.2016 was executed appointing the
complainant as a Dealer. It was further alleged that the complainant gave
bank guarantee of Rs.100 Lakhs and also paid Rs.22,50,000/- through RTGS
to the petitioner company. It was also alleged that the complainant acted in
terms with the agreement, but the petitioner company has cheated the
complainant and induced him to enter into the development agreement. It
was alleged that petitioner no.2 had assured the complainant that he will be
getting interest on Rs.1 Crore deposited on 30.09.2015 and in spite of
mails, interest has not been credited to complainant's account. It was
further alleged that the complainant was not provided with Dealership
agreement and only after repeated reminders on 03.07.2018, copy of the
same was made available. It was also alleged that the complainant had
been assured to be given Dealership for Jharkhand too and initially invoices
for Jharkhand were also raised in 2015. It was further alleged that not
giving copy of Dealer agreement, denying Dealership of Jharkhand and not
crediting interest on the Security amount is cheating on part of the
petitioner company. It was also alleged that wrong invoice has been created
by the petitioner company inasmuch as machine which was manufactured a
year ago was supplied to the complainant to supply to customer which the
customer has refused to take causing loss to the complainant. It was further
alleged that on 30.03.2018, the complainant received a mail mentioning the
area of operation of the complainant as only few areas in Bihar. It was
alleged that machines of Rs.1,75,00,000/- and spare parts of Rs.80,00,000/-
are lying in the office of the complainant. It was alleged that on account of
wrong billing the complainant received a notice under Jharkhand VAT Act,
2015 dated 18.01.2018 from the Commercial Taxes Department,
Government of Jharkhand. It was further alleged that the accused persons
have completely failed to conform to the terms and conditions agreed
between the parties and had intention to cheat from the beginning and
thereby the accused are liable to be punished under Sections 406 and 420
of the Indian Penal Code.
4. Mr. A.K. Kashyap, learned senior counsel appearing for the petitioners
submits that earlier the complainant had lodged Complaint Case No.1326 of
2018 on 03.10.2018, which was sent by the learned Court under Section
156(3) Cr.P.C. and subsequently FIR being Telaiya P.S. Case No.109 of 2019
was lodged. Mr. A.K. Kashyap, learned senior counsel appearing for the
petitioners submits that in the complaint, the complainant has alleged that
he was not given the dealership agreement and he has not been given
dealership for Jharkhand though the petitioner company had assured to
give dealership for Jharkhand and he has not been paid interest on the
security deposit of Rs.1 Crore and an equipment of one year old was sent to
him which the customer refused to receive and equipment, machinery and
spare parts are lying with him. By way of referring contents of the complaint
case and FIR, he submits that for a civil wrong, present complaint case was
filed which was transmitted for registration of FIR under Section 156(3)
Cr.P.C. By way of referring supplementary affidavit, filed by the petitioners,
he submits that for the grievance of interest, the complainant has instituted
Original Suit No.92 of 2018, which was dismissed vide order dated
27.01.2023 with observation that since arbitration clause is there, the
parties are kept at liberty to invoke arbitration clause and pursuant to that,
arbitration clause has been invoked by opposite party no.2, which is
pending before the learned Arbitrator. He submits that for a civil wrong, the
present case has been filed against the petitioners. He relied upon the
judgment passed by the Hon'ble Supreme Court in the case of Chandran
Ratnaswami v. K.C. Palanisamy, reported in (2013) 6 SCC 740.
Paragraph 5 of the said judgment is quoted hereinbelow:
"5. Cross-appeals were filed by the parties before the High
Court of Judicature of Madras and the High Court vide order
dated 5-8-2011 [C.G. Holdings (P) Ltd. v. Ramasamy
Athappan, CSAs Nos. 2 to 5 of 2009, order dated 5-8-2011
(Mad)] confirmed the order dated 13-8-2008 passed by the
Company Law Board, in the following terms:
"54. On analysis of various aspects, the Company
Law Board concluded that it was no longer possible
for the parties to carry out joint venture business of
CEPL as per the terms of joint venture agreement.
Only to have smooth exit of ORE and Athappan, the
Company Law Board passed the order directing CEPL
to repay Rs 75 crores and Rs 4 crores invested by
ORE Holdings and Athappan respectively. By perusal
of the order of the Company Law Board, in our
considered view, the Company Law Board has
elaborately gone into the issues arisen between the
parties even though those objections were filed under
Sections 397 and 398 of the Companies Act. As
demonstrated infra, there are commonality of issues
raised in both the company petitions, OS No. 90 of
2007 and the petition filed before ICC seeking for
arbitration.
55. Criminal cases: The learned counsel for the
appellants, Mr Karthik Seshadri contended that the
purport of the criminal proceedings are different and
initiating of criminal complaints does not amount to
waiver of arbitration. Of course, a party does not
waive his right to invoke arbitration by filing criminal
complaints. But what is relevant is the allegations in
the plethora of criminal complaints filed at the
instance of the appellants/father of KCP/respondents.
Both parties have made serious allegations of
cheating, forgery, falsification of records, etc., against
one another. Even before the Arbitral Tribunal, the
same allegations are made. The Hon'ble Supreme
Court and the Madras High Court have held that the
arbitration is not the appropriate forum if allegations
of fraud, misappropriation and complicated facts are
involved.
* * *
84. By a careful reading of the order of the
Company Law Board in CPs Nos. 65 and 76 of 2005, it
is clear that the alleged breach of Clause 9.2 has
been elaborately dealt with. The Company Law Board
dealt with not only the issues pertaining to the
oppression and mismanagement of CEPL and also the
larger issues arising between the parties. Only to
ensure smooth exit of ORE and Athappan, the order
dated 13-8-2008 came to be passed by the Company
Law Board. It is pertinent to note that KCP had not
challenged the said order of the Company Law Board.
* * *
112. As pointed out earlier, several criminal cases
have been filed and number of quash petitions also
came to be filed. Of course a party does not waive his
right to invoke the arbitration of the dispute by filing
of criminal complaints. When a party deliberately
chooses not to adopt a particular course of action, the
arbitration agreement becomes inoperative and as the
parties have waived or abandoned the arbitration
clause, by invoking the jurisdiction of the civil court,
the doctrine of waiver applies. The appellants had the
option to go before ICC even in 2005 but the
appellants chose to file CP No. 65 of 2005 and also
stoutly defended CP No. 76 of 2005 filed by ORE
Holdings. Even in CP No. 76 of 2005, the appellants
have not sought for reference to arbitration. By
agitating the matter before the Company Law Board
for nearly two years, and filing the civil suit in OS No.
90 of 2007 before the District Munsif's Court,
Kangeyam, by their conduct the appellants must be
deemed to have given a go-by to the arbitration
clause.
113. The parties have been engaged in pitched
battle before the Company Law Board and orders
were passed by the Company Law Board on 13-8-
2008. When the matter was pending before the
Company Law Board, the Company Law Board has
passed interim orders at various stages. The learned
counsel for the plaintiffs would submit that even
settlements/proposals have been made disclosing
parties intentions and discovery process has been
utilised. We find much force in the contention of the
respondents that Athappans and ORE have spent
considerable time and money before the Company
Law Board. Insofar as OS No. 90 of 2007 pending
before the District Munsif's Court, Kangeyam, the suit
is ready ripe for trial and the respondents are
diligently defending the same. Having initiated
proceedings before various forums, cannot now seek
to invoke arbitration as an additional remedy.
* * *
120. Company Appeals Nos. 21, 25 to 27 and 29 of
2009: The gist of order in CP Nos. 65 and 76 of 2005
dated 13-8-2008 is that:
CEPL, KCP and CG Holdings were to return Rs
75 crores to ORE and Rs 4 crores to Athappan.
The money was to be paid within a period of
one year starting 1-11-2008 with 25 per cent
of the same, being paid every year.
CEPL, KCP and CG Holdings were to utilise Rs
20 crores maintained in the fixed deposit at
State Bank of India, Erode to pay ORE and
Athappan. In the event of failure to pay the
money the property of VMC situated in
Coimbatore is to be transferred to ORE and
Athappan in the proportion of 17.15 acres and
7.80 acres respectively. Until then VML was
refrained from dealing with the property.
On receipt of money, ORE and Athappan
were to surrender their shares in CEPL and
CEPL shall accordingly be permitted to reduce
its share capital.
The parties were given liberty to approach
Company Law Board for limited purpose of
overcoming difficulties in implementation of the
said order.
* * *
145. As per order of the Company Law Board amount
invested by ORE has to be refunded which of course,
must be in accordance with applicable laws: be it
compliance with FEMA or other Regulations, ORE,
being a foreign investor, an entity of foreign origin, as
per FEMA, cannot own immovable property in India.
Compliance with FEMA or other applicable regulations
cannot be bypassed. By the order dated 3-8-2009,
the Company Law Board modified its earlier order
directing VML to execute the sale deed conveying
immovable properties of 17.15 acres to the nominee
of ORE and thereby modified its earlier order. The
order of the Company Law Board modifying its earlier
order directing VML to convey the properties to
'nominee of ORE' is to be modified to the effect that
any such conveyance should be subject to applicable
laws and regulations and with required
approval/permission to be obtained by ORE from the
competent authorities. The order of the Company Law
Board in CA No. 155 of 2008 is to be modified to that
extent.
146. ... Company Appeals Nos. 21 and 29 of 2009
preferred by ORE and Company Appeals Nos. 25 and
26 of 2009 preferred by N. Athappan and R. Athappan
are allowed. Company Appeal No. 27 of 2009 is
disposed of modifying the order of the Company Law
Board dated 3-8-2009 in CA No. 155 of 2008 to the
effect that the conveyance of immovable properties to
nominee of ORE is subject to all applicable laws and
regulations and if need be, with necessary
approval/permission to be obtained by ORE from the
competent authorities."
5. By way of referring the above judgment, Mr. A.K. Kashyap, learned
senior counsel appearing for the petitioners submits that the arbitration
clause no.28 is there in the agreement and in view of the above judgment,
the case of the petitioners is covered.
6. Mr. P.K. Mukhopadhyay, learned counsel appearing for opposite party
no.2 opposes the prayer on the ground that criminality is made out. He
submits that the petitioners have cheated the complainant and intention of
cheating was there from very beginning. He further submits that once
criminality is made out, criminal and civil cases, both can go simultaneously.
He also submits that bank guarantee was given to the petitioner company
by the complainant. On these grounds, he submits that this petition may
kindly be dismissed.
7. Mr. Shiv Shankar Kumar, learned counsel appearing for the State
submits that it appears that for a civil wrong, complaint case has been filed.
8. The Court has gone through the materials on record and finds that
every efforts have been made by the complainant to make out the case of
criminality by way of filing the complaint case, however, gist of the entire
case is that the complainant was not given dealership agreement and he
has not been given dealership for Jharkhand though the petitioner
company has assured to give dealership for Jharkhand and he has not been
provided interest on the security deposit of Rs.1 Crore and equipment of
one year old was sent to the complainant which was refused by the
customer and equipment, machinery and spare parts are lying with the
complainant. Apart from that, there is no other allegation and gist of the
allegation is already disclosed hereinabove.
9. It is an admitted position that for the interest part, the complainant
preferred Original Suit No.92 of 2018, which was dismissed by the learned
Civil Judge (Sr. Division)-III, Koderma vide order dated 27.01.2023 with
observation that in view of arbitration clause, the parties may invoke
arbitration clause and pursuant to that, the complainant invoked the said
clause and the matter has been referred to the learned Arbitrator and the
arbitration proceeding is still pending before the learned Arbitrator. In this
background, it is crystal clear that the matter is arising out of commercial
transaction and the entire nature of the complaint case is civil in nature,
which is further fortified in view of the order passed by the learned Civil
Judge (Sr. Division)-III, Koderma in Original Suit No.92 of 2018. Clause 28 is
the arbitration clause and pursuant to the observation by the learned Civil
Judge (Sr. Division)-III, Koderma, the arbitration clause has been invoked by
the complainant.
10. On query of the Court where is the terms and conditions with regard
to interest on deposit of the security money in the agreement,
Mr. Mukhopadhyay, learned counsel appearing for opposite party no.2 has
not been able to show that clause with regard to interest and that aspect
has already been dealt with by the learned Civil Judge (Sr. Division)-III,
Koderma in Original Suit No.92 of 2018.
11. In view of the above facts, reasons and analysis, the entire criminal
proceeding including the order dated 21.02.2019, whereby, Complaint Case
No.1326 of 2018 was transmitted for lodging of FIR under Section 156(3)
Cr.P.C. as well as the order taking cognizance dated 10.05.2023 and the FIR
being Telaiya P.S. Case No.109/2019 registered under Sections 406, 420 of
the Indian Penal Code, pending in the Court of the learned Chief Judicial
Magistrate, Koderma are quashed.
12. Accordingly, this petition is allowed and disposed of.
13. It is made clear that this order is meant for dealing with the present
complaint case and the said FIR and civil proceeding will be decided, in
accordance with law without prejudiced to this order.
14. Interim order, if any granted by this Court, is vacated.
(Sanjay Kumar Dwivedi, J.)
Ajay/ A.F.R.
