Citation : 2024 Latest Caselaw 806 Jhar
Judgement Date : 24 January, 2024
1 Cr.M.P. No. 638 of 2016
IN THE HIGH COURT OF JHARKHAND, RANCHI
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Cr.M.P. No. 638 of 2016
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1.Rajendra Singh
2.Binod Kumar Singh
3.Ajay Singh
4.Bijay Pratap Singh .... Petitioners
-- Versus --
The State of Jharkhand and Another .... Opposite Parties
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CORAM: HON'BLE MR. JUSTICE SANJAY KUMAR DWIVEDI
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For the Petitioners :- Mr. R.S. Mazumdar, Sr. Advocate
Mr. Nishant Roy, Advocate
For the State :- Mr. Fahad Allam, Advocate
For the O.P.No.2 :- Mr. Mahesh Tewari, Advocate
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4/24.01.2024 At the outset, it has been pointed out that the petitioner no.2
has left for his heavenly abode and in view of that this petition is confined to
petitioner nos.1,3 and 4.
2. Let name of petitioner no.2 be deleted from the array of the
petitioners.
3. Heard Mr. R. S. Mazumdar, the learned Senior counsel
appearing on behalf of the petitioners, Mr. Fahad Alam, the learned counsel
appearing on behalf of the respondent State and Mr. Mahesh Tewari, the
learned counsel appearing on behalf of the O.P.No.2.
4. This petition has been filed for quashing of the entire
criminal proceeding including the order taking cognizance dated 26.08.2015
in connection with C. P. Case No.3012 of 2014, pending in the court of
learned Judicial Magistrate, First Class, Dhanbad.
5. The complaint case has been filed alleging therein that the
accused persons with criminal conspiracy among a previous themselves
during first half of the year 2010 approached through accused No.5 Rakesh
Ranjan (Partner) before the complainant and repeatedly induced the
complainant to be agreed for Development Project of the land which the
accused persons fraudulently described through false forged document of
rent receipt and other documents of their land owned and acquired/
purchased by the grandfather of accused No. 1 to 4 (Plot No. 3045, 4046,
3047, 3048 and 3049 under Khata No. 53, Mouza Dhaiya, Mouza No. 6 within
the P.S & District Dhanbad).
It is further alleged that the complainant being the Director of the
company agreed to invest in the name of company for development project
of the land. It is pertinent to mention herein that the accused No. 5, namely,
Rakesh Ranjan and the complainant are the Director of the company, namely,
India Pvt. Ltd., Divij-Infrastructure Jamshedpur. Accused Rakesh Ranjan was
unable to provide fund for the company, but his greedy eye was over the
personal property of the complainant. Hence, he repeatedly induced the
complainant to agree for the project.
It is further alleged that the accused Rakesh Ranjan fraudulently
represented that he has checked all the papers of land and the complainant
agreed to the project as such one Registered Power of Attorney dated
22.09.2010 got executed between accused Rajendra Singh, Binod Kumar
Singh, Ajay Singh and Bijay Pratap Singh and accused Rakesh Ranjan and
the complainant. Subsequent 28.01.2011, registered Development
Agreement got executed between parties.
It is further alleged that accused No. 1 to 4 took Rs. 99,000/- from
the complainant after execution of development agreement. Thereafter the
accused person one or other ground started avoiding execution of
Development work, supply of original papers, etc. to the complainant. In
March, 2012, the accused No. 1 to 4 sent a notice through their advocate for
terminating the agreement dated 28.01.2011 and when the complainant
enquired he came to learn that the accused persons need hard cash and they
once again pressurized the complainant to give Rs. Sixty Lakhs in his
personal capacity for continuing the agreement. Upon that the complainant
simply said that he has no money in his personal capacity. However, Rs. 60
Lakhs was paid to the accused No. 1 to 4 and they executed a receipt
thereof. Thereafter also they delayed the project.
It is further alleged that recently in September/ October, 2014,
when the complaint went on to carry on project without assistant of accused
No. 5 and collected copies of the documents of the land in question, it was
detected that the accused No. 1 to 4 are owners of Plot No. 3045, 3046 and
3049, area 2.36 acres of Khata No. 53, but they fraudulently entered into
agreement with respect to Plot No. 3047, 3048 and 3304 of Khata No. 237.
In December, 2014, when the complainant went to the accused person
Rakesh Ranjan he admits his guilt and hand over copies of Mutation Case No.
507(II)/2009-10 and the attested copy of money receipt. The accused No. 1
to 4 denied to return the money.
6. Mr. Mazumdar, the learned Senior counsel appearing on
behalf of the petitioners submits that the petitioners are the land owners and
for development of the said land, the development agreement dated
28.01.2011 has been entered into between the petitioners and the O.P.No.2.
He submits that prior to that development agreement, the registered power
of attorney dated 22.09.2010 has been executed between the parties. He
submits that in the light of the terms and conditions a sum of Rs.99,000/- by
way of draft was paid by the developer company to the land owners who are
the petitioners herein. In view of clause-8 the said amount was to be
returned back at the time of initiation of the construction work. He submits
that in spite of that provision, the work was not started and in view of that,
the notice dated 15.3.2012 was issued by the land owners to the O.P.No.2 as
to why they did not work on the basis of such agreement which deemed to
be rescinded on 15.03.2012. He further submits that the said revocation was
also registered on 30.03.2012. He submits that the allegations are made that
after revocation of the registered deed a sum of Rs.60 lacs (sixty lacs) as
cash was paid to the petitioners on 01.04.2012 which is beyond the
imagination. He further submits that even the said receipt is found to be
forged as has been disclosed by the handwriting expert as contained in
Annexure-6. He further submits that the lands were also mutated, however,
it appears that in Mutation Case No.507 (ii) of 2009-2010, the plot nos.3047
and 3048 were left out inadvertently. He submits that has been rectified by
the Circle Officer, Dhanbad by order dated 09.03.2017 which has been
brought on record by way of filing supplementary affidavit. He submits that
in view of the above facts if any case is made out, that is civil in nature and
for which criminal case has been filed and to buttress his such argument, he
relied in the case of "Sarabjeet Kaur v. State of Punjab" (2023)5 SCC
360 and refers to paragraph nos.8, 12 and 13 of the said judgment which
are quoted below:
"8. On the material placed on record by the parties, it is evident that an agreement to sell was executed by the appellant in favour of the wife of Respondent 2, namely, Sarabjit Kaur for sale of plot measuring 1 (kanal). The agreement to sell specifically mentions the fact that the appellant/the vendor gets entitled to the property on the basis of the agreement to sell executed in her favour by Malkit Kaur on 27-5-2013. The last date fixed for registration of sale deed was 25-6-2014 which was extended to 24-12-2014. There is nothing placed on record by the complainant or the State to show that besides filing of the criminal complaint, Respondent 2 had initiated any civil proceedings for execution of sale deed on the basis of agreement to sell or in the alternative return of the earnest money.
12. There is nothing on record to suggest that any notice was issued by Respondent 2 or the vendee to the appellant to get the sale deed registered just either before expiry of the last date fixed for execution of sale deed or immediately thereafter. No civil proceedings were also initiated rather Respondent 2 proceeded only by filing complaints with the police two of which were earlier filed. Had there been any civil proceedings initiated, the question of readiness and willingness of the vendee is also an aspect to be examined by the court.
13. A breach of contract does not give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction. Merely on the allegation of failure to keep up promise will not be enough to initiate criminal proceedings. From the facts available on record, it is evident that Respondent 2 had improved his case ever since the first complaint was filed in which there were no allegations against the appellant rather it
was only against the property dealers which was in subsequent complaints that the name of the appellant was mentioned. On the first complaint, the only request was for return of the amount paid by Respondent 2. When the offence was made out on the basis of the first complaint, the second complaint was filed with improved version making allegations against the appellant as well which was not there in the earlier complaint. The entire idea seems to be to convert a civil dispute into criminal and put pressure on the appellant for return of the amount allegedly paid. The criminal courts are not meant to be used for settling scores or pressurise parties to settle civil disputes. Wherever ingredients of criminal offences are made out, criminal courts have to take cognizance. The complaint in question on the basis of which FIR was registered was filed nearly three years after the last date fixed for registration of the sale deed. Allowing the proceedings to continue would be an abuse of process of the court."
7. Relying on the above judgment, he submits that unless
fraudulent intention is there from the very beginning, the case of cheating is
not made out. He further submits that if the breach of contract is there, only
civil proceeding can be maintained and to buttress such argument, he relied
in the case of "International Advanced Research Centre for Powder
Metallugy and New Materials (ARCI) And Others v. Nimra Cerglass
Technics Private Limited and Another", (2016) 6 SCC 348 and he
refers to paragraph nos. 15, 16, 22 and 27 of the said judgment, which reads
as under:
"15. The essential ingredients to attract 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. The making of a false representation is one of the essential ingredients to constitute the offence of cheating under Section 420 IPC. In order to bring a case for the offence of cheating, it is not merely sufficient to prove that a false representation had been made, but, it is further necessary to prove that the representation was false to the knowledge of the accused and was made in order to deceive the complainant.
16. The distinction between mere breach of contract and the cheating would depend upon the intention of the accused at the time of alleged inducement. If it is established that the intention
of the accused was dishonest at the very time when he made a promise and entered into a transaction with the complainant to part with his property or money, then the liability is criminal and the accused is guilty of the offence of cheating. On the other hand, if all that is established is that a representation made by the accused has subsequently not been kept, criminal liability cannot be foisted on the accused and the only right which the complainant acquires is the remedy for breach of contract in a civil court. Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown at the beginning of the transaction. In S.W. Palanitkar v. State of Bihar [(2002) 1 SCC 241 : 2002 SCC (Cri) 129] , this Court held as under: (SCC p. 250, para 21) "21. ... In order to constitute an offence of cheating, the intention to deceive should be in existence at the time when the inducement was made. It is necessary to show that a person had fraudulent or dishonest intention at the time of making the promise, to say that he committed an act of cheating. A mere failure to keep up promise subsequently cannot be presumed as an act leading to cheating."
The above view in Palanitkar case [(2002) 1 SCC 241 : 2002 SCC (Cri) 129] was referred to and followed in Rashmi Jain v. State of U.P. [(2014) 13 SCC 553 : (2014) 5 SCC (Cri) 751]
22. By an analysis of the terms and conditions of the agreement between the parties, the dispute between the parties appears to be purely of civil nature. It is a settled legal proposition that criminal liability should not be imposed in disputes of civil nature. In Anil Mahajan v. Bhor Industries Ltd. [(2005) 10 SCC 228 : (2006) 1 SCC (Cri) 746] , this Court held as under: (SCC p. 231, paras 6-7) "6. ... A distinction has to be kept in mind between mere breach of contract and the offence of cheating. It depends upon the intention of the accused at the time of inducement. The subsequent conduct is not the sole test. Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent, dishonest intention is shown at the beginning of the transaction.
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8. The substance of the complaint is to be seen. Mere use of the expression 'cheating' in the complaint is of no consequence. Except mention of the words 'deceive' and 'cheat' in the complaint filed before the Magistrate and 'cheating' in the complaint filed before the police, there is no averment about the deceit, cheating or fraudulent intention of the accused at the time of entering into MoU wherefrom it can be inferred that the accused had the intention to deceive the complainant to pay. ... We need not go into the question of the difference of the
amounts mentioned in the complaint which is much more than what is mentioned in the notice and also the defence of the accused and the stand taken in reply to notice because the complainant's own case is that over rupees three crores was paid and for balance, the accused was giving reasons as above- noticed. The additional reason for not going into these aspects is that a civil suit is pending inter se the parties for the amounts in question."
27. As per the terms of the technology transfer agreement, ARCI has to conduct performance guarantee tests and in those tests when ARCI was unsuccessful in achieving the targeted specifications, ARCI cannot be said to have acted with dishonest intention to cheat the respondent. The appellant ARCI is a structure of Scientists, Team Leader and Associate Director and it is the team leader who actually executes the project, the job of Associate Director and Director is to monitor/review progress of the project. Appellants 2 and 3 who were the Associate Director and Director of ARCI respectively were only monitoring the progress of the project cannot be said to have committed the offence of cheating. In the facts of the present case, in our view, the allegations in the complaint do not constitute the offence alleged and continuation of the criminal proceeding is not just and proper and in the interest of the justice, the same is liable to be quashed."
8. Mr. Mazumdar, the learned Senior counsel appearing on
behalf of the petitioners submits that breach of contract cannot be subject
matter of criminal proceeding and to buttress his such argument, he relied in
the case of "Mitesh Kumar J. Sha v. State of Karnataka and Others"
(2022) 14 SCC 572 and relied on paragraph nos.25 to 27, 34, 35 and 44 of
the said judgment which are quoted as under:
"25. In order to ascertain the veracity of contentions made by the parties herein, it is imperative to firstly examine whether the relevant ingredients of offences which the appellants herein had been charged with, are prima facie made out. The relevant sections read as follows:
"405. Criminal breach of trust.--Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or wilfully suffers any other person so to do, commits "criminal
breach of trust".
Explanation 1.--A person, being an employer of an establishment whether exempted under Section 17 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952), or not who deducts the employee's contribution from the wages payable to the employee for credit to a Provident Fund or Family Pension Fund established by any law for the time being in force, shall be deemed to have been entrusted with the amount of the contribution so deducted by him and if he makes default in the payment of such contribution to the said Fund in violation of the said law, shall be deemed to have dishonestly used the amount of the said contribution in violation of a direction of law as aforesaid.
Explanation 2.--A person, being an employer, who deducts the employees' contribution from the wages payable to the employee for credit to the Employees' State Insurance Fund held and administered by the Employees' State Insurance Corporation established under the Employees' State Insurance Act, 1948 (34 of 1948), shall be deemed to have been entrusted with the amount of the contribution so deducted by him and if he makes default in the payment of such contribution to the said Fund in violation of the said Act, shall be deemed to have dishonestly used the amount of the said contribution in violation of a direction of law as aforesaid.
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406. Punishment for criminal breach of trust.--Whoever commits criminal breach of trust shall be punished with imprisonment of either description for a term which may extend to three years, or with fine, or with both.
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419. Punishment for cheating by personation.--Whoever cheats by personation shall be punished with imprisonment of either description for a term which may extend to three years, or with fine, or with both.
420. Cheating and dishonestly inducing delivery of property.-- Whoever cheats and thereby dishonestly induces the person deceived to deliver any property to any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and which is capable of being converted into a valuable security, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine."
26. In the instant case, the complaint levelled against the appellants herein is one which involves commission of offences of criminal breach of trust and cheating. While a criminal breach of trust as postulated under Section 405 of the Penal Code, 1860, entails misappropriation or conversion of another's property for one's own use, with a dishonest intention, cheating too on the
other hand as an offence defined under Section 415 of the Penal Code, 1860, involves an ingredient of having a dishonest or fraudulent intention which is aimed at inducing the other party to deliver any property to a specific person. Both the sections clearly prescribed "dishonest intention", as a precondition for even prima facie establishing the commission of the said offences. Thus, in order to assess the relevant contentions made by the parties herein, the question whether actions of the appellants were committed in furtherance of a dishonest or fraudulent scheme is one which requires scrutiny.
27. Coming to the facts of the case at hands, the contested contention between the parties is that the builder company had sold four excess flats beyond its share, in terms of the JDA and supplementary agreement entered into between the parties. Respondent 2 contends that builder company which was entitled to sell only 9 flats in its favour, has instead executed sale deed for 13 flats in total. Thus, the company simply could not have sold the flats beyond 9 flats for which it was authorised and resultantly cannot evade criminal liability on a mere premise that a civil dispute is already pending between the parties.
34. Although, there is perhaps not even an iota of doubt that a singular factual premise can give rise to a dispute which is both, of a civil as well as criminal nature, each of which could be pursued regardless of the other. In the instant case, the actual question which requires consideration is not whether a criminal case could be pursued in the presence of a civil suit, but whether the relevant ingredients for a criminal case are even prima facie made out. Relying on the facts as discussed in previous paragraphs, clearly no cogent case regarding a criminal breach of trust or cheating is made out.
35. The dispute between the parties, could at best be termed as one involving a mere breach of contract. Now, whether and what, is the difference between a mere breach of contract and an offence of cheating has been discussed in the ensuing paragraphs.
44. Moreover, this Court has at innumerable instances expressed its disapproval for imparting criminal colour to a civil dispute, made merely to take advantage of a relatively quick relief granted in a criminal case in contrast to a civil dispute. Such an exercise is nothing but an abuse of the process of law which must be discouraged in its entirety."
9. Relying on the above judgments, he submits that in view of
the above judgments, the case of the petitioners is fully covered and as such
the entire criminal proceeding may kindly be quashed.
10. The said argument of Mr. Mazumdar, the learned Senior
counsel appearing on behalf of the petitioners is resisted by Mr. Mahesh
Tewari, the learned counsel appearing on behalf of the O.P.No.2 on the
ground that the filing of the supplementary affidavit itself suggest that the
intention of cheating from the very beginning is there as those plots were not
mutated in the name of the petitioners. He further submits that in the
agreement dated 28.01.2011 it was agreed between the parties that for
three years, nobody will take any action and in view of that, the revocation
of power of attorney by the petitioners itself is illegal. He submits that in
these background, the O.P.No.2 has paid a sum of Rs.60 lacs in cash to the
petitioners and that cannot be appreciated by the High Court sitting under
section 482 of the Cr.P.C. He refers to Mutation Case No.507 (ii) of 2009-
2010 and submits that in this order dated 09.03.2017, two of the plots are
not mentioned in favour of the petitioners and in view of that, the case is
made out against the petitioners. He submits that even if the civil nature of
proceeding is there and criminality is made out, the criminal case can be
maintained and to buttress his such argument, he relied in the case of "Priti
Saraf and Another v. State (NCT of Delhi) and Another" (2021) 16
SCC 142 and refers to paragraph nos.31 and 34 of the said judgment which
are quoted below:
"31. In the instant case, on a careful reading of the complaint/FIR/charge-sheet, in our view, it cannot be said that the complaint does not disclose the commission of an offence. The ingredients of the offences under Sections 406 and 420IPC cannot be said to be absent on the basis of the allegations in the complaint/FIR/charge-sheet. We would like to add that whether the allegations in the complaint are otherwise correct or not, has to be decided on the basis of the evidence to be led during the course of trial. Simply because there is a remedy provided for breach of contract or arbitral proceedings initiated at the instance of the appellants, that does not by itself clothe the court to come to a conclusion that civil remedy is the only remedy, and the initiation of criminal proceedings, in any manner, will be an abuse of the process of the court for exercising inherent powers of the High Court under Section 482CrPC for quashing such proceedings.
34. So far as initiation of arbitral proceedings is concerned,
there is no correlation with the criminal proceedings. That apart, the High Court has not even looked into the charge-sheet filed against the second respondent which was on record to reach at the conclusion that any criminal offence as stated is prima facie being made out and veracity of it indeed be examined in the course of criminal trial."
11. Relying on the above judgments, he submits that if the
nature of the case is civil as well as criminal, the criminal case can be
maintained. On these grounds, he submits that this petition may kindly be
dismissed. He further submits that in the development agreement, plot
nos.3044, 3045, 3046, 3047, 3048 and 3049 are there and two plots later on
not found in the name of the petitioners.
12. Mr. Allam, the learned counsel appearing on behalf of the
respondent State submits that the learned court has taken cognizance
pursuant to the complaint case.
13. It is an admitted fact that the petitioners are at least at the
time of entering into the agreement were the owners of the plot nos.3046
and 3049 of Khata No.53, however, the documents on record brought by way
of filing supplementary affidavit suggest that they were also the owners of
plot nos.3047 and 3048 and by the order dated 09.03.2017, the Circle
Officer, Dhanbad has clearly stated that in Mutation Case No.507(ii) of 2009-
2010, inadvertently plot nos.3047 and 3048 were not recorded. It is further
an admitted position that there was development agreement between the
petitioners and the O.P.No.2 dated 28.01.2011 and prior to that, the power
of attorney was executed between the parties on 22.09.2010. The said
power of attorney was revoked by notice dated 15.03.2012 and the said
revocation was further registered on 30.03.2012. The allegations are made
that thereafter on 01.04.2012, a sum of Rs.60 lacs was paid in cash by the
O.P.No.2 to the petitioners. When the revocation has already been made on
15.03.2012 and 30.03.2012, how such a huge amount would be paid on the
second day of the registered revocation of power of attorney. Further the
document on the record suggest that in the said receipt the hand writing
were not matching as has been disclosed by the Document Examiner
contained in Annexure-6. In the solemn affirmation, on the query of the
Court, the O.P.No.2 clearly stated that the petitioners are the land owners
and the construction has not been started by the company. It was further
stated in the solemn affirmation that within three years the work was
required to be completed. The allegations are made that since for a long
period of time nothing was done and thereafter the petitioners have revoked
the power of attorney. All these facts clearly suggest that if there is any
dispute that is civil in nature and if such facts are there, the High Court is
further having the responsibility to look into the things by way of reading in
between the lines as has been held by the Hon'ble Supreme Court in the
case of "Haji Iqbal @ Bala through S.P.O.A. v. State of Uttar Pradesh
and Others, 2023 SCC Online SC 946. Imparting the criminal colour to a
civil dispute made merely to take advantage of a relatively quick relief
granted in the criminal case in contrast with the civil dispute has been
deprecated by the Court time and again and the judgments relied by Mr.
Mazumdar, the learned Senior counsel appearing on behalf of the petitioners
in the case of "Sarabjeet Kaur v. State of Punjab" , "International
Advanced Research Centre for Powder Metallugy and New Materials
(ARCI) And Others v. Nimra Cerglass Technics Private Limited and
Another" and Mitesh Kumar J. Sha v. State of Karnataka and
Others" (supra) are helping the petitioners. Further there is no doubt that
the High Cout is required to exercise its jurisdiction under section 482 Cr.P.C
with circumspection that is not in dispute and if the criminal case is made out
the criminal case and civil case both can go simultaneously, however, if the
criminal case is not made out, and to allow the present proceeding to
continue further will amount to abuse of process of law.
14. The ratio laid down by the Hon'ble Supreme Court in the
case of "Priti Saraf and Another v. State (NCT of Delhi) and
Another"(supra) is not in dispute and in the fact of that case that order has
been passed. In that case, the property was in the ownership of the second
respondent. The said property was mortgaged with the State Bank of Patiala
and the total legal liability payable to the Bank was Rs.18 crores. That in
order to clear the said dues, the second respondent hatched a conspiracy
with broker Ashok Kumar so as to cheat and defraud the appellant
complainants and to further misappropriate the amounts paid by the
complainants as part of the deal, the second respondent breached the trust
of the appellant complainants deliberately and falsely stating to the appellant
complainants that the second respondent would be liable to pay a sum of
Rs.25.50 crores to the complainant if the deal is not carried forward by the
second respondent and in that background that case has been lodged and it
was a clear case of cheating and on that background, the Hon'ble Supreme
Court has passed the said order. In view of that, that judgment is not helping
the O.P.No.2 as the facts of this case are otherwise.
15. In view of the above facts, reasons and analysis, entire
criminal proceeding including the order taking cognizance dated 26.08.2015
in connection with C. P. Case No.3012 of 2014, pending in the court of
learned Judicial Magistrate, First Class, Dhanbad are quashed. This petition is
allowed and disposed of.
16. It is made clear that if any civil proceeding is there, that will
be decided in accordance with law without prejudice to this order as this
order is passed considering the parameters of criminal case and the power to
exercise section 482 Cr.P.C.
17. Pending petition if any also stands disposed of accordingly.
( Sanjay Kumar Dwivedi, J.)
SI/, A.F.R.
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