Sri G Anjana Reddy vs State By Jeevan Bheemanagar ...
2021 Latest Caselaw 5510 Kant

                           1



       IN THE HIGH COURT OF KARNATAKA AT BENGALURU

        DATED THIS THE 06TH DAY OF DECEMBER, 2021

                         BEFORE

         THE HON'BLE MR. JUSTICE M. NAGAPRASANNA

             CRIMINAL PETITION No.8947 OF 2018

BETWEEN:

1.    SRI G.ANJANA REDDY
      S/O SRI G.LAKSHMI REDDY
      AGED ABOUT 43 YEARS,
      YARRAGUNTA VILLAGE,
      RAPTHADU MANDALAM
      ANATHAPUR DIST (AP)

2.    M/S BALAJI CONSTRUCTIONS LTD.,
      PLOT NO.164, NCHO, NCHO ROAD VILLA
      ALIZABETHA
      POST NET 738(891)
      LUSAKA ZAMBIA

      REPRESENTED BY ITS PROP:
      MR.G. ANJAN REDDY
                                             ... PETITIONERS

(BY SRI GANGADHAR R.GURUMATH, SR.ADV. A/W
    SRI CHANDRASHEKAR B.A., ADVOCATE (PHYSICAL HEARING))

AND

1.    STATE BY JEEVAN
      BHEEMANAGAR POLICE STATION
      BENGALURU CITY
      REPTD. BY S.P.P
      HIGH COURT BUILDING
      BENGALURU - 560 001.
                              2



2.   M/S AEROSTAR GLOBAL LOGISTICES
     INDIA PVT. LTD.,
     NO.5, 2ND FLOOR,
     CRIMSON COURT
     JEEVAN BHEEMANAGA MAIN ROAD
     BENGALURU-560075
     REPRESENTED BY PROPRIETOR
     MR.GOPI KRISHNAN NAIR SUNDARESAN
                                                ... RESPONDENTS

(BY SMT.NAMITHA MAHESH B.G., AGA FOR R1 (PHYSICAL
    HEARING),
   SRI STANLEY SAM, ADVOCATE FOR R2 (PHYSICAL HEARING))


      THIS CRIMINAL PETITION IS FILED UNDER SECTION 482 OF
CR.P.C., PRAYING TO QUASH THE ENTIRE PROCEEDING IN CRIME
NO.117/2016 PENDING ON THE FILE OF 4TH ADDITIONAL CHIEF
METROPOLITAN MAGISTRATE AT BANGALORE P/U/S 205, 500,
506, 34, 406, 120-B, 405, 416, 425, 417, 420, 409 AND 426 OF IPC.

    THIS CRIMINAL PETITION HAVING BEEN HEARD AND
RESERVED FOR ORDERS ON 18.11.2021, COMING ON FOR
PRONOUNCEMENT THIS DAY, THE COURT MADE THE FOLLOWING
:-
                            ORDER

The petitioners are before this Court calling in question the

proceedings in Crime No.117 of 2016 pending before the 4th

Additional Chief Metropolitan Magistrate, Bangalore alleging

offences punishable under Sections 205, 500, 506, 34, 406,

120-B, 405, 416, 425, 417, 420, 409 and 426 of the Indian

Penal Code.

2. Heard Sri Gangadhar R.Gurumath, learned senior

counsel along with Sri B.A.Chandrashekar, learned counsel for

the petitioners, Smt. B.G. Namitha Mahesh, learned Additional

Government Advocate for respondent No.1 and Sri Stanley Sam,

learned counsel for respondent No.2.

3. Brief facts leading to the filing of the present petition, as

borne out from the pleadings, are as follows:-

The respondent No.2/complainant - M/s Aerostar Global

Logistics India Private Limited is into the business of

International Shipping and Logistics Services. It is alleged that

the petitioners approached the complainant for its services

through its sales executive and after several rounds of

deliberations the 1st petitioner who is the owner of the 2nd

petitioner nominated the complainant for a sea export of one

truck with an excavator in the month of March, 2015. The said

shipment was to be executed through the supplier of the

accused M/s Sree Tirumala Enterprises who was the licensee for

such shipment. The cost of the shipment was also drawn and

invoice along with export documents were also generated.

4. Against the invoice it is alleged that the petitioners made

a payment of Rs.12,99,790/- which was equivalent to USD

19,000/- and the balance of USD 22,302/- was to be paid later.

The complainant undertakes four shipments from India to

Lusaka/Zambia through the consignee aforementioned. The

shipments were marketed by the complainant's Hyderabad

Branch Sales through its executive on certain mutually agreed

terms and conditions between the petitioners and the

complainant.

5. It is not in dispute that three shipments were marketed

in terms of the contract entered into between the parties. The

particular shipment moved from Chennai Port on 14-03-2015

and arrived at Port of Entry at Dar-es-Salaam on 28-03-2015.

Due to some formalities the transit shipment underwent a delay

for which the complainant to solve the issue with regard to

customs flew from Hyderabad to Tanzania on 19-04-2015. It is

alleged that on an assurance that payment for the entire journey

would be met by the petitioners the complainant had

undertaken the journey. For solving the issue with shipping line

and customs, the complainant stayed at Tanzania for about 17

days and such expenses were indicated to the petitioners.

6. The petitioners are said to have informed the

complainant that they are in need of the shipment urgently as it

was to be handed over to the consignee at Zambia and assured

the complainant that payment as promised will be made once

the delivery of shipment is done for which, again the

complainant sent his representative one Mr. Gopinath to

Tanzania to solve the issue who stayed there for 58 days,

completed the issue and closed the same. The said expenses of

stay and flight charges of the representative of the complainant

was sent to the petitioners.

7. It is alleged by the complainant that despite submission

of aforesaid invoice and flight tickets, as promised, the

petitioners did not pay the amount. When a demand was made

for such payment, it is further alleged that the complainant was

threatened. In those circumstances, the complainant caused a

legal notice upon the petitioners claiming outstanding amount of

USD 1,17,794/- along with interest. The notice was replied by

the petitioners in denial of the claim and laid the blame on the

complainant itself for having caused huge loss to the petitioners.

On receipt of the reply from the hands of the petitioners, the

complainant springs into action by registering a private

complaint invoking Section 200 of the Cr.P.C. On the strength

of the aforesaid averments the complaint is registered alleging

offences punishable as aforesaid. Pursuant to the said

complaint, a FIR is registered for the aforesaid offences in Crime

No.117 of 2016 on 22-04-2016. On issuance of notice to the

petitioners, the petitioners have knocked the doors of this Court

in the subject criminal petition.

8. The learned senior counsel representing the petitioners

would contend that the very contents of the complaint would

clearly indicate that it is a commercial transaction between the

parties and no offence as alleged can be even found in the

complaint. It was business transaction between the parties

which turned out to be little difficult for execution for the

reasons which are indicated in the legal notices exchanged

between the petitioners and the complainant. No criminality can

be attached to the act of the petitioners as the contention of the

complainant is breach of promise.

9. On the other hand, the learned counsel representing the

respondent No.2/complainant would submit that on the

assurance given by the petitioners once the complainant traveled

to Tanzania and stayed there for 17 days and thereafter, the

representative of the complainant stayed there for 58 days to

resolve the shipment issue between the parties and would,

therefore, contend that the complainant was induced into going

to Tanzania or sending its representative to Tanzania, which

inducement has resulted in huge loss to the complainant.

10. I have given my anxious consideration to the

submissions made by the respective learned senior counsel and

the learned counsel for the parties and perused the material on

record.

11. The afore-narrated facts are not in dispute. The fact

that the petitioners and respondent No.2/complainant entered

into contract for shipment of certain material is also not in

dispute. Several shipments were made by the complainant and

the business transaction was an ongoing process between the

petitioners and the complainant is also not in dispute. A

particular shipment which had to reach Zambia or Tanzania got

held up due to certain issues for which the complainant had to

resolve it being the transporter or shipment agency to shift the

products. The allegation is that the petitioners had promised the

complainant that they would reimburse flight and stay charges

of both the complainant and its representative who had visited

Tanzania twice and certain other incidental expenses that they

had incurred for such travel. The total amount claimed by the

complainant was USD 1,17,794/- . When the amount that the

complainant had to get was not realized, the complainant

registered a complaint invoking Section 200 of the Cr.P.C., when

the legal notices sent were replied by the petitioners in denial of

its claim. The relevant narrations of the complaint dated

24.02.2016 are extracted hereunder for the purpose of quick

reference:

"6. That, the complainant had done 04 shipments from India to Lusakd/Zambia through the consignee referred IEC (Import Export Certificate) holder (M/s SREE TIRUMALA ENTERPRISES AND M/s MYTHRI TRADING). The said invoices bearing Nos. AGL OEX/HYD/0005/14-15 dated 14-03-2015: AGL OEX HYD 0001/15-16 dated 02-04-2015: AGL OEX HYD 0002 14-15 dated 12-04-2015 and AGL OEX HYD 0010 15-16 dated 28-04-2015 are herewith produced as ANNEXURE 'B', B1', 'B2' & 'B3' respectively.

             ..        ..         ..          ..

           8.That,   these   Shipments    were    marketed    by
     Complainant's     Hyderabad     Branch    Sales   Executive

Mr.Prashanth and the terms and conditions were mutually agreed upon between the accused and the complainant. The respective emails attached along with the Annexure-B series support the contention.

9.That, the first shipment was executed in the month of March 2015 through License Holder M/s TIRUMALA ENTERPRISES via Chennai Port Shipment consisting of 01 Truck with 01 Excavator.

.. .. .. ..

11. That, the Complainant had sent all the relevant documents to the accused's handling agent who has processed all the formalities at the final stage.

12. That, the accused came back raising issues with customs to process further to take out the shipment from Tanzania Customs to move to delivery area Lusaka/ Zambia.

.. .. .. ..

14. After solving the issue with shipping line and customs with amendment of documents (TRA - Tanzania Revenue Authority) the complainant came back to India on 3- 05-2015. The complainant stayed there almost for 17 days to solve the issue and the expenses of such travel, stay and food was additional expenses incurred by the complainant which has also been communicated to the accused No.1 and 2 over phone wherein he also agreed to take care of such additional expenses which the accused No.1 and 2 has not paid trill date.

.. .. .. ..

16. In the meantime, before delivery of the shipment, the complainant has executed 03 more shipments. The payment for the same has also not been made by the accused Nos. 1 & 2.

.. .. .. ..

20. In the meantime, when the complainant was working with Tanzania Port Authority and Tanzania Road Authority to clear the issues, the A1 threatened the

complainant in his Bangalore Office through his Manager Ms. Manju using phone Nos. 9686215555 and 9448053888. The person who made the threatening call himself claimed to be the P.A of the then Hon'ble Home Minister (Mr. K.J. George() and insisted for the delivery of the shipment. When the complainant contacted the PA of the then Home Minister they were astonished to hear about such kind of a threat. The complainant made it clear that the shipment has been held by Tanzania Customs not by the complainant.

21. That the total outstanding balance is US $1,17,794.00 and with respect to this a legal notice has been sent to the A1 & A2 to clear the outstanding amount with interest @ 18% within three days from the receipt of this notice.

22. That, the Accused No.1 & 2 has cheated the complainant by not paying the promised amount of Rs.87,73,596/- (Rupees Eighty Seven Lakhs Seventy Three Thousand Five Hundred and Ninety Six only) [US $ 1,28,250.20 @ Rs.68.41 conversion rate] to the complainant towards the services satisfactorily performed by the complainant as per the invoice bearing No.AGL/OEX/HYD/0005/1445 dated 14-03-2015 and others (Annexure-B series).

.. .. .. ..

26. That, the accused No.1 committed the offence of cheating by personation in May 205 by falsely representing himself as 'Private Assistant (PA) to previous Hon'ble Minister of Home Affairs, Mr. K.J.George made a call to the complainant's staff named Mr. Manju from 9686215555 and 9448053888. The accused fraudulently and dishonestly did this fraudulent act for the purpose of getting the delivery of the shipment from the complainant."

(Emphasis added)

A perusal at the afore-extracted complaint makes it

unmistakably clear that it was a contract between the

petitioners and the complainant for shipping, in which business

the complainant was in. Therefore, it is a case of transaction and

execution that took place on mutually agreed terms and

conditions. There cannot be any inducement to a particular

party in mutually agreed terms and conditions. The allegation

that the petitioners have breached the promise of making

payment cannot be a ground to initiate criminal proceedings

against the petitioners for offences alleged under Sections 406

and 420 of IPC inter alia.

12. Section 406 of IPC deals with offence of criminal

breach of trust. For criminal breach of trust there must be an

entrustment of property. In the case at hand, as observed

hereinabove, it was a business transaction or a commercial

contract between the parties for execution of such contract.

There was no entrustment of property for an allegation of

criminal breach of trust. For an offence under Section 420 of

IPC, if it has to be proved, prima facie the ingredients under

Section 415 are required to be alleged. For an offence under

Section 420 of IPC there must be inducement against the victim

for entering into a transaction, out of which, the accused should

have made a gain. The circumstances narrated hereinabove

would clearly indicate that it was mutually agreed terms and

conditions that had to be executed by the complainant. Once it

is mutually agreed, there cannot be an element of inducement in

the said transaction. Therefore, the complaint as alleged cannot

link the offences punishable under Section 406 or Section 420 of

IPC against the petitioners.

13. The other offences that are alleged against the

petitioners are in terms of Section 205 of IPC which deals with

false personation. There is no allegation of impersonation in the

complaint. What is alleged is when the amount was demanded,

someone spoke on phone as Private Secretary to the then

Minister. This imaginary contention cannot lead to an allegation

under Section 205 of the IPC. Section 500 of IPC deals with

criminal defamation. The complaint nowhere alleges that the

complainant has been defamed in the transaction in the eyes of

the public by any publication. Section 500 of IPC is recklessly

included in the FIR. All other offences with regard to Section

506 and Section 120-B of IPC which deal with criminal

intimidation or criminal conspiracy cannot take the complaint

any further as it was breach of contract or a breach of terms as

is alleged by the complainant itself.

14. If the criminal trial is permitted to be continued for the

purpose of recovery of money the proceedings will result in

miscarriage of justice and permitting abuse of the process of law

at the behest of the complainant. This view of mine, in this

regard, is fortified, by the judgment of the Apex Court in the case

of ANAND KUMAR MOHANTTA AND ANOTHER v. STATE (NCT

OF DELHI) DEPARTMENT OF HOME AND ANOTHER1 wherein

the Apex Court holds as follows:

"21. The essence of the offence lies in the use of the property entrusted to a person by that person, in violation of any direction of law or any legal contract which he has made

(2019) 11 SCC 706

during the discharge of such trust. In the present case, the amount of rupees one crore was paid by the respondent complainant to the appellants as an interest-free deposit on the signing of the agreement. It was liable to be refunded to the complainant simultaneously on handing over of possession of the area of the owner's share to the owner in the group housing complex vide Clause 30(b) of the agreement dated 3-6-1993.

22. Two things are significant in the transaction between the parties. Firstly, that the occasion for returning the amount i.e. the developer handing over the possession of the area of the owner's share to the owner in the group housing complex, has not occurred. According to the appellants, the contract stands frustrated because no group housing can be legally built on 20, Feroz Shah Road, New Delhi since it falls in the Lutyens Bungalow Zone. Appellant 1 has therefore, terminated the contract. Further, the amount has been retained by him as a security because not only is there any handing over of constructed portion, the complainant has also got into part-possession of the property and has not handed it back. Also, the complainant has failed to get the property vacated from the tenant's possession.

23. We, thus find that it is not possible to hold that the amount of rupees one crore which was paid along with the development agreement as a deposit can be said to have been entrustment of property which has been dishonestly converted to his own use or disposed of in violation of any direction of law or contract by the appellant. The appellants have not used the amount nor misappropriated it contrary to any direction of law or contract which prescribes how the amount has to be dealt with. Going by the agreement dated 3-6-1993, the amount has to be returned upon the handing over of the constructed area to the owner which admittedly has not been done. Most significantly Respondent 2 has not demanded the return of the amount at any point of time. In fact, it is the specific contention of Respondent

2 that he has not demanded the amount because the agreement is still in subsistence.

24. We do not see how it can be contended by any stretch of imagination that the appellants have misappropriated the amount or dishonestly used the amount contrary to any law or contract. In any case, we find that the dispute has the contours of a dispute of civil nature and does not constitute a criminal offence.

25. Having given our anxious consideration, we are of the view that assuming that there is a security deposit of rupees one crore and that he has misappropriated the dispute between the two parties can only be a civil dispute.

26. In Indian Oil Corpn. v. NEPC (India) Ltd. [Indian Oil Corpn. v. NEPC (India) Ltd., (2006) 6 SCC 736 : (2006) 3 SCC (Cri) 188] , this Court observed as follows: (SCC p. 749, para

13) "13. ... Any effort to settle civil disputes and claims, which do not involve any criminal offence, by applying pressure through criminal prosecution should be deprecated and discouraged."

The Court noticed a growing trend in business circles to convert purely civil dispute into criminal cases.

27. We find it strange that the complainant has not made any attempt for the recovery of the money of rupees one crore except by filing this criminal complaint. This action appears to be mala fide and unsustainable.

... ... ... ...

30. It is necessary here to remember the words of this Court in State of Karnataka v. L. Muniswamy [State of Karnataka v. L. Muniswamy, (1977) 2 SCC 699 : 1977 SCC (Cri) 404] which read as follows: (SCC p. 703, para 7)

"7. ... In the exercise of this wholesome power, the High Court is entitled to quash a proceeding if it comes to the conclusion that allowing the proceeding to continue would be an abuse of the process of the Court or that the ends of justice require that the proceeding ought to be quashed. The saving of the High Court's inherent powers, both in civil and criminal matters, is designed to achieve a salutary public purpose which is that a court proceeding ought not to be permitted to degenerate into a weapon of harassment or persecution. In a criminal case, the veiled object behind a lame prosecution, the very nature of the material on which the structure of the prosecution rests and the like would justify the High Court in quashing the proceeding in the interest of justice."

(Emphasis supplied)

In a latest judgment the Apex Court in the case of ARCHANA

RANA v. STATE OF UTTAR PRADESH AND ANOTHER2 holds

as follows:

"7. Having heard the learned counsel appearing on behalf of the appellant and the learned counsel appearing on behalf of the respondent State and having gone through the averments in the complaint and the charge-sheet, even if the averments made in the complaint are taken on their face, they do not constitute the ingredients necessary for the offence under Sections 419 and 420 IPC. As observed and held by this Court in R.K. Vijayasarathy [R.K. Vijayasarathy v. Sudha Seetharam, (2019) 16 SCC 739 : (2020) 2 SCC (Cri) 454] , the ingredients to constitute an offence under Section 420 are as follows:

(i) a person must commit the offence of cheating under Section 415; and

(2021) 3 SCC 751

(ii) the person cheated must be dishonestly induced to

(a) deliver property to any person; or

(b) make, alter or destroy valuable security or anything signed or sealed and capable of being converted into valuable security.

Thus, cheating is an essential ingredient for an act to constitute an offence under Section 420 IPC.

8. "Cheating" is defined under Section 415 IPC. The ingredients to constitute an offence of cheating are as follows:

(i) there should be fraudulent or dishonest inducement of a person by deceiving him:

The person who was induced should be intentionally induced to deliver any property to any person or to consent that any person shall retain any property, or the person who was induced should be intentionally induced to do or to omit to do anything which he would not do or omit if he were not so deceived.

Thus, a fraudulent or dishonest inducement is an essential ingredient of the offence under Section 415 IPC. A person who dishonestly induced any person to deliver any property is liable for the offence of cheating.

9. Now, keeping in mind the relevant ingredients for the offences under Sections 419 and 420 IPC, as noted hereinabove, it is required to be considered whether the averments in the complaint taken on their face do constitute the ingredients necessary for the offences under Sections 419 and 420 IPC, as alleged.

10. Having gone through the complaint/FIR and even the charge-sheet, it cannot be said that the averments in the FIR and the allegations in the

complaint against the appellant constitute an offence under Sections 419 and 420 IPC. Whatever allegations are made for the offence with respect to inducement and/or even giving Rs 5,00,000 for obtaining the job, are made against the appellant's husband, co-accused. There are no allegations at all that the appellant herein induced the complainant to get the job and the amount of Rs 5,00,000 was given to the appellant herein. Therefore, even if all the allegations in the complaint taken at the face value are true, in our view, the basic essential ingredients of cheating are missing. Therefore, this was a fit case for the High Court to exercise the jurisdiction under Section 482 CrPC and to quash the criminal proceedings against the appellant herein for the offences under Sections 419 and 420 IPC. The High Court has failed to exercise the jurisdiction vested in it by not quashing the criminal proceedings against the appellant herein for the offences under Sections 419 and 420 IPC.

11. Now so far as the FIR/charge-sheet/criminal proceedings against the appellant herein for the other offences, namely, under Sections 323, 504 and 506 IPC are concerned, the High Court has rightly not quashed the criminal proceedings qua the said offences.

12. In view of the above and for the reasons stated above, the present appeal is allowed in part. The criminal proceedings against the appellant herein for the offences under Sections 419 and 420 IPC arising out of Case Crime No. 153 of 2016, registered with PS Kotwali, District Azamgarh, pending in the Court of the learned Chief Judicial Magistrate, Azamgarh are hereby quashed and set aside."

(Emphasis supplied)

Therefore, on the touchstone of the law laid down by the Apex

Court in the afore extracted cases, if the facts obtaining in the

case at hand are considered, permitting the trial against the

petitioners would result in miscarriage of justice and be an

abuse of the process of the Law.

15. Insofar as the judgment relied on by the learned

counsel appearing for the complainant in the case of PRITI

SARAF AND ANOTHER v. STATE OF NCT OF DELHI AND

ANOTHER - Criminal Appeal No.296 of 2021 decided on 10-

03-2021, the same would not be applicable to the facts of the

case at hand, as the Apex Court clearly holds that the material

on record would indicate that the accused therein had induced

the complainant to enter into a particular transaction which was

the subject matter of the said dispute. It is in that light the Apex

Court holds that the offence of cheating, if on the face of it is

noticed, it hardly matters if it is a commercial transaction

arising out of mutually agreed terms and conditions. These are

not the facts in the case at hand, as afore-narrated facts clearly

indicate that there was no criminal breach of trust or cheating or

any other offence that could be alleged against the petitioners.

16. The obliteration of the criminal trial would not come in

the way of the complainant taking recourse to any other

proceedings in accordance with law for recovery of money, if any,

from the hands of the petitioners.

17. For the aforesaid reasons, the following:

ORDER

(i) Criminal Petition is allowed.

(ii) The proceedings in Crime No.117 of 2016 pending

before the 4th Additional Chief Metropolitan

Magistrate, Bangalore stand quashed.

(iii) Quashing of the proceedings in Crime No.117 of 2016

will not come in the way of the complainant initiating

any proceedings, in accordance with law, for recovery

of money, if any.

The observations made in the course of this order are only

for the purpose of a decision to be rendered under Section 482 of

the Cr.P.C. Any other proceeding, if initiated by the complainant,

the judicial or quasi judicial fora considering the merits of the

claim of the complainant would not be influenced by the

observations made in the course of this order and consider such

claim independently.

Sd/-

JUDGE

bkp CT:MJ