Mr Rajesh Parekh vs State Of Karnataka
2021 Latest Caselaw 5050 Kant

 IN THE HIGH COURT OF KARNATAKA AT BENGALURU

     DATED THIS THE 30 T H DAY OF NOVEMBER, 2021

                        BEFORE

THE HON'BLE MR. JUSTICE SREENIVAS HARISH KUMAR

       CRIMINAL PETITION NO.4310 OF 2020


BETWEEN:

1.    Mr. Rajesh Parekh,
      S/o Jamnadas Parekh,
      Aged about 67 years,
      President & Chief Executive Officer,
      M/s. Parekh Industries Limited,
      No.51/3, Prince House,
      Marol Co-op. Ind us. Estate,
      M.V.Road, Andheri(E)
      Mumb ai-400059.

2.    Mrs. Shubhad a Gawde,
      W/o Prakash Gawde,
      Aged about 51 years,
      Managing Director,
      M/s. Parekh Industries Limited,
      No.51/3, Prince House,
      Marol Co-op. Ind us. Estate,
      M.V.Road, Andheri(E),
      Mumb ai-400059.

3.   Mrs. Nayna Rajesh Parekh,
     W/o Mr. Rajesh Parekh,
     Aged about 65 years,
     Director, M/s. Parekh Industries Limited,
     No.51/3, Prince House,
     Marol Co-op. Ind us. Estate,
     M.V.Road, Andheri(E),
     Mumb ai-400059.
                                           ...Petitioners
(By Sri B.S.Radhanand an, Advocate)
                                 :: 2 ::



AND:

1.     State of Karnataka
       Peenya Police Station,
       Beng aluru City,
       Represented by
       Special Pub lic Prosecutor,
       Hig h Court of Karnataka,
       Beng aluru-560001.

2.     Mr. Ketan S.Dhruv
       S/o Suresh I. Dhruv
       Aged about 47 years,
       No.6/1, Plot No.21A,
       1 s t Cross, 1 s t Phase,
       Peenya Ind ustrial Area,
       Beng aluru-560058.
                                           ...Respondents
(By Sri B.J.Rohith, HCGP, for R1;
Sri Kiran S Javali, Advocate, for Sri Mad hu N. Rao,
Advocate for R2)

       This Criminal Petition is filed under Section 482
of Cr.P.C. praying to q uash and set aside the criminal
proceedings        in Cr.No.207/2019 dated 21.06.2019 for
offence     punishable    under        Sections   406,   409,   420,
120B read with Section 34 of IPC which culminated
into continuation of the criminal proceedings on the
file   of    the     Hon'b le     IV      ACMM,    Bengaluru      in
C.C.No.29369/2019 at Annexures-A, B and C lodged
against the p etitioners.


       This Criminal Petition coming on for admission
this d ay, the Court made the following:
                                :: 3 ::


                              ORDER

The petitioners who have been charge sheeted

for the offences under sections 406, 409, 420,

120B read with section 34 IPC have sought

quashing of the proceedings against them in

C.C.29369/2019 on the file of IV ACMM,

Bengaluru.

2. The second respondent made a report to

the first respondent police for registration of FIR

against the petitioners. The first petitioner is the

President and Chief Executive Officer, the second

petitioner is the Managing Director and the third

petitioner is a Director of a company called Parekh

Industries Limited. The second respondent is

Director of another company called Bangalore

Refinery (P) Limited. Both the companies are into

the business of manufacturing precious metals.

Respondent No.2 is also a close relative of the

petitioners. The second respondent in his report :: 4 ::

to the police stated that his company and Parekh

Industries started having mutual business

transactions in the year 2015 for trading in

precious metals and chemicals. In the course of

these dealings, Parekh Industries fell in due of

Rs.7,36,16,156/- as on 14.3.2019. On 20.3.2019

his company received a cover through courier

services. The said cover contained a letter dated

19.3.2019 from Parekh Industries, a tax invoice

with number 175 dated 19.3.2019 for 22,000

grams of gold bars of the value Rs.7,15,00,000/-

with tax of Rs.21,45,000/-, totally amounting to

Rs.7,36,45,000/- and two train tickets reserved in

the names of two employees of Parekh Industries.

It was written in the letter dated 19.3.2019 that

as per the telephonic conversation between the

two companies, Parekh Industries would be

sending 22 kgs of gold bars. But, no order had

been placed by Bangalore Refinery for the gold as

stated in the letter. Therefore the second :: 5 ::

respondent presumed that Parekh Industries might

have done so for discharging its outstanding

amount through sale of 22 kgs of gold bars. The

second respondent has also stated that sending

gold bars through employees by train was never a

practice at all and the normal practice was to send

the precious cargo only through secure logistic

company. On 20.3.2019 itself the second

respondent communicated to Parekh Industries

that the gold was being sent without their

knowledge and consent, however on 21.3.2019,

though it was a holiday, second respondent made

arrangements and waited at his factory premises

to receive the gold under the belief that the gold

was really sent. Since no consignment was

received although he waited till 6.00 PM on

21.3.2019, he sent a communication to the second

petitioner that the gold was not received and that

nobody arrived in Bengaluru as scheduled. On

22.3.2019 also, a communication was sent to :: 6 ::

Parekh Industries stating that the gold was not

received and that a letter was also written to GST

Department, Mumbai and Bengaluru, on

23.3.2019. In the above premise, the second

respondent alleged that the petitioners and the

employees of their company hatched a conspiracy

to commit fraud and deceive them of the payments

that they were due by raising false invoice for 22

kgs of gold.

3. On the other hand, the petitioners'

contentions are that Bangalore Refinery used to

place orders for gold with Parekh Industries orally

over the phone and that they used to supply the

gold raising proper invoices. On 14.3.2019 when

the father of second respondent visited Mumbai,

he verbally placed orders for 22 kgs of gold.

Therefore on 19.3.2019, an invoice was raised for

22 kgs of gold, and train tickets were booked for

dispatching the gold through their two employees.

:: 7 ::

They could not send gold to Bangalore Refinery

because the train tickets were not confirmed

although they waited till the closure of the working

hours of their company. The petitioners had also

arranged for insuring the consignment arranged to

be sent by train. Unless the train tickets were

confirmed, they could not go for insurance.

Because they did not send gold, the second

respondent did not suffer any loss as he had not

made payment of Rs.7,36,45,000/- after receiving

the invoice. The second respondent is under the

false impression that the petitioners wanted to

cheat him by sending false invoices.

4. Sri B.S.Radhanandan, learned counsel for

the petitioners, has argued that the transaction

clearly discloses that the second respondent did

not suffer any loss nor the petitioners gained

anything. It was a practice to send the gold to the

second respondent by train through the employees :: 8 ::

after obtaining insurance for the consignment. For

the amount said to be due to the second

respondent, a suit has been instituted in the City

Civil Court, Bengaluru. The petitioners have also

instituted a commercial suit in Mumbai to recover

an amount of Rs.7,50,00,000/- with interest from

Bangalore Refinery. The second respondent has

presumed that the petitioners might cheat him and

FIR is as a result of presumption. The FIR does

not disclose the essential ingredients for

constituting offence under section 420 IPC. For

invoking the offence under section 406 IPC there

was no entrustment of property. To say that there

is conspiracy, the commission of offences under

sections 406, 409, and 420 should be prima facie

made out. FIR essentially lacks these ingredients.

The investigation based on a false FIR is illegal

and invalid. He submitted that the intention of the

second respondent to prosecute the petitioners is

to compel them to arrive at a settlement in the :: 9 ::

civil litigations. Therefore the criminal proceeding

against the petitioners should be quashed.

5. Sri. Kiran Javali, counsel for the second

respondent contended that since charge sheet has

already been filed, the petitioners may make an

application under Section 239 Cr.P.C. seeking their

discharge. The investigating agency has collected

evidence; the petitioners are required to make out

a case that there is no scope for charging them

based on the materials collected by the

investigator, they cannot seek quashing of charge

sheet under Section 482 Cr.P.C. In this regard, he

has relied upon the judgment of the Supreme

Court in the case of Kaptan Singh Vs. State of

Uttar Pradesh and Others [(2021) SCC Online

SC 580].

6. On facts, Sri. Kiran Javali submitted that

the very fact of sending an invoice to the second

respondent in spite of the fact that the second :: 10 ::

respondent had not placed any order for gold on

behalf of his company is indicative of the

petitioner's dishonest intention to cheat. The

second respondent has instituted a suit against the

petitioners, and knowing very well about the suit,

if the petitioners sent an invoice, it was a

deceptive act likely to cause damage to the second

respondent. Therefore there is no scope for

interference under Section 482 Cr.P.C.

7. I have considered the rival contentions.

The petitioners have sought quashing of the

proceedings against them after filing of charge

sheet. There is subtle distinction between

quashing of FIR and the charge sheet. If the FIR

does not prima facie disclose constitution of any

offence un-warranting investigation, Section 482

Cr.P.C. can be invoked for quashing the FIR.

Filing of charge sheet indicates collection of

evidence, and in that event two courses are open :: 11 ::

to the accused - one to apply for discharge under

Section 227 or 239, as the case may be. The

accused must point out that the materials

collected by the investigator are insufficient to

frame charge. But when the charge sheet is

sought to be quashed, the accused must point out

inherent illegality and infirmity in the charge sheet

and that subjecting the accused for prosecution

amounts to abuse of process of court. Of course

with the expansion of scope of section 482 Cr.P.C.,

the fine distinction between quashing and

discharge appears to have vanished, yet the High

Court cannot exercise jurisdiction under section

482 Cr.P.C., whenever there is scope for

discharge. In this context, it may be apt to refer

to what the Supreme Court has observed in the

case of Kaptan Singh (Supra)

"22. At the outset, it is required to be noted that in the present case the High Court in exercise of powers under Section :: 12 ::

482 Cr.P.C. has quashed the criminal proceedings for the offences under Sections 147, 148, 149, 406, 329 and 386 of IPC. It is required to be noted that when the High Court in exercise of powers under Section 482 Cr.P.C. quashed the criminal proceedings, by the time the Investigating Officer after recording the statement of the witnesses, statement of the complainant and collecting the evidence from the incident place and after taking statement of the independent witnesses and even statement of the accused persons, has filed the charge- sheet before the Learned Magistrate for the offences under Sections 147, 148, 149, 406, 329 and 386 of IPC and even the learned Magistrate also took the cognizance. From the impugned judgment and order passed by the High Court, it does not appear that the High Court took into consideration the material collected during the investigation/inquiry and even the statements recorded. If the petition under Section 482 Cr.P.C. was at the stage of FIR in that case the allegations in :: 13 ::

the FIR/Complaint only are required to be considered and whether a cognizable offence is disclosed or not is required to be considered. However, thereafter when the statements are recorded, evidence is collected and the charge-sheet is filed after conclusion of the investigation/inquiry the matter stands on different footing and the Court is required to consider the material/evidence collected during the investigation. Even at this stage also, as observed and held by this Court in catena of decisions, the High Court is not required to go into the merits of the allegations and/or enter into the merits of the case as if the High Court is exercising the appellate jurisdiction and/or conducting the trial. As held by this Court in the case of Dineshbhai Chandubhai Patel (Supra) in order to examine as to whether factual contents of FIR disclose any cognizable offence or not, the High Court cannot act like the Investigating agency nor can exercise the powers like an Appellate Court. It is further observed and held that question is required to be :: 14 ::

examined keeping in view, the contents of FIR and prima facie material, if any, requiring no proof. At such stage, the High Court cannot appreciate evidence nor can it draw its own inferences from contents of FIR and material relied on. It is further observed it is more so, when the material relied on is disputed. It is further observed that in such a situation, it becomes the job of the Investigating Authority at such stage to probe and then of the Court to examine questions once the charge-sheet is filed along with such material as to how far and to what extent reliance can be placed on such material.

23. In the case of Dhruvaram Murlidhar Sonar (Supra) after considering the decisions of this Court in Bhajan Lal (Supra), it is held by this Court that exercise of powers under Section 482 Cr.P.C. to quash the proceedings is an exception and not a rule. It is further observed that inherent jurisdiction under Section 482 Cr.P.C. though wide is to be exercised sparingly, carefully and with caution, only when such exercise is :: 15 ::

justified by tests specifically laid down in section itself. It is further observed that appreciation of evidence is not permissible at the stage of quashing of proceedings in exercise of powers under Section 482 Cr.P.C. Similar view has been expressed by this Court in the case of Arvind Khanna (Supra), Managipet (Supra) and in the case of XYZ (Supra), referred to hereinabove."

(underlining by me)

8. In the instant case, charge sheet has been

filed for the offences under sections 120(B), 406,

409 and 420 read with section 34 of IPC. Section

406 is the penal Section for committing an offence

of criminal breach of trust, and section 405

defines criminal breach of trust. The essential

requirement for the offence of criminal breach of

trust, is entrustment of property on a person, or a

person should have dominion over the property of

another, and such person must have dishonestly

misappropriated the property or converted a :: 16 ::

property for his use or used or disposed of the

property in violation of direction of law prescribing

the usage or a legal contract.

9. To constitute an offence punishable under

Section 420 IPC, a person should have been

cheated and dishonestly induced to delivery a

property or make or alter or destroy the whole or

any part of the valuable property. Section 120B

deals with conspiracy to commit an offence.

10. In the case on hand, neither the FIR nor

the charge sheet discloses essential requirements

to constitute offences under section 406 and

section 420 IPC. It is undisputed that the

petitioners did not send the gold and that the

second respondent did not receive it. If the

petitioners say that the invoice came to be raised

for 22 kgs of gold on a verbal order placed by the

father of second respondent, the 2 n d respondent

denies it, and states that the petitioners resorted :: 17 ::

to this dubious method in order to defeat his claim

for Rs.7,36,16,156/-. Whatever may be the

allegation and counter allegation, no party has

neither gained or lost anything. Entrustment of

property with the petitioners is also not there.

The contention of 2 n d respondent that his company

was likely to be cheated, is nothing more than his

imagination. If essential ingredients for offences

under sections 406, 409 and 420 are conspicuously

absent, or in other words offences do not appear

to have taken place it is difficult to infer offence of

conspiracy under section 120B IPC. This being the

factual position, the police should not have

proceeded to conduct investigation. Now merely

for the reason that charge sheet is filed, the 2 n d

respondent cannot contend that the petitioners

cannot seek quashing of charge sheet and that

they have to apply for discharge. As has been

observed already, investigation was totally

unwarranted, the 2nd respondent has already :: 18 ::

instituted a suit against the petitioners and that

the petitioners have also filed a commercial suit.

When the suits are pending, the 2 n d respondent's

contention that the petitioners intended to cheat

them is fallacious. Therefore the conclusion is

that the petitioners have made out a case for

exercising jurisdiction under section 482 Cr.P.C.,

and consequently the proceedings against them in

C.C.29369/2019 on the file of IV A.C.M.M.,

Bengaluru, are quashed.

SD/-

JUDGE

ckl/-