Karnataka High Court
Sri Amit Garg vs State Of Karnataka on 26 July, 2022
Bench: M.Nagaprasanna
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CRL.P No. 4856 of 2021
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 26TH DAY OF JULY, 2022
BEFORE
THE HON'BLE MR JUSTICE M.NAGAPRASANNA
CRIMINAL PETITION NO.4856 OF 2021
BETWEEN:
SRI AMIT GARG
S/O SUSHIL GARG
AGED ABOUT 31 YEARS
R/O NO.43/44, GANDHI MANDI
PANIPAT, HARAYANA - 132 103.
...PETITIONER
(BY SRI BHARATH KUMAR V., ADVOCATE)
AND:
1. STATE OF KARNATAKA
THROUGH STATION HOUSE OFFICER
WHITEFIELD CEN POLICE STATION
BENGALURU
REPRESENTED BY
Digitally signed by
STATE PUBLIC PROSECUTOR
PADMAVATHI B K HIGH COURT OF KARNATAKA
Location: HIGH
COURT OF BENGALURU - 560 001.
KARNATAKA
2. NEERAJ KUKREJA
AGED ABOUT 45 YEARS
DIRECTOR OF M/S PEGASI SPIRITS PVT. LTD
(FORMERLY KNOWN AS
M/S 3 ACES HOSPITALITY PVT. LTD)
HAVING ITS CORPORATE OFFICE AT
LEVEL-3
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CRL.P No. 4856 of 2021
SY NO.33/1
DODDAKANNAHALLI VILLAGE AND HOBLI
BENGALURU - 560 035.
...RESPONDENTS
(BY SMT.K.P.YASHODHA, HCGP FOR R1;
SRI D.VIJAY RAJ, ADVOCATE FOR R2)
THIS CRIMINAL PETITION IS FILED UNDER SECTION 482
OF CR.P.C., PRAYING TO QUASH THE FIR BEARING
NO.64/2021 REGISTERED WITH THE RESPONDENT NO.1
WHITEFIELD CEN CRIME P.S., ALONG WITH INFORMATION
DATED 02.08.2021 WHEREIN THE PETITIONER HEREIN IS
ARRAIGNED AS ACCUSED NO.2 FOR THE ALLEGED OFFENCES
P/U/S 420, 419 OF IPC AND SEC.66(C), 66(D) OF I.T ACT.
THIS CRIMINAL PETITION HAVING BEEN HEARD AND
RESERVED FOR ORDERS ON 15.07.2022, COMING ON FOR
PRONOUNCEMENT THIS DAY, THE COURT MADE THE
FOLLOWING:-
ORDER
The petitioner is before this Court calling in question
registration of crime in Crime No.64 of 2021 for offences
punishable under Sections 419 and 420 of the IPC and Sections
66C and 66D of the Information Technology Act, 2000 ('the Act'
for short).
2. Heard Sri V.Bharath Kumar, learned counsel appearing
for the petitioner, Smt. K.P.Yashodha, learned High Court
CRL.P No. 4856 of 2021
Government Pleader appearing for respondent No.1 and Sri
D.Vijay Raj, learned counsel appearing 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 petitioner is in the business of manufacture of
medical equipments which includes manufacture of masks to be
used during the period when the country was engulfed with
COVID-19 pandemic. The 2nd respondent/Director of M/s Pegasi
Spirits Private Limited earlier known as M/s 3 Aces Hospitality
Private Limited desiring to purchase certain quantity of masks
placed an order with the petitioner for supply of one lakh pieces
of N-95 masks. The correspondence between the parties led to
acceptance of contract and supply of one lakh masks to the 2nd
respondent. After receipt of masks payment was also made by
the 2nd respondent to the petitioner in terms of the invoice that
was raised by the petitioner.
4. It appears that prior to transportation of masks to the
2nd respondent-Company, samples had been sent to the 2nd
respondent for verification of the quality of masks, which in
CRL.P No. 4856 of 2021
turn sent them to quality checks to various organizations.
Before the quality check came about, the 2nd respondent had
insisted delivery of masks and therefore, the delivery had taken
place and payment also was made against such delivery.
5. The 2nd respondent, on receiving the samples from the
petitioner, had sent them to laboratories to check their quality
which resulted in a report depicting that efficiency of mask
which ought to have been 95% was actually 38.41%. On the
ground that the petitioner had supplied masks which were not
in tune with what they ought to have been i.e., N-95, the 2nd
respondent caused a legal notice upon the petitioner seeking
refund of the entire amount that was paid, as the masks were
never put into use in the light of they being ineffective owing to
poor quality.
6. The petitioner replied to the said notice clearly
indicating that all the compliances and approvals were known
to the 2nd respondent and the petitioner had not concealed
anything prior to delivery of masks. What was sent as sample
was the one that was delivered. The fact that the complainant
CRL.P No. 4856 of 2021
could not put them into use cannot mean that the petitioner
has supplied poor quality, as it was in tune with the sample.
After receipt of the reply, the complainant registers a crime
which becomes an FIR in Crime No.64 of 2021 for offences
punishable under Sections 419 and 420 of the IPC and Sections
66C and 66D of the Act. On registration of the crime, the
petitioner knocks the doors of this Court in the subject petition
and the petition having been entertained, further investigation
against the petitioner was stalled by an interim protection in
favour of the petitioner. Therefore, further investigation into
the matter has not gone on.
7. The learned counsel appearing for the petitioner would
contend with vehemence that the entire issue is in the realm of
contract. It was a contract between the parties and what was
supplied was what was sought for. There was no cheating on
the part of the petitioner and there was no dishonest intention
at the inception. Without waiting for the report to come on the
quality of masks sample which was supplied by the petitioner,
the respondent insisted that delivery be made immediately and,
therefore, the complainant cannot now contend that what was
CRL.P No. 4856 of 2021
supplied was not what was promised. He would submit that
the entire intention of registering the crime against the
petitioner is recovery of money.
8. On the other hand, the learned counsel representing
the 2nd respondent would seek to refute the submissions to
contend that though it lies in the realm of contract, the
dishonest intention of the petitioner to cheat the 2nd respondent
was there right from the inspection i.e., when the supply was
made and he would contend that the entire consignment of
masks could not be put into use as they were of poor quality.
In the bargain the complainant has lost Rs.47/- lakhs which he
has paid and has registered the crime on the ground that the
petitioner had cheated the complainant by supplying poor
quality masks.
9. The learned High Court Government Pleader would
however contend that investigation is stalled by an interim
order and no further material has been collected and it is a
matter of investigation of masks that the petitioner has
CRL.P No. 4856 of 2021
supplied which is of poor quality. He would seek quashment of
entire proceedings.
10. I have given my anxious consideration to the
submissions made by the respective learned counsel and
perused the material on record.
11. The afore-narrated transaction between the parties is
not in dispute. The complainant-Company became interested in
venturing into COVID-19 pandemic related product in the
month of May 2020 and indented for supply of N-95 masks.
Looking at the credentials of the petitioner the complainant
placed an order for N-95 masks with M/s Amit Spinning Mills,
the petitioner herein. Samples of masks that the petitioner
manufactures were sent to the 2nd respondent on 31-05-2020,
whereafter the complainant communicates his intention to
purchase one lakh pieces of masks. The communication reads
as follows:
"This Agreement is made by and between M/S Amit
Spinning Mills ("Manufacturer") having an office at
Gohanna Road Panipat, Haryana 132103 and 3 Aces
Hospitality Pvt Ltd.("Company") having an office at Level
3 Sy No.33/1 Doddakannahalli Village Varthur Hobli,
Bengaluru, Karnataka 560 035.
CRL.P No. 4856 of 2021
WHEREAS, Manufacturer is manufacturing N95 mask at
their factory located at Gohana Road, Panipat and
Company is having a registered Trademarked Brand called
"Pegasi".
WHEREAS, Company wishes to contract the Manufacturer
as an Original Equipment Manufacturer ("OEM") to
manufacture and deliver to the Company high quality,
well sanitised "Pegasi" Brand N95 Masks and 3 Ply Masks.
WHEREAS, the product will be manufactured in
accordance to product specifications issued for N95
Masks, and must match the criteria for necessary
filtration efficiency, fabric quality, respirator
classifications, etc. in line with CE< ISO9001:2015
& ISO22609:2004 FFP2, GMP, FDA, NOISH, and all
other certifications related to N95 Masks required
for the production of efficient N95 Masks.
WHEREAS, the Manufacturer agrees that they will
not compete with the company directly or indirectly
for any Government supply and tenders. The
Manufacturer will not be able to sign an OEM for any
organisation except the company for government
contracts and tenders.
WHEREAS, the Manufacturer and the company will
mutually agree to a timeline for each order and the
manufacturer will be responsible to fulfil timelines,
if manufacturer fails to meet deadline, penalty
might apply.
WHEREAS, the manufacturer agrees t o
manufacture N95 masks adhering to all quality
standards with Pegasi Brandingand to prioritise all
orders issued by the Company.
THEREFORE, the parties agree as follows
1.DEFINITIONS
As used herein, the following terms have the following
meaning, unless the context indicates otherwise.
"OEM" - (Original Equipment Manufacturer)
products shall be private labelled finished goods
that go to the Company or the Company's
customers from Supplier either directly or through
CRL.P No. 4856 of 2021
the Company. An OEM product may be designed
and manufactured to specifications and
certifications as mentioned above."
(Emphasis added)
This communication is agreed to by the petitioner. Therefore it
became a contract between the parties for manufacture of N-95
masks and its supply to the complainant's Company. The
purchase order was placed by the complainant on 31-05-2020
itself. By then, the samples which were sent to the complainant
for their quality check appear to have been sent to Laboratories
for their check. The laboratories included Defence Research &
Development Establishment which has given a report that
particulate filtration efficiency of the mask that was sent for
quality check was 38.41% as against 95% which ought to be
the level of efficiency of N-95 mask. The opinion is that it does
not meet the requirement with reference to PFE parameter.
12. Several other laboratories to which samples had been
sent also opined that the masks were of poor quality. The catch
in the transaction is that the complainant Company did not wait
till the report of the quality check came about. The complainant
Company placed the order, transferred money and sought
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CRL.P No. 4856 of 2021
immediate supply of masks. In accordance with the samples
that were sent, the masks were supplied and the masks,
according to the complainant-Company and in terms of the
report, were not used, as the filtration was not to the tune of
95% as is required. This resulted in causing exchange of legal
notices between the parties - the complainant demanding
refund of the entire amount and the petitioner denying the fact
that no refund is permissible as the contract had concluded by
demand and supply. It is after this, the present crime is
registered for the offences punishable under Sections 419 and
420 of the IPC and Sections 66C and 66D of the Act. Since the
entire issue, now springs from the complaint, the same is
germane to be noticed and it reads as follows:
"Sir,
Sub: Complaint against:
1. Mr. AMIT GARG, (+919999900008)
Proprietor of,
M/s. AMIT SPINNING MILLS
2. M/s. AMIT SPINNING MILLS.
1. The Complainant submits that, the Complainant is
in the business of hospitality sector under the name
and style M/s.Pegasi Spirits Pvt. Ltd., which was
formerly known as 3-Aces Hospitality Pvt. Ltd.,
registered under the Companies Act, 1956 vide
Certificate of Incorporation pursuant to change of
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CRL.P No. 4856 of 2021
name vide Corporate Identification
No.U55100DL2005PTC141319 which certify the
name of the Company which has been changed
form 3-ACES HOSPITALITY PRIVATE LIMITED
to PEGASI SPIRITS PRIVATE LIMITED. The
said company is represented by its Directors who
are as follows:
(1) Mr.NeerajKukreja,
(2) Mrs.RitikaKukreja
2. The Complainant further submits that since the
complaint was in hospitality business was intending
to supply N-95 Mask to Government and other
private vendors. The complainant was not having
Manufacturing setup in Bangalore and due to the
said reason, had contacted Amit Spinning Mills
represented by its propitiator Amit gargafter getting
to know about their manufacturing unit in Panipat,
Haryana online for the manufacture of N-95 Mask
at his factory located at BILL NEHAATA, NR.L.CR.T.
Public School, Gohana Road, Panipat, Harayana -
132 103, in furtherance OEM agreement and
purchased order was placed to Amit Spinning Mills
on 31/05/2020 for a quantity of 1,00,000/- N-95
mask amounting to Rs.46,72,500/-. The order was
placed by the Complainant with the test reports of
the products which was issued by Amit Spinning
Mills to authenticate its quality. Later when the
products were delivered, the complaint had found
the said products were substandard products with
inferior quality based on DRDO report and BIS
certification
90% of the Payment was made VIA RTGS, the
details of the payment are as follows:
Sl. Date Particulars of payment (70%) Amount in Rs.
No. made to Respondent
Company A/c i.e., with
H.D.F.C. Current A/c bearing
No.50200022636225
1. 10/06/2020 By RTGS through Canara bank 25,00,000/-
vide Transaction No. CNR RBR
12020060900650618
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CRL.P No. 4856 of 2021
2. 10/06/2020 By RTGS through Canara Bank 7,55,250/-
vide Transaction No. CNR RBR
12020061000669129
Rupees Thirty Two lakhs Fifty Five thousand two 32,55,250/-
hundred and fifty only
Add: (Plus)Initial Advance Payment 20% Paid On 9,50,000/-
31/05/2020 By NEFT Vide Transaction Number
P20060196839689
TOTAL AMOUNT PAID Rupees Forty Two lakhs 42,05,250/-
five thousand two hundred and fifty only
The Complainant after the receipt of the test reports from
DRDO and BIS authorities the complainant had also availed
second opinion from SGS located at Chennai but to the dismay
of the complainant the said report had also authenticated that
the quality of N-95 mask supplied by Amit Spinning Mill
represented by its proprietor was of inferior quality which does
not meet the necessary requirement as per the approved
government labs. The complainant bring to the notice of this
jurisdiction police station that the said persons as mentioned
below:
1. Mr. AMIT GARG,
Proprietor of,
M/s. AMIT SPINNING MILLS
2. M/s. AMIT SPINNING MILLS.
The said persons have defrauded the complainant and has given
false reports in order to defraud the complainant for the amount
paid for the said contract which is about Rs.46,72,500/- hereby
the complainant request this jurisdiction police station to
enquire the said matter by registering this complainant against
the above mentioned persons.
Yours faithfully
Sd/-
(Neeraj Kukreja)
Age:45 years
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CRL.P No. 4856 of 2021
Mob No.7338305003, 7899100003
From:
M/s. PEGASI SPIRITS PVT. LTD.,
(Formerly known as
3-Aces Hospitality Pvt. Ltd.,)
having its Corporate Office
At Level-3, Sy.No.33/1,
Doddakannahalli village and Hobli,
Bangalore - 560 035
Represented by its
Managing Director."
The grievance of the complainant in the complaint (supra) is
that the petitioner had defrauded the complainant for the
amount paid in terms of the contract which is about
Rs.46,72,500/- and seeks action upon the petitioner which
would result in recovery of money. Therefore, the case
becomes one instituted on breach of contract and recovery of
money. Whether that would amount to offence punishable for
cheating under Section 420 of the IPC is the issue that requires
consideration in the present lis. Section 420 of the IPC reads as
follows:
"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
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CRL.P No. 4856 of 2021
which may extend to seven years, and shall also be liable to
fine."
For an offence under Section 420 of the IPC to be alleged,
ingredients of Section 415 of the IPC are required to be
present. Section 415 of the IPC reads as follows:
"415. Cheating.--Whoever, by deceiving any person,
fraudulently or dishonestly induces the person so deceived to
deliver any property to any person, or to consent that any
person shall retain any property, or intentionally induces the
person so deceived to do or omit to do anything which he
would not do or omit if he were not so deceived, and which act
or omission causes or is likely to cause damage or harm to
that person in body, mind, reputation or property, is said to
"cheat"."
Section 415 mandates that whoever by deceiving any person
fraudulently or dishonestly induces the person so deceived to
deliver any property is said to cheat. There are several
illustrations that are found for Section 415 of the IPC.
13. In the case at hand, finding the petitioner-Company
to be well equipped for production and delivery of masks to be
marketed in the name of the complainant-Company, it had
placed a purchase order and purchased masks. This is found to
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CRL.P No. 4856 of 2021
be of poor quality at a later point in time. This cannot amount
to cheating or deception at the inception of the contract, as
masks were needed; they were supplied after supplying of
samples. If the complainant could not wait for the samples to
be checked by the appropriate laboratories, the offence of
cheating cannot be laid against the petitioner. Therefore, none
of the ingredients of Section 415 of the IPC is seen to be
existing in the dispute between the petitioner and the
complainant, which is a contract and the allegation is breach of
contract.
14. The other offence alleged is under Section 419 of the
IPC. Section 419 of the IPC deals with cheating by
impersonation and whoever cheats by impersonation shall be
punished. The offence would tumble down for the reasons
rendered (supra) on Section 415 of the IPC itself. There was no
cheating in the case at hand and the offence under Section 419
of the IPC also cannot be laid against the petitioner.
15. What remains is offence punishable under Sections
66C and 66D of the Act. Section 66C reads as follows:
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CRL.P No. 4856 of 2021
"66-C. Punishment for identity theft - Whoever,
fraudulently or dishonestly make use of the electronic
signature, password or any other unique identification feature
of any other person, shall be punished with imprisonment of
either description for a term which may extend to three years
and shall also be liable to fine which may extend to rupees one
lakh."
66-D. Punishment for cheating by personation by
using computer resource.--Whoever, by means of any
communication device or computer resource cheats by
personation, shall be punished with imprisonment of either
description for a term which may extend to three years and
shall also be liable to fine which may extend to one lakh
rupees."
Section 66C deals with any person fraudulently or dishonestly
makes use of the electronic signature, password or any other
unique identification of any other person would be punished.
The other offence that is alleged is, whoever by means of any
communication device or computer resource, cheats by
personating. In the considered view of this Court, these
provisions of the Act are reckless inclusions in the crime as the
facts narrated hereinabove would not even remotely touch
upon Sections 66C and 66D of the Act. Therefore, those
offences also cannot be laid against the petitioner.
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CRL.P No. 4856 of 2021
16. In the teeth of the aforesaid undisputed facts,
reference is being made to the judgment of the Apex Court in
the case of SUSHIL SETHI v. STATE OF ARUNACHAL
PRADESH1 becomes apposite, the Apex Court has held as
follows:
"7. While considering the prayer of the appellants to
quash the impugned criminal proceedings against the
appellants for the offence under Section 420 IPC, few decisions
of this Court in exercise of powers under Section 482 CrPC are
required to be referred to.
7.1. In Bhajan Lal [State of Haryana v. Bhajan Lal, 1992
Supp (1) SCC 335: 1992 SCC (Cri) 426], in para 102, this
Court has categorised the cases by way of illustration wherein
the powers under Article 226 or the inherent powers under
Section 482 CrPC could be exercised either to prevent the
abuse of the process of any court or otherwise to secure the
ends of justice. In para 102, it is observed and held as under:
(SCC pp. 378-79)
"102. In the backdrop of the interpretation of the
various relevant provisions of the Code under Chapter
XIV and of the principles of law enunciated by this Court
in a series of decisions relating to the exercise of the
extraordinary power under Article 226 or the inherent
powers under Section 482 of the Code which we have
extracted and reproduced above, we give the following
categories of cases by way of illustration wherein such
power could be exercised either to prevent abuse of the
process of any court or otherwise to secure the ends of
justice, though it may not be possible to lay down any
precise, clearly defined and sufficiently channelised and
inflexible guidelines or rigid formulae and to give an
(2020) 3 SCC 240
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CRL.P No. 4856 of 2021
exhaustive list of myriad kinds of cases wherein such
power should be exercised.
(1) Where the allegations made in the first
information report or the complaint, even if they
are taken at their face value and accepted in their
entirety do not prima facie constitute any offence
or make out a case against the accused.
(2) Where the allegations in the first
information report and other materials, if any,
accompanying the FIR do not disclose a
cognizable offence, justifying an investigation by
police officers under Section 156(1) of the Code
except under an order of a Magistrate within the
purview of Section 155(2) of the Code.
(3) Where the uncontroverted allegations
made in the FIR or complaint and the evidence
collected in support of the same do not disclose
the commission of any offence and make out a
case against the accused.
(4) Where, the allegations in the FIR do not
constitute a cognizable offence but constitute only
a non-cognizable offence, no investigation is
permitted by a police officer without an order of a
Magistrate as contemplated under Section 155(2)
of the Code.
(5) Where the allegations made in the FIR
or complaint are so absurd and inherently
improbable on the basis of which no prudent
person can ever reach a just conclusion that there
is sufficient ground for proceeding against the
accused.
(6) Where there is an express legal bar
engrafted in any of the provisions of the Code or
the Act concerned (under which a criminal
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CRL.P No. 4856 of 2021
proceeding is instituted) to the institution and
continuance of the proceedings and/or where
there is a specific provision in the Code or the Act
concerned, providing efficacious redress for the
grievance of the aggrieved party.
(7) Where a criminal proceeding is
manifestly attended with mala fide and/or where
the proceeding is maliciously instituted with an
ulterior motive for wreaking vengeance on the
accused and with a view to spite him due to
private and personal grudge."
The aforesaid decision of this Court has been followed
subsequently by this Court in a catena of decisions.
7.2. In Vesa Holdings (P) Ltd. [Vesa Holdings (P)
Ltd. v. State of Kerala, (2015) 8 SCC 293 : (2015) 3 SCC
(Cri) 498] , it is observed and held by this Court 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. It is further
observed and held that 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. It is further observed and held that 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 IPC can be said to have been made out. It is further
observed and held that the real test is whether the
allegations in the complaint disclose the criminal
offence of cheating or not.
7.3. In Hira Lal Hari Lal Bhagwati [Hira Lal Hari Lal
Bhagwati v. CBI, (2003) 5 SCC 257 : 2003 SCC (Cri) 1121] ,
in para 40, this Court has observed and held as under: (SCC p.
280)
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CRL.P No. 4856 of 2021
"40. It is settled law, by a catena of
decisions, that for establishing the 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.
From his making failure to keep promise
subsequently, such a culpable intention right at
the beginning that is at the time when the promise
was made cannot be presumed. It is seen from the
records that the exemption certificate contained
necessary conditions which were required to be
complied with after importation of the machine.
Since the GCS could not comply with it, therefore,
it rightly paid the necessary duties without taking
advantage of the exemption certificate. The
conduct of the GCS clearly indicates that there was
no fraudulent or dishonest intention of either the
GCS or the appellants in their capacities as office-
bearers right at the time of making application for
exemption. As there was absence of dishonest and
fraudulent intention, the question of committing
offence under Section 420 of the Penal Code, 1860
does not arise. We have read the charge-sheet as
a whole. There is no allegation in the first
information report or the charge-sheet indicating
expressly or impliedly any intentional deception or
fraudulent/ dishonest intention on the part of the
appellants right from the time of making the
promise or misrepresentation. Nothing has been
said on what those misrepresentations were and
how the Ministry of Health was duped and what
were the roles played by the appellants in the
alleged offence. The appellants, in our view, could
not be attributed any mens rea of evasion of
customs duty or cheating the Government of India
as the Cancer Society is a non-profit organisation
and, therefore, the allegations against the
appellants levelled by the prosecution are
unsustainable. The Kar Vivad Samadhan Scheme
certificate along with Duncan [CBI v. Duncans
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CRL.P No. 4856 of 2021
Agro Industries Ltd., (1996) 5 SCC 591: 1996 SCC
(Cri) 1045] and Sushila Rani [Sushila Rani v. CIT,
(2002) 2 SCC 697] judgments clearly absolve the
appellants herein from all charges and allegations
under any other law once the duty so demanded
has been paid and the alleged offence has been
compounded. It is also settled law that once a civil
case has been compromised and the alleged
offence has been compounded, to continue the
criminal proceedings thereafter would be an abuse
of the judicial process."
(emphasis in original)
It is further observed and held by this Court in the
aforesaid decision that to bring home the charge of
conspiracy within the ambit of Section 120-B IPC, it is
necessary to establish that there was an agreement
between the parties for doing an unlawful act. It is
further observed and held that it is difficult to establish
conspiracy by direct evidence.
7.4. In V.Y. Jose [V.Y. Jose v. State of Gujarat, (2009) 3
SCC 78 : (2009) 1 SCC (Cri) 996] , it is observed and held by
this Court that one of the ingredients of cheating is the
existence of fraudulent or dishonest intention of making initial
promise or existence thereof, from the very beginning of
formation of contract. It is further observed and held that it is
one thing to say that a case has been made out for trial and as
such criminal proceedings should not be quashed, but it is
another thing to say that a person should undergo a criminal
trial despite the fact that no case has been made out at all.
7.5. In Sharad Kumar Sanghi [Sharad Kumar
Sanghi v. Sangita Rane, (2015) 12 SCC 781: (2016) 1 SCC
(Cri) 159], this Court had an occasion to consider the initiation
of criminal proceedings against the Managing Director or any
officer of a Company where Company had not been arrayed as
a party to the complaint. In the aforesaid decision, it is
observed and held by this Court that in the absence of specific
allegation against the Managing Director of vicarious liability,
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CRL.P No. 4856 of 2021
in the absence of Company being arrayed as a party, no
proceedings can be initiated against such Managing Director or
any officer of a Company. It is further observed and held that
when a complainant intends to rope in a Managing Director or
any officer of a Company, it is essential to make requisite
allegation to constitute the vicarious liability.
7.6. In Joseph Salvaraj A. v. State of
Gujarat [Joseph Salvaraj A. v. State of Gujarat, (2011) 7
SCC 59: (2011) 3 SCC (Cri) 23] , it is observed and held
by this Court that when dispute between the parties
constitutes only a civil wrong and not a criminal wrong,
the courts would not permit a person to be harassed
although no case for taking cognizance of the offence
has been made out.
7.7. In Inder Mohan Goswami v. State of
Uttaranchal [Inder Mohan Goswami v. State of
Uttaranchal, (2007) 12 SCC 1: (2008) 1 SCC (Cri) 259] ,
it is observed and held by this Court that the Court must
ensure that criminal prosecution is not used as an
instrument of harassment or for seeking private
vendetta or with an ulterior motive to pressurise the
accused. It is further observed and held by this Court
that it is neither possible nor desirable to lay down an
inflexible rule that would govern the exercise of
inherent jurisdiction. It is further observed and held
that inherent jurisdiction of the High Courts under
Section 482 CrPC though wide has to be exercised
sparingly, carefully and with caution and only when it is
justified by the tests specifically laid down in the statute
itself.
8. Applying the law laid down by this Court in the
aforesaid decisions to the facts of the case on hand, we
are of the opinion that this is a fit case to exercise
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powers under Section 482 CrPC and to quash the
impugned criminal proceedings.
9. In view of the above and for the reasons stated
above, we are of the firm opinion that this is a fit case to
exercise the powers under Section 482 CrPC and to
quash the criminal proceedings against the appellants
for the offence under Section 420 read with Section
120-B IPC. To continue the criminal proceedings against
the appellants would be undue harassment to them. As
observed hereinabove, no prima facie case for the
offence under Section 420 IPC is made out."
(Emphasis supplied)
The Apex Court, in the afore-quoted judgment, was considering
the case whether the allegation was for offence punishable
under Section 420 of the IPC. The Apex Court considers the
entire spectrum of law with regard to interplay between the
contract and cheating. The issue before the Apex Court in the
said judgment was also supply of inferior quality of material in
contravention of the provisions of the Act, which stipulated
specific percentages of chemicals to be found in the supply
therein. The allegation was that the accused was required to
supply the equipments in terms of the contract which had not
been done. A criminal case was registered against the appellant
therein and the High Court had refused to quash the
proceedings in terms of its power under Section 482 of the
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Cr.P.C. The matter was taken up in appeal before the Apex
Court and the Apex Court set aside the order of the High Court
and quashed the proceedings against the appellant therein.
17. The facts in the case at hand are identical to what fell
for consideration before the Apex Court in the case of SUSHIL
SETHI (supra). The contract between the parties or supply of
inferior quality would undoubtedly come within the realm of
civil proceedings of whatever nature the complainant would
seek to initiate, but not registration of a crime. It is trite law
that criminal law cannot be set into motion for recovery of
money unless the offence of cheating or even criminal breach
of trust is established. The case at hand involves both
incurable infirmities for setting criminal law in motion - one it is
initiated for breach of contract and the other it is initiated for
recovery of money. Therefore, further proceedings if permitted
to continue against the petitioner, it would degenerate into
harassment and result in miscarriage of justice, for which the
case at hand becomes a fit case for exercise of jurisdiction of
this Court under Section 482 of the Cr.P.C. and obliterate the
impugned proceedings.
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18. For the aforesaid reasons, the following:
ORDER
(i) The Criminal Petition is allowed.
(ii) The FIR registered in Crime No.64 of 2021 by the
Whitefield CEN Police Station stands quashed.
(iii) It is made clear that this Court has not pronounced
upon any right of the complainant to initiate civil
proceedings for recovery of money. If such
proceedings are instituted, the observations made
in the course of this order would not influence any
judicial fora on merit of the said claim.
I.A.No.1/2021 stands disposed, as a consequence.
Sd/-
JUDGE
BKP
