Karnataka High Court
Mr Arun Narayanan vs State Of Karnataka on 3 January, 2023
Bench: M.Nagaprasanna
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 03RD DAY OF JANUARY, 2023
BEFORE
THE HON'BLE MR. JUSTICE M. NAGAPRASANNA
WRIT PETITION No.11774 OF 2021(GM - RES)
BETWEEN:
MR.ARUN NARAYANAN
AGED ABOUT 53 YEARS
S/O MR. KUTTAPPA KURUP
HAVING ITS ADDRESS AT
SEA FACING BLOCK, 4TH FLOOR
BHAVANI, TECHNO PARK CAMPUS
KARIYAVATTOM, TRIVANDRUM
KERALA - 695 581.
... PETITIONER
(BY SRI C.V.NAGESH, SR.ADVOCATE A/W
SRI NIKHILESH RAO M., ADVOCATE)
AND:
1. STATE OF KARNATAKA
BY SOUTH CEN CRIME POLICE STATION,
BANASHANKARI, BENGALURU.
2. TE CONSULTING (INDIA) PRIVATE LIMITED
A COMPANY REGISTERED UNDER
THE PROVISIONS OF
THE COMPANIES ACT, 2013
HAVING ITS REGISTERED OFFICE AT
15, 15TH CROSS ROAD,
MG LAYOUT, JP NAGAR 6TH PHASE,
2
BENGALURU - 560 078.
REPRESENTED BY
MR.SOMANNA CHENDIRA
MANDANNA AND
MR. SHOUVIK BHATTACHARYA.
3. THIRD EYE INC.
A COMPANY REGISTERED UNDER
THE LAWS OF THE UNITED STATES
OF AMERICA
HAVING ITS HEAD OFFICE AT
15950, DALLAS PARKWAY
SUITE 400, DALLAS
TX 75248, UNITED STATES
ALSO HAVING ITS LOCAL OFFICE AT
15, 15TH CROSS ROAD
MG LAYOUT, J.P.NAGAR
6TH PHASE,
BENGALURU - 560 078
REPRESENTED BY
MR. SOMANNA CHENDIRA MANDANNA
AND MR. SHOUVIK BHATTACHARYA.
(DELETED VIDE ORDER DATED 26.05.2022)
... RESPONDENTS
(BY SMT.K.P.YASHODHA, HCGP FOR R1)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA READ WITH SECTION 482 OF
CR.P.C., PRAYING TO CALL FOR THE RECORDS IN CRIMINAL
COMPLAINT BEARING CRIME NO.0056/2021 PENDING BEFORE THE
I ADDITIONAL CHIEF METROPOLITAN JUDGE BENGALURU; QUASH
THE CRIMINAL COMPLAINT BEARING CRIME NO.0056/2021
PENDING BEFORE THE I ADDITIONAL CHIEF METROPOLITAN JUDGE
BENGALURU (AT ANNEXUER-A) AND ETC.,
3
THIS WRIT PETITION HAVING BEEN HEARD AND RESERVED
FOR ORDERS, 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.56 of 2021 for offences punishable
under Sections 419 and 420 of the IPC and Sections 65 and 66 of
the Information Technology Act, 2008 ('the Act' for short), pending
before the I Additional Chief Metropolitan Magistrate, Bangalore.
2. Heard Sri C.V.Nagesh, learned senior counsel appearing for
the petitioner and Sri K.P.Yashodha, learned High Court
Government Pleader appearing for respondent No.1.
3. Brief facts that lead the petitioner to this Court in the
subject writ petition, as borne out from the pleadings, are as
follows:-
The petitioner avers that he is a senior employee of US
Technology International Private Limited ('the Company' for short),
a company that is incorporated under the laws of India on 12th
April, 2005. He claims to be working in the said Company since
2000 and has produced certain salary slips from April, 2014 to
November, 2020, to demonstrate his relationship with the Company
of being an employee. It appears that the name of the Company is
changed from 'U.S.Software Resources Private Limited' to 'U.S.
Technology International Private Limited' ('the Company' for short)
in terms of the fresh certificate of incorporation dated 12.04.2005.
The company was only one of the constituents of US Technology
Group, which comprises of several other companies such as
accused Nos.1 and 2 i.e., UST Global Incorporation and US
Technology Resources Private Limited.
4. The 2nd respondent/TE Consulting (India) Private Limited is
the complainant and a part of Third Eye Inc. group of companies
controlled and promoted by the 2nd respondent. Accused Nos.1 and
2 - companies enter into transactions for providing staffing services
to, and from the Third Eye Incorporation - complainant, outside
India and inside India respectively. Therefore, it is a transaction
between accused Nos.1 and 2 and the complainant. Between the
month of June, 2013 and end of 2018, Third Eye Incorporation
appears to have defaulted in various payments for the services
provided by accused No.1 outside India. Between August, 2015
and August, 2017 accused No.2 had deputed various employees in
India to the complainant and it appears that on deputation of such
human resources, it raised invoices upon the complainant totally
amounting to Rs.10,28,41,345.67. It is contended that the
complainant did not pay accused No.2 - company. Therefore, the
complainant is, as allegedly defaulted in payment both to accused
No.1 and accused No.2. Based upon the aforesaid contract between
the parties and the claim, accused No.1 instituted arbitration
proceedings on 18-09-2020 in California, a State in United States of
America against Third Eye Incorporation for non-payment of invoice
dues towards services rendered by accused No.1 to the complainant
- Company outside India. In the same way accused No.2 filed a
Pre-Institution Mediation Application in India in terms of
Commercial Courts Act, 2015 against the complainant seeking
recovery of monetary dues totally amounting to Rs.17 + crores
towards providing human resource services in India. Third Eye
Incorporation files its answering statement cum-counter claim
before the Arbitrator in the U.S.A. and later, made belated
allegations against accused No.1 along with accused Nos.4 to 13
alleging that they had diverted confidential information of
customers and caused losses to Third Eye Inc. Between
12-11-2020 and 18-02-2021, multiple mediation sessions were held
for several months between the complainant and accused No.2.
During the pendency of these proceedings, the complainant
registers a complaint on 11.02.2021 before the South CEN Crime
Police Station, Bengaluru, alleging that the Third Eye's confidential
information was stolen by accused Nos.1 and 2 between
03.10.2014 and 05.10.2020. It is alleged that the petitioner got to
know of it only shortly before the complaint came to be registered
on 11-02-2021. This becomes a crime in Crime No.56 of 2021 for
offences punishable under Sections 419 and 420 of the IPC read
with Section 65 and 66 of the Act. The petitioner is made accused
No.3. The registration of crime against the petitioner is what drives
him to this Court in the subject petition.
5. The learned senior counsel Sri C.V.Nagesh, appearing for
the petitioner would contend with vehemence that if the complaint
is perused in its entirety, there is not even a mention of the name
of the petitioner in the entire complaint. Without there being any
allegation against the petitioner in the complaint, he is dragged into
these proceedings merely because he is the President of UST Global
Inc. while the transaction is between accused Nos.1 and 2 and the
complainant. He would contend that to avoid arbitration
proceedings in which an arbitral award was to be passed, the
complaint comes to be registered to arm twist accused Nos.1 and 2,
who claim certain amounts from the complainant/Company. It is his
emphatic submission that a contractual matter or a commercial
dispute between the parties is sought to be given a colour of crime
and seeks its quashment. He would seek to place reliance on the
judgments rendered by the Apex Court in the case of WYETH
LIMITED AND OTHERS v. STATE OF BIHAR AND ANOTHER -
Criminal Appeal No.1224/2022 decided on 11.08.2022
(arising out of SLP.No.10730/2018).
6. The learned High Court Government Pleader would seek to
refute the submissions of the learned senior counsel for the
petitioner to contend that the matter is at the stage of investigation
and the complaint clearly makes out an offences under Sections 65
and 66 of the Act as the accused have taken away the information.
Offences under Sections 419 and 420 IPC is also seen to be alleged
in the complaint. Therefore, she would submit that the petitioner is
not guilty of any act. The Police will necessarily file a report in his
favour. It is not a stage at which this Court would interfere with the
investigation. She would seek dismissal of the petition.
7. Notice issued to the 2nd respondent/complainant by this
Court was returned with a shara as 'unclaimed' on 09-09-2022.
When the matter was listed before the Court on several occasions
thereafter i.e., 13-09-2022, 14-09-2022, 16-09-2022, 19-09-2022,
20-09-2022, 21-09-2022 and 22-09-2022, there was no
representation on behalf of the 2nd respondent, ostensibly so, as he
did not claim the notice. Later, on 30-09-2022, the matter was
reserved for its orders upon hearing on behalf of the petitioner and
the State.
8. This Court while entertaining the petition has granted an
interim order of stay qua the petitioner on 21-12-2021 and the
same is in operation as on date.
9. I have given my anxious consideration to the submissions
made by the respective learned counsel and have perused the
material on record.
10. The 2nd respondent is the complainant. Who is the 2nd
respondent is what is required to be noticed. His description bears
presence in the complaint itself. Therefore, the complaint dated
11-02-2021 is quoted hereunder for the purpose of quick reference:
"To February 11, 2021
The Inspector,
CEN Bengaluru Police Station,
Banashankari,
Bengaluru-560 028.
Respected Madam,
1. My name is Somanna Chendira Mandanna and I am
an employee of TE Consulting (India) Pvt.Ltd.,('TE India),
having its office at #15, 15th Cross Road, MG Layout, JP Nagar
Phase-6, JP Nagar, Bengaluru-560 078. TE India is a
subsidiary of the Third Eye, Inc. ("Third Eye"), a company
registered in the United States of America.
2. I am authorized to file this complaint on behalf of the
CEO of TE India, Mr.Shouvik Bhattacharya, who is resident of
USA, and therefore, a Letter authorizing me is attached
herewith as Annexure-1.
3. The accused persons listed in the Annexure-1 have
together conspired against Third Eye and have stolen
confidential information belonging to the Company.
Subsequently, the Accused persons have been responsible to
fraudulently maneuvering the Company into financial losses,
and diverting in excess of Rs.18 crores to their accused
Companies account with the help of individual accused
persons.
4. UST Global, and US Technology Resources
Pvt.Ltd. have placed their key employee Siddharth
Srivastava in Third Eye's office in Bengaluru. Sidharth
Srivastava gained the trust of Third Eye's CEO Mr.
Shouvik Bhattacharya, and became the de facto head of
India operations of
Third Eye India. Interestingly, Siddharth Srivastava was
an employee of UST Global and US Technology
Resources Pvt.Ltd. while all the three accused convinced
Mr. Shouvik Bhattacharya to make him the de facto
head of Third Eye's India operations.
5. Siddharth Srivastava is a known criminal, and
other criminal cases have been registered against him,
and this fact was concealed by UST Global and US
Technology Resources Pvt.Ltd. with the Company while
Siddharth Srivastava was working at Third Eye's
premises in India. I state that UST Global and US
Technology Resources Pvt. Ltd., conspired with a known
criminal to steal the proprietary information of Third
Eye and divert money belonging to Third Eye to their
own or their accomplices accounts.
6. That based on the facts stated in Annexure-3, I
hereby urge you to take cognizance of the fraud,
cheating, criminal conspiracy, misappropriation and
theft of confidential, proprietary information and trade
secrets, theft of clients, tortuous interference in the
business and stealing of clients and employees related
offences committed by all the accused mentioned in the
attached Annexure-1 (List of Accused).
7. I request you to register an FIR for offences
committed by the accused under Section 65 and Section 66 of
the Information Technology Act, 2000 and Section 43 read
with Section 120A and 120B (ii), Section 405, Section 408 and
Section 420 of Indian Penal Code and register an FIR and
arrest the accused persons and punish them according to the
law.
Sincerely,
Sd/- (Somanna Chendira Mandanna),
Near Banaswadi Police Station, Bangalore North,
Bangalore Kalyananagar, Karnataka 560 043
For SHOUVUK BHATACHARYA
CEO TE CONSULTING (India) Pvt.Ltd."
(Emphasis added)
The complainant describes himself to be an employee of TE
Consulting (India) Pvt. Ltd., a subsidiary of Third Eye Incorporation,
a company registered in USA.
11. For the complaint to be registered, a little walk in the
history is necessary to be taken. In the early 2000, the petitioner
was an employee of one US Technology International Private
Limited. There is no direct connection between the complainant and
the petitioner. The petitioner is accused No.3. The 2nd
respondent/complainant is a company and as described by it in the
complaint, it is a part of Third Eye Group of Companies and it is the
complainant's case that he controls both the companies. Accused
Nos.1 and 2 are in the business of supply of staffing services or
human resources in India and outside India. Between June 2013 to
the end of 2018, both the accused Nos.1 and 2 supplied manpower
or staffing services to Third Eye Incorporation and the company of
the complainant - TE Consulting (India) Pvt. Ltd. both outside India
and inside India. Against the services so rendered by accused
Nos.1 and 2, the complainant had defaulted in various payments.
Both accused Nos.1 and 2 began registration of claims for their
money, which the complainant was in default. Trouble appears to
have been brewed at this juncture. Accused No.2 claims an amount
of Rs.10,28,41,345.67 and accused No.1 claims close to Rs.17+
crores. For not paying the amount, accused No.1 institutes
arbitration proceedings before the Arbitrator in the jurisdiction of
the State of California, USA, against Third Eye Incorporation on 18-
09-2020. Likewise, accused No.2 wanting to initiate arbitration
proceedings institutes a Pre-Institution Mediation Application in
terms of Commercial Courts Act, 2015 in India against the
complainant for recovery of money, which by then had risen to
mountainous proportion i.e., Rs.17 crores and odd.
12. The Third Eye Incorporation filed its counter-claim before
the Arbitrator in the USA alleging that accused Nos.4 to 13 had
diverted confidential information of customers of Third Eye Inc. and
caused huge loss to Third Eye Inc. This was concerning accused
No.1. Accused No.2 in India had initiated a Pre-Institution
Mediation Application in which several sessions were held between
the complainant and accused No.2. In the teeth of pendency of the
aforesaid proceedings, the afore-quoted complaint comes about by
the complainant. This is the history of the complainant.
13. The aftermath of the complaint is also required to be
noticed. On 18-02-2021, the Mediation Application so filed by
accused No.2 against the complainant fails and accused No.2
institutes a commercial suit in O.S.No.176 of 2021 before the
Commercial Court at Bangalore. The said suit is pending
adjudication. In the USA on 08-04-2021, the Arbitral Tribunal
constituted for the purpose of arbitration instituted by accused No.1
categorically ruled that the trade secret claims made by Third Eye
Inc. were not even identified with reasonable particularity which
would mean that the counter-claim filed by the Third Eye Inc. with
regard to breach of confidentiality was not proved. Against the said
interlocutory finding of the arbitral Tribunal, the Third Eye Inc.
re-agitated the issue before the Arbitrator. The Arbitral Tribunal
rejects the amended trade secret identification claims in terms of
another order dated 06-06-2021. During the pendency of all these
proceedings, the present writ petition comes to be filed by accused
No.3/petitioner. During the pendency of this petition, a final award
is passed by the Arbitral Tribunal in USA directing the Third Eye Inc.
to pay moneys demanded by accused No.1 and has dismissed the
counter-claim against accused No.1 on 13.09.2021.
14. In terms of Arbitration laws of USA, the award of Arbitral
Tribunal needs confirmation by a Superior Court. The Superior
Court of California affirms the award passed by the Arbitral Tribunal
in terms of its order dated 28-03-2022. The final award of the
Arbitral Tribunal dated 13-09-2021, reads as follows:
"I, the undersigned arbitrator, having been
designated and duly appointed in accordance with
Section 12.2 of the Master Services Agreement dated
3-10-2014, by and between Claimant UST Global Inc.
("Claimant" or "UST") and Respondent Third Eye, Inc.
("Respondent" or "Third Eye"), and having duly heard
the proofs and allegations of the parties in and prior to
the Final hearing, which closed on August 19, 2021,
award as follows:
1. UST's claim for Breach of Contract is hereby
granted, for which UST shall be entitled to
recover from Third Eye:
a. Contractual damages of $481,991.00
b. Contractual pre-judgment interest of
$515,296.60; and
c. Post-judgment interest at 10% simple
interest per annum.
2. With respect to Third Eye's First Counterclaim
seeking a declaratory judgment "regarding the manner of
payment required for the SOWs at issue in this case," the
undersigned determines that cash is the proper method of
payment under the Statements of Work at issue in this case
and, in addition, the specific declaratory relief sought by
Third Eye, including the following declaratory judgments:
a. UST's SOWs for Project IDs ThDE-002-01-00,
THDE-002-02-00, THDE-0006-01-00, THDE-
0006-02-00, THDE-0007-01-00, and THDE-
0012-01-00 do not specifically provide for
payment in cash;
b. The MSA permits Third Eye to pay for UST's
services in Third Eye shares;
c. Excluding interest, at $60.00 per share,
issuance of 8,037 Third Eye common shares to
UST constitutes payment in full for the SOWs;
are hereby denied.
3. Third Eye's Second Counterclaim, for Breach of
Contract is hereby denied;
4. Third Eye's Third Counterclaim, for Tortious
Interference with contract, is hereby denied;
5. Third Eye's Forth Counterclaim, for Tortious
Interference with Prospective Economic Advantage, is hereby
denied;
6. Third Eye's Fifty Counterclaim, under the California
Uniform Trade Secrets Act, Cal.Civ. Code s 3426, et seq.,
including without limitation Respondent's claim for attorney's
fees and expert witness fees pursuant to Cal.Civ.Code s
3426.4 is hereby denied.
7. Third Eye's claims that UST is vicariously liable for
the alleged torts of its employees under the doctrine of
respondent superior are hereby denied.
8. Third Eye shall take nothing against UST;
9.The compensation and expenses of the arbitrator
shall be borne by the parties equally; therefore, because the
parties have shared arbitral compensation and expenses
equally to date, neither arbitral compensation nor expenses
are due from each party to the other; and
10. The parties have stipulated that neither party
continues to assert any claim for attorneys' fees in this
matter; therefore, the parties' prior claims for attorneys' fees
are denied.
11. The undersigned awards damages to UST in the
following amounts, which total $997,287.60 through
September 13, 2021, and continue to accrue as shown
below:
a. Contractual damages of $481,991.00
b. Contractual pre-judgment interest of
$515,296.60;
c. Post-judgment interest at 10% simple interest
per annum.
This Final award is in full settlement of all claims and
counterclaims submitted to this arbitration."
(Emphasis added)
and confirmation order dated 28-03-2022, passed by the Superior
Court of California, County of Orange reads as follows:
"Petition to Confirm Arbitration Award
Before the Court in UST Global Inc.'s ("UST") Petition to
confirm the September 13, 2021 Arbitration Award and Third
Eye,Inc.'s ("Third Eye") Cross-Petition to vacate the award.
The Court is inclined to confirm UST's Petition to confirm the
award and deny the Cross-Petition.
... .... ...
Timeliness of UST's Response
... ... ...
Merits
Moving to the merits, Claimant UST Global Inc. and
Respondent Third Eye Inc. arbitrated UST's claims in Aliso
Viejo on August 17 through 19, 2021 in person before
arbitrator John DeGroote, DeGroote Partners (based in Texas),
pursuant to AAA rules.
On September 13, 2021, the arbitrator awarded UST
$997.287.60 with 10% per year interest against Third Eye.
Both petitions are timely.
The matter stemmed from a Master Services Agreement,
effective 10-03-2014 where UST contracted with Third Eye to
create trade secret software solutions for Third Eye.
UST sued for breach of contract. Third Eye counterclaimed for
declaratory relief, breach of contract, tortuous interference
with contract, tortuous interference with prospective economic
advantage, trade secret violations. UST was entirely
successful. Third Eye obtained noting from the arbitration.
UST filed a petition in this Court to confirm the award. Within
days of the filing, Third Eye filed a "request for the trial de
novo" and a Cross-Petition to vacate the award on the grounds
that the arbitrator exceeded his authority and refused to hear
evidence. (ROA 9. 10).
Third Eye makes three general arguments as to why the court
should not confirm the award, none of which the court find
persuasive.
... ... ...
CCP s 1286.2(a)(6)
Third, and finally, following the close of evidence, but before
rendering his Final Award, the Arbitrator was appointed to
serve as mediator in a mater in which counsel for UST
represented a party. Third Eye argues that this potential
engagement was required to be disclosed pursuant to Section
7(d)(5) of the Ethics Standards for Neutral Arbitrators in
Contractual Arbitration, as adopted by the California Judicial
Council. No such disclosure was made, and thus Third Eye
argues that it was not afforded the opportunity to disqualify
the Arbitrator pursuant to Section 1281.9 of the California
Code of Civil Procedure.
Section (a)(6) allows a court to vacate the arbitration award if
an arbitrator making the award...: "(A) failed to disclose within
the time required for disclosure a ground for disqualification of
which the arbitrator was then aware."
Section 1281.9 provides, in turn: "the proposed neutral
arbitrator shall disclose all matters that could cause a person
aware of the facts to reasonably entertain a doubt that the
proposed neutral arbitrator would be impartial,
including....[a]ny matters required to be disclosed by the ethics
standards for neutral arbitrators adopted by the Judicial
Council pursuant to t his chapter" (CCP s 1281.9(a)(2).)
The Ethics Standards for Neutral Arbitrators in Contractual
Arbitrations require an arbitrator to disclose all matters in
which "(t)he arbitrator is serving or has served as a dispute
resolution neutral.... involving a party or lawyer for a party and
the arbitrator received or expects to receive any form of
compensation for serving in this capacity". (Ethics standards
For Neutral Arbitrators in Contractual Arbitrations s 7(d)(5).)
Evidence in the final hearing closed on August 19, 2021. The
Arbitrator's Final Award was due within thirty (30) days from
the date. While the Arbitrator was evaluating the evidence and
considering the Final Award, he was appointed to serve as
mediator in Southwest Airlines Company v. Kiwi.com and
Kiwi.com SRO, Case No.3:21-cv-0098-E, in the United States
District Court for the Northern District of Texas ("Southwest
Airlines"). The Arbitrator issued the Final Award on September
13, 2021. No party filed an application to correct the award
with the arbitrator. (Gaudioso Decl., /3.)
Two days later, one of the attorneys representing UST entered
an appearance as additional counsel for defendants in
Southwest Airlines. (See Exhibit "N").
Third Eye failed to establish that the Arbitrator began "serving"
as the mediator in another case before the conclusion of the
arbitration proceeding."
The suit in Commercial Court i.e., O.S.No.176 of 2021 is referred to
arbitration, pursuant to an application filed by the complainant
himself under Section 8 of the Arbitration and Conciliation Act,
1996. This has been challenged by accused No.2 before this Court
in Writ Petition No.17934 of 2022. Therefore, Third Eye Inc. is now
saddled with payment of huge moneys by the Arbitrator, which is
confirmed by the Superior Court of California, County of Orange.
Therefore, a sword of one proceeding is hanging on the head of the
complainant. Insofar accused No.2 is concerned, on its seeking
arbitration for the amounts that are to be paid to it, the matter is
referred to arbitration and its challenge is pending before this
Court.
15. That is all the afore-quoted link in the chain of events, its
dates and moneys that are directed to be paid by the competent
Court against Third Eye Inc., which the complainant claims to be
controlling and the criminal complaint comes to be registered. That
several transactions between the parties which are purely
commercial in nature, the crime comes to be registered. If it is for
other acts to defend themselves, it is the defense that they have to
put up. To continue or permitting continuance of investigation
against the petitioner by the Police what is germane to be noticed
is, whether the complaint would make out any offence against the
petitioner. The complaint is quoted hereinabove. There is not even
a whisper of any act of the petitioner. Therefore, it is a clear case
where the petitioner is hauled into the web of crime without there
being any rhyme or reason. Reference is being made to the
judgment of the Apex Court in the case of STATE OF HARYANA v.
BHAJAN LAL1, in the circumstances becomes apposite. In the said
Judgment, the Apex Court holds as follows:
"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 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
1992 Supp (1) SCC 335
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 concerned Act (under
which a criminal proceeding is instituted) to the
institution and continuance of the proceedings and/or
where there is a specific provision in the Code or the
concerned Act, 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."
(Emphasis supplied)
In the light of 1st clause in the BHAJAN LAL'S case (supra),
even if the complaint is taken as true, it would not make out any
offence alleged against the petitioner. Therefore, if further
investigation is permitted to be continued, it would unmistakably
lead to proceedings becoming an abuse of the process of law.
16. Yet another factor that would weigh in favour of the
petitioner is the preceding analysis, they are purely commercial in
nature. In a purely commercial transaction, the complainant seeks
to dress those transactions with a robe of crime, which should not
be permitted, in terms of the judgment rendered by the Apex Court
in the case of WYETH LIMITED (supra), wherein it is held as
follows:
"14. A careful reading of the complaint, the gist of
which we have extracted above would show that none of the
ingredients of any of the offences complained against the
appellants are made out. Even if all the averments contained
in the complaint are taken to be true, they do not make out
any of the offences alleged against the appellants. Therefore,
we do not know how an FIR was registered and a charge
sheet was also filed.
15. The contention of the learned senior counsel for
respondent No.2 that the Court has to take note of the final
report filed by the police along with the statement of
witnesses, could have been accepted by us, if the whole
thing had emanated from a First Information lodged with the
police. Respondent No.2 actually filed a private complaint
under Section 200 Cr.P.C, which was referred by the Court
under Section 156(3) to the police. When
this complaint itself disclosed nothing more than a
commercial relationship which broke, it is not possible for
respondent No.2 to enlarge the scope of his complaint by
merely adding the language used in the text of the Indian
Penal Code.
16. Admittedly appellant No.1 had instituted a civil
Suit on the file of the judicature at Bombay and also
obtained an order for the appointment of a Court Receiver to
take possession of the goods lying in the godown. The
appellants have also lodged a criminal complaint, which was
refused to be quashed by the High Court of Patna. It is only
after the appellants filed a civil suit and a criminal complaint
that respondent No.2 chose to file his complaint.
17. The High Court was clearly in error in overlooking
the application for bringing on record the subsequent
development of the filing of the chargesheet and the prayer
for inclusion of the relief of quashing of the chargesheet in
the original petition.
18. It is too late in the day to seek support from any
precedents, for the proposition that if no offence is made out
by a careful reading of the complaint, the complaint deserves
to be quashed."
The Apex Court, in the aforesaid judgment, clearly holds that
the High Court fell in error in overlooking the fact that the criminal
complaint is registered after the complainants had filed a civil suit
and therefore, the matter was clearly civil in nature. In the case at
hand, as narrated hereinabove, the issue cannot but be held to be
arising out of commercial transactions between the parties.
Therefore, the said commercial transaction or the suits that are
filed are sought to be given a colour of crime, which is precisely
held to be contrary to law by the Apex Court in plethora of
judgments, apart from the one that is quoted hereinabove. Quoting
all the judgments would only render this order to be bulky, as it is
by now trite law that the Court exercising jurisdiction under Section
482 of the Cr.P.C. has to step in and obliterate such proceedings,
which are civil/commercial in nature and are given a cloak of crime,
except in circumstances as elucidated by the Apex Court in those
very judgments which would depend upon the facts of each case.
17. In the light of all the aforesaid reasons, permitting further
proceedings to continue particularly, against the petitioner would
degenerate into harassment, become an abuse of the process of
law and ultimately, result in miscarriage of justice.
18. Wherefore, the following:
ORDER
(i) The writ petition is allowed.
(ii) The FIR in Crime No.56 of 2021 registered by South
CEN Crime Police Station, Bangalore and pending
before the I Additional Chief Metropolitan Magistrate,
Bangalore, stands quashed qua the petitioner.
(iii) It is made clear that any observations made in the
course of the order, will not bind or influence any
other civil proceedings pending between the other
parties.
Sd/-
JUDGE
nvj
CT:MJ
