Cc 1413/2014 Of Judicial ... vs By Advs
2021 Latest Caselaw 10677 Ker

                  IN THE HIGH COURT OF KERALA AT ERNAKULAM

                                     PRESENT

                   THE HONOURABLE MRS. JUSTICE M.R.ANITHA

           TUESDAY, THE 30TH DAY OF MARCH 2021 / 9TH CHAITHRA, 1943

                          Crl.MC.No.4860 OF 2015(C)

    CC 1413/2014 OF JUDICIAL MAGISTRATE OF FIRST CLASS -1 ,PERUMBAVOOR


PETITIONERS/ACCUSED 1 TO 5

       1        ROY A VARICATT,
                S/O.V.T. AUGUSTINE, VARICATT HOUSE, NEAR P & T QUARTER,
                THODUPUZHA, IDUKKI

       2        MR.BASIL CYRIL, S/O.M.A.CYRIL
                FLAT 2A 1, ABAD, LOTUS LAKE APARTMENT, CHILAVANNOOR, KOCHI

       3        ROY CYRIL
                S/O.M.C.CYRIL, RESIDING AT M.A.CYRIL ROAD, MOOTHINGAL HOUSE,
                KARIPPALAM

       4        DAI ROY,
                W/O.ROY, VARICATT HOUSE, NEAR P & T QUARTERS, THODUPUZHA,
                IDUKKI

       5        PHILDA CYRIL
                W/O.BASIL CYRIL, FLAT 2A 1, ABAD, LOTUS LAKE APARTMENT,
                CHILAVANNOOR, KOCHI

                BY ADVS.
                SRI.VIPIN NARAYAN
                SRI.M.REVIKRISHNAN
                SRI.V.C.SARATH

RESPONDENTS/COMPLAINANT AND STATE

       1        M.M.VARGHESE
                S/O.MATHAI, MATTUVANCHERRY HOUSE, THAMARACHAL,
                KIZHAKKAMBALAM

       2        STATE OF KERALA REPRESENTED BY
                PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM

                BY ADV. SRI.DINESH R.SHENOY
                BY ADV. SRI.SANIL JOSE
                SR.PP SRI.D.CHANDRASEKHARAN

     THIS CRIMINAL MISC. CASE HAVING BEEN FINALLY HEARD ON 30.03.2021, THE
COURT ON THE SAME DAY PASSED THE FOLLOWING:
 Crl.M.C.4860/2015
                                             2

                                           ORDER

Dated : 30th March, 2021

1. This petition has been filed under Sec.482 Cr.P.C to quash

the entire proceedings in C.C.1413/2014 on the file of

Judicial Magistrate of First Class-I, Perumbavoor.

2. C.C.1413/2014 has been taken on file by the learned

Magistrate upon a private complaint filed by the 1 st

respondent. After taking sworn statement of the complainant

and perusing the complaint and documents, the learned

Magistrate taken on file the case under Secs. 403, 420,

409, 418 120B and 34 IPC. Bailable warrant was issued to

the 1st accused and summons was issued to accused Nos.2 to

5. Against which the petitioners/accused came up before

this Court.

3. Heard both sides. Lower Court Records were called for and

perused.

4. According to the petitioners the entire allegation in

Ext.P1 complaint is based upon the financial transaction in

between the petitioners and the 1st respondent. The

allegation in the complaint is that they have induced the

1st respondent to enter into a partnership deed and to part Crl.M.C.4860/2015

with huge amount promising to conduct gold business in

Madagascar. But did not act in accordance with the

agreement, thereby cheated the 1st respondent. According to

them, even if the entire allegations in the complaint are

admitted, it would only disclose some civil dispute and the

attempt of the 1st respondent is to resort to a short cut

method and thereby pressurize the petitioners to settle the

civil dispute and claims. It is also their contention that

there is specific clause in the partnership agreement to

invoke the arbitration clause in case of dispute. The

petitioners already started gold business in Madagascar and

the whole transactions are properly accounted and the 1 st

respondent is fully aware of all those factors. There is

nothing to infer any dishonest intention from the part of

the respondent and Sec.420IPC would not be attracted. Civil

Suit has already been filed as O.S.67/2014 and O.S.116/2015

for realization of the amount. The property of the 2 nd

petitioner has already been attached. Hence the entire

proceedings initiated against the petitioners is an abuse

of process of law, the learned counsel contends.

5. The learned counsel for the 1st respondent on the other Crl.M.C.4860/2015

hand, contended that huge amount has been got invested by

the petitioners after entrapping the 1st respondent in a

transaction of purchasing shares of M/s.Cochin Shell

Products India Ltd, and thereby gaining trust and

confidence of the first respondent/complainant. 1 St

petitioner subsequently introduced petitioners 2 and 3 as

experienced jewellers involved in gold business and he was

also taken to their business premises and convinced him

that on investing funds abroad, there would be 100% profit.

It is also his contention that 1st accused who is a lawyer,

approached the 1st respondent with a draft partnership deed

and thereby fraudulently and dishonestly persuaded the

complainant to join them in executing the partnership deed

on 12.12.2012. The partnership was also registered but

apart from the registration, the firm never started

functioning and no business was conducted. Thereafter the

1st respondent was forced to invest money in gold business

in Madagascar on various occasion. It is also his

contention that the petitioners colluded and converted the

money in violation of their trust reposed upon them. There

is also allegation of advancing amount for the daughter's Crl.M.C.4860/2015

marriage of the 1st petitioner. In total, according to him,

an amount of Rs.75,27,263/- has been obtained from him. A

promissory note acknowledging the debt is issued on

13.9.2013. It is also his contention that the 1 st

petitioner executed a Power of Attorney with respect to his

property and handed over the title deed and that according

to him, was also a fraudulent act since the Power of

Attorney was not registered. It is further alleged that on

subsequent demand by him, cheque for Rs.75,00,000/- dated

12.9.2014 was issued. But on presentation of the same, it

was also bounced for reason of 'funds insufficient'.

According to the 1st respondent, the criminal prosecution

initiated against the petitioners is perfectly legal and

proper and no interference is called for.

6. Based on the above rival contentions, the following points

arise for consideration.

(i) Whether the dispute between the parties is purely civil

and whether any criminal offence is prima facie made out.

(ii) Whether the petitioners have any dominion over the

money entrusted.

(iii) Whether there was any dishonest intention from the Crl.M.C.4860/2015

inception from the part of the petitioners.

7. Point Nos.(i to (iii)) - Annexure-A is the complaint filed

by the 1st respondent against the petitioners. Paragraph

NO.1 itself would go to show that on an approach by the 1 st

petitioner, first respondent/complainant purchased shares

of M/s.Cochin Sheel Products India Ltd in Kasargode and

invested an amount to the tune of Rs.32,33,958/-. 1 st

respondent has no dispute with respect to that transaction.

It is after that, according to him, accused Nos.1 to 3

approached him with a proposal for investment of money in a

gold business promising that there would be 100% profit. It

is further admitted that a partnership agreement was

entered into between the petitioners and the 1 st respondent

as the Managing partner, in the name and style "M/s.Mary

Math Enterprises" and that partnership was got registered

also on 17.1.2013. A copy of the acknowledgment of

Registrar of Firms with respect to "M/s.Mary Matha

Enterprises" is produced as document No.9 in the Lower

Court Records. It would indicate that the 1 st respondent

took an active role for the registration of the partnership

and he is also the Managing Partner as per the partnership Crl.M.C.4860/2015

deed. Even the complaint filed by him would show that the

investment has been made by him after the formation of the

partnership and its registration. In this context,

petitioner's counsel placed reliance on Velji Raghavji

Patel v. State of Maharashtra (1965 KHC 667) wherein it has

been held that in order to attract breach of trust under

Secs 405 and 409 IPC, investment of dominion over the

property is essential. In order to establish entrustment of

dominion over property to an accused, the mere existence of

that person's dominion over the property is not enough and

it is also held that dominion of partner over partnership

asset is not an entrustment unless there is special

agreement. So in order to find that a person has committed

criminal breach of trust, it must be established that he

was either entrusted with the dominion over the property

which is said to have been converted to his own use and

every partner has also dominion over property by reason of

the fact that he is a partner. It is also necessary that

the prosecution must establish that the petitioners have

dominion over the assets of the partnership by any special

agreement between the parties. In the absence of any such Crl.M.C.4860/2015

special agreement, the fact that a partner receives money

belonging to the partnership cannot be said to have

received it in a fiduciary capacity or he cannot be held to

have been entrusted with dominion over the partnership

properties. So there is nothing in Annexure-A partnership

indicating that the petitioners received the money

belonging to the partnership with a dominion over the money

entrusted. So the allegations in the complaint only

indicate entrustment of the money by the 1st respondent in

pursuance of the partnership agreement entered into between

the parties without any specific clause to give the

petitioners any dominion over the property entrusted in the

partnership. Hence prima facie the ingredients under

Sec.409 will not be attracted.

8. The learned counsel for the petitioners would also

vehemently contend that the allegation in the entire

complaint would not make out any dishonest intention from

the inception from the part of the petitioners and it is

very much necessary to attract an offence under Sec.420

IPC. As pointed out earlier, the complaint begins with a

transaction of investment of money to the tune of Crl.M.C.4860/2015

Rs.32,33,958/- by the first respondent/complainant by the

purchase of shares of a Company in the name and style

M/s.Cochin Shell Products India Ltd, in Kasargode. It is

thereafter that the partnership agreement was executed in

between them. The learned counsel placed reliance on

S.W.Palanitkar and Others v. State of Bihar and Another

((2002) 1 SCC 241) paragraph 23 is relevant in this

context to be extracted which reads as follows :

"Many a times, complaints are filed under Section 200 Cr.P.C by the parties with an oblique motive or for collateral purposes to harass, to wreck vengeance, to pressurize the accused to bring them to their own terms or to enforce the obligations arising out of breach of contract touching commercial transactions instead of approaching civil courts with a view to realise money at the earliest. It is also to be kept in mind that when parties commit a wrongful act constituting a criminal offence satisfying necessary ingredients of an offence, they cannot be allowed to walk away with an impression that no action could be taken against them on the criminal side. A wrongful or illegal act such as criminal breach of trust, misappropriation, cheating or defamation may give rise to action both on civil as well as on the criminal side when it is clear from the complaint Crl.M.C.4860/2015

and sworn statement that necessary ingredients of constituting an offence are made out. Maybe parties are entitled to proceed on civil side only in a given situation in the absence of an act constituting an offence but not to proceed against the accused in a criminal prosecution. Hence before issuing a process, a Magistrate has to essentially keep in mind the scheme contained in the provisions of Sections 200-203 CrPC keeping in mind the position of law stated above and pass an order judiciously and not mechanically or in a routine manner."

9. In this case case also, on going through the complaint what

could be gathered is that the grievance of the complainant

is with regard to the deposit of amount in pursuance of the

partnership agreement entered into between them and the

failure of the petitioners to return the money.

S.W.Palanitkar's case would further laid down a proposition

that the dishonest intention to cheat should exist from the

beginning and mere failure to keep a promise subsequently

cannot be presumed as an act leading to cheating.

10. The complaint Annexure-A would reveal that the amounts

have been deposited by the 1st respondent in pursuance of

the partnership agreement between the parties. The copy of Crl.M.C.4860/2015

the partnership agreement produced as Annexure-B would

clearly show that the main object of the firm is to do

business in countries outside India along with oversees

partners which are permitted by the law of that country and

also to carry on such other business or businesses as may

be agreed upon by the parties from time to time. So the

starting of gold business at Madagascar and investment of

money in the said business by the first

respondent/complainant prima facie seems to be in pursuance

of the terms of the agreement. Though the 1 st respondent

would contend that no business was started at Madagascar,

the learned counsel for the petitioners brought my

attention to the documents produced before the Civil Court

from the side of the petitioners to prove the transaction

of the partnership. But at this stage I am not expected to

evaluate the documents produced from the side of defence.

But it is admitted in the complaint itself that O.S.67/2014

and O.S.116/2015 have been filed by the 1st respondent for

realisation of the amount from the petitioners.

11. The learned counsel placed reliance on Anand Kumar

Mohatta and Another v. State (NCT of Delhi), Department of Crl.M.C.4860/2015

Home and Another ((2019) 11 SCC 706). That was a

proceedings under Sec.482 Cr.P.C initiated by the

appellant/accused for quashing the proceedings. The facts

of the case would go to show that pursuant to an agreement

of the accused who is the owner of the property and the

developer for construction of flats, developer paid

interest fee security money to the owner/accused which was

liable to be returned to the developer after handing over

of constructed area to the accused/owner. But the agreement

was subsequently frustrated but the money was retained by

the accused even after the frustration of the agreement. In

the said context it was held that money was neither

misappropriated nor converted by accused dishonestly for

his own use nor disposed of in violation of direction of

law or contract and hence it was held that the retention of

money by the accused will not constitute an offence under

Sec.406 and it had a contours of a civil dispute. In the

present case also, the admitted case of the first

respondent/ complainant throughout the complaint is the

deposit of amount by him in pursuance of the partnership

agreement with the petitioners and the partnership Crl.M.C.4860/2015

agreement expressly provides for starting business outside

India along with oversees partners. After having executed

such a partnership agreement with the petitioners and

investing money for the business, the 1 st respondent cannot

be heard to contend about any misappropriation of funds or

cheating.

12. The learned counsel for the petitioners also placed

reliance on Mohammed Ibrahim and Others v. State of Bihar

and Another ((2009) 8 SCC 751) wherein it has been held

that when disputes are essentially of civil nature and has

been filed as criminal complaints there is a duty cast upon

the criminal Courts to check the abuse of process and the

criminal Court should ensure that criminal proceedings are

not misused for setting scores or pressurizing parties to

settle civil disputes. It has also been found therein that

civil disputes in some cases may also contain ingredients

of criminal offence and such disputes have to be

entertained notwithstanding they are also civil disputes.

13. The learned counsel for the first respondent placed

reliance on Keynote Capitals Ltd. (M/s.), Mumbai and Anr.

v. State of Kerala and Anr. [2020 (5) KHC 434]. The Crl.M.C.4860/2015

allegation against the petitioners in that case was that

they received deposits with intention to cause unlawful

loss to the depositors and in that decision it has been

held that when the transaction is not transparent and

without any statutory authority intended to cause unlawful

loss to various depositors and canvassed deposits under the

guise of shares by constituting a Limited Company by

accused themselves, it would prima facie reveal the

deception played on the de facto complainant and others. It

was in that context it was held that mere existence of

civil liability will not itself take away the criminal

liability arising out of the transaction and hence the

court was not inclined to quash the Final Report filed

u/s.173(2) Cr.P.C. So the fact situation of that case has

no application in the present case since the first

respondent has no such case as against the petitioners.

14. On evaluating the averments in the complaint it can

very well be concluded that the entire averments in the

complaint is with regard to a partnership agreement entered

into between the parties and investments of money by the

complainant in pursuance of the partnership arrangement and Crl.M.C.4860/2015

subsequent dispute between the partners with regard to the

financial dealings in between them. There is also averment

in the complaint regarding advance of money to the marriage

of the daughter of the 1st petitioner to the tune of

Rs.22,18,500/ and non payment of the same also has been

included in the complaint to allege the misappropriation

and cheating. Though the complainant alleges that no gold

business as alleged in Madgascar has been commenced and

money has been syphoned by the petitioners for their own

use in view of the partnership agreement which actually has

been presented for incorporation by the 1st respondent

himself would not enable the 1st respondent to make such

allegation. It is true that there is a contention for the

1st respondent that the Power of Attorney was not

registered and the purposes for which it has been entrusted

with him cannot be fulfilled without registration etc. But

the entrustment of the title deed itself would prove bona

fides of the petitioners. There is also allegation of

execution of promissory note by the petitioners in favour

of the 1st respondent and also execution of cheque though

found to be bounced by reason of 'insufficiency of funds'. Crl.M.C.4860/2015

All those transactions between the parties would only prima

facie reveal the civil nature of the transaction existing

between the parties.

15. The learned counsel for the petitioners also placed

reliance on Prof. R.K.Vijayasarathy and Another v. Sudha

Seetharam and Another ((2019) 16 SCC 739), wherein it has

been held that in cases where there is prima facie absence

of ingredients of offence and there is attempt to make a

civil dispute with a criminal nature despite absence of

ingredients necessary to constitute criminal offence, the

invocation of power under Sec.482 Cr.P.C is found to be

justified. That was also a case in which appellant

instituted civil Suits for recovery of amount and

thereafter filed complaint alleging commission of offence

under Secs 405, 415 and 420 alleging that the money

entrusted was for his benefit and not returned on demand.

16. According to the learned counsel for the petitioners, the

process of initiating criminal proceedings against the

petitioners is also an abuse of process of law. The wives

of the petitioners 1 & 2 have also been arraigned as

accused 4 & 5. The mala fides of the first respondent is Crl.M.C.4860/2015

explicit on arraigning the wives of the accused No.1 & 2 as

accused 4 & 5. Actually, they have no connection at all

with the business transaction of the petitioners. In the

complaint, there is allegation with respect to the 4 th

accused (wife of the 1st accused) alleging that 1st and 4th

accused approached him for financial aid in connection with

the marriage of the daughter and the amounts so advanced as

per their request is stated as Rs.22,18,500/-. It is

further alleged that accused 4 & 5 received amount on

behalf of their husbands while they were at abroad. But no

date or the amount availed also have not been specified. So

accused 4 & 5 have been arraigned in the complaint without

any material prima facie to attract the ingredients of the

offence. So that would strengthen the contention of the

learned counsel for the petitioners that the wives are

arraigned as accused to pressurize them in effecting

payment of amount.

17. The learned counsel for the respondent also placed

reliance on Ismail C.A. v. Sakkeer Hussain & Anr. [2017

(2) KHC 861] in the aspect of admissibility of judgment in

one proceedings and its relevancy in another proceedings Crl.M.C.4860/2015

only if Secs 40, 41, 42 or 43 of the Evidence Act is

attracted. But in that case an FIR was registered based on

a private complaint filed U/S 190 Cr.Pc which was forwarded

u/s 156(3) Cr.P.C. to Police. Offences U/S 17 of Kerala

Money Lenders Act ,1958 and offences U/S 468 and 469 IPC

are also involved. It has also observed that investigation

is only started and no conclusion is possible before the

conclusion of investigation.

18. In this case, the judgments of the civil courts seem to

have been produced from the side of the petitioners only to

show the pendency of the civil proceedings against the

petitioners and the civil nature of the transaction between

the parties. No reliance is palced on those judgments by

this Court in the disposal of this case also. Based on the

above I conclude that first respondent could not prima

facie establish, any dishonest intention from the inception

and that the petitioners have any dominion over the money

deposited in view of the registered partnership agreement

executed between them. Further that the dispute between the

parties is civil in nature and criminal proceedings has

been initiated arraiging the wives of petitioners 2 and 3 Crl.M.C.4860/2015

with mala fides to pressurize them to effect the payment.

Hence ends of justice demands that the entrie proceedings

in C.C.1413/2014 on the file of Judicial Magistrate of

First Class-I, Perumbavoor to be set aside.

19. In the result, Cr.M.C allowed and all proceedings in

C.C.1413/2014 on the file of Judicial Magistrate of First

Class-I, Perumbavoor is set aside.

Sd/-

M.R.ANITHA, Judge

Mrcs/24.3.

Crl.M.C.4860/2015

APPENDIX

ANNEXURES

ANNEXURE P1 ANNEXURE A- TRUE COPY OF THE C.M.P NO.1681/2014 FIED BY THE 1ST RESPONDENT BEFORE THE JUDICIAL FIRST CLASS MAGISTRATE -I, PERUMBAVOOR, DATED 9.10.2014

ANNEXURE P2 ANNEXURE B- TRUE COPY FO THE PARTNERSHIP DEED BETWEEN PETITIONERS 1 TO 3 AND THE 1ST RESPONDENT DATED 12.12.2012

ANNEXURE P3 ANNEXURE C- TRUE COPY OF THE PLAINT FILED BY THE 1ST RESPONDENT AS O.S.NO.67/14 BEFORE THE COURT OF THS SUBORDINATE JUDGE, PERUMBAVOOR.

ANNEXURE P4 ANNEXURE D- TRUE COPY OF THE ORDER OF ATTACHMENT IN I.A.NO.1277/2014 IN O.S.NO.67/2014 OF THE COURT OF THE SUB JUDGE, PERUMBAVOOR 5.2.2015

ANNEXURE P5 ANNEXURE E- TRUE COPY OF THE PLAINT FILED BY THE 1ST RESPONDENT AS O.S.116/2015 BEFORE THE HON'BLE DISTRICT COURT (VACATION COURT), ERNAKULAM.

ANNEXURE P6 ANNEXURE F- TRUE CPY OF THE ATTACHMENT SCHEDULE IN I.A.NO.2955/15 IN O.S.NO.116/2015 BEFORE THE HON'BLE DISTRICT COURT, (VACATION COURT), ERNAKULAM.