Raaj Dhawan vs The State Of Madhya Pradesh
2023 Latest Caselaw 12866 MP

                            1
      IN    THE    HIGH COURT OF MADHYA
                       PRADESH
                     AT JABALPUR
                         BEFORE
           HON'BLE SHRI JUSTICE VISHAL DHAGAT


           MISC. CRIMINAL CASE No. 10286 of 2015

BETWEEN:-
1.    RAAJ    DHAWAN  S/O SHRI MANGAL
      DHAWAN, AGED     ABOUT 68 YEARS,
      OCCUPATION: MANAGING DIRECTOR, M/S
      R.B. CAD COORDINATE SYSTEM PVT. LTD.,
      PLOT NO. 408 SECTOR 22, GURGAON
      (HARYANA) RESIDENT OF 3263, SECTOR 23,
      GURGAON (HARYANA).

2.    KUNAL DHAWAN S/O RAAJ DHAWAN, AGED
      ABOUT     38  YEARS, OCCUPATION: EX.
      DIRECTOR M/S R.B CAD COORDINATE
      SYSTEM PVT. LTD. PLOT NO. 408, SECTOR 22
      GURGAON (HARYANA) R/O 3263, GURGAON
      (HARYANA)    THROUGH       POWER     OF
      ATTORNEY HOLDER SHRI RAAJ DHAWAN,
      S/O SHRI MANGAL DHAWAN, AGED ABOUT
      68 YEARS, MANAGING DIRECTOR, M/S. R.B.
      CAD COORDIANTE SYSTEM PVT. LTD.,
      ADDRESS; PLOT NO.408, SECTOR 22,
      GURGAON (HARYANA) RESIDENT OF 3263,
      SECTOR 23, GURGAON (HARYANA).

                                                 .....PETITIONERS
(BY SHRI ANIL KHARE - SENIOR ADVOCATE WITH SHRI SAHIL
SHARMA - ADVOCATE FOR PETITIONERS)

AND
1.    THE STATE OF MADHYA PRADESH
      THROUGH DISTRICT MAGISTRATE, BHOPAL
      (MADHYA PRADESH)
      (FORMAL PARTY)

2.    AJAY KUMAR MOHASE S/O C.S. MOHASE,
      AGED ABOUT 46 YEARS, OCCUPATION:
      PROP. M/S. SAPPHIRE HEIGHTS R/O MIG,
                           2
      A/89 BEEMA KUNJ, KOLAR ROAD, BHOPAL
      (MADHYA PRADESH)

3.    B.P.S TOMAR S/O JAGBIR SINGH TOMAR,
      AGED ABOUT 32 YEARS, R/O VILL. MADHI,
      POST DOKI, DISTRICT AGRA (UTTAR
      PRADESH)

                                                        .....RESPONDENTS
(BY   SHRI C.M. TIWARI - GOVERNMENT ADVOCATE FOR
RESPONDENT NO.1/STATE AND SHRI ANKIT SAXENA - ADVOCATE
FOR RESPONDENT NO.2)

      Reserved on        :    17.07.2023
      Delivered on        :   09.08.2023
      This case having been heard and reserved for orders, coming on
for pronouncement this day, the Court pronounced the following:
                                 ORDER

Petitioners have filed this petition under Section 482 of Cr.P.C for quashing of complaint, which is registered under Section 406, 420, 467, 468, 471 read with Section 120-B of IPC against petitioners vide order dated 03.09.2013 passed by Judicial Magistrate First Class, Bhopal, in criminal Case No.RCT No.7508/2013.

2. Petitioners, being aggrieved by aforesaid order, has preferred criminal revision No.682/2013, which was dismissed vide order dated 30.04.2015. Impugned order dated 30.04.2015 is challenged on the ground that dispute between parties is of civil nature and appropriate remedy is to file civil case. Continuance of criminal proceedings will amount to abuse of process of law. It is also submitted that civil suit for recovery is pending between parties. Petitioners are Directors of Company and they cannot be held liable for acts of the Company without making Company

as accused in the case. It is submitted that no fraud or forgery is said to have been committed by petitioners. If there is any deception, then same is practiced either by Mr. B.P.S.Tomar over complainant or by complainant over Mr. B.P.S. Tomar. There is inter se dispute between Respondent No.2 and Respondent No.3 and petitioners are unnecessarily dragged into, though they have no role. Complainant has first time stated that he is proprietor of the firm only after settlement has been arrived between petitioners and Respondent No.3. Petitioners were not in knowledge of fact that complainant is Proprietor of M/s Sapphire Heights and Respondent No.3 is not proprietor.

3. Learned Senior counsel appearing for petitioners has relied on judgement reported in (2018) 13 SCC 374 - Medmeme. LLC & Ors. Vs. IHORSE BPO Solutions Private Limited. In said case, it has been held that when civil remedies are available and civil proceedings are pending and respondent had resorted to filing of complaint under Section 420, 406, 409 read with Section 120-B of IPC, then complaint gives clear impression that it is primarily a case of alleged breach of contract for not making payments and criminal proceedings were quashed by Apex Court. Reliance is also placed on judgment reported in (2018) 15 SCC 273 - Suresh and others Vs. State of Andhra Pradesh and Ors. In said case, it has been held that merely because civil dispute is involved, remedy under criminal law is not barred, if criminal case is made out. Criminal law cannot be invoked for settling civil dispute when no offence is committed.

In these circumstances, appeal was allowed by Apex Court. Reliance is also placed upon judgment reported in (2000) 4 SCC 168 Hridaya

Ranjan Prasad Verma & Ors. Vs. State of Bihar & Another . In said case, Apex Court has drawn out distinction between mere breach of contract and offence of cheating. It has been held that distinction depends upon the intention of the accused at the time to inducement which may be judged by his subsequent conduct but for this subsequent conduct is not the sole test. Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction, that is the time when the offence is said to have been committed. It is submitted that no case under Section 420 of IPC is made out against petitioners. Learned Senior Counsel also relied on judgment reported in (2015) 12 SCC 781 Sharad K. Sanghi Vs. Sangita Rane, wherein it has been held that criminal proceedings, in which, Company has not been made an accused and proceedings are initiated only against Managing Director, then said proceedings are not maintainable. Apex court held that where complaint intends to rope in Managing Director or any Officer of Company, it is essential to make requisite allegation to constitute the vicarious liability. It is obligatory on part of complainant to make requisite allegations, which would attract the provision constituting vicarious liability. Learned Senior counsel also relied on judgment reported in (2019) 17 SCC 193 - Shiv K Jatia Vs. State of NCT, Delhi. It has been held that for fastening vicarious liability, there must be specific statutory provision in that regard applicable to the facts of the case. If there is no such provision, then criminal liability can only be imposed for direct actions of the individual concerned, culpability of

which must be established in accordance with law.

4. Learned Sr. Counsel also relied on judgment reported in (2015) 4 SCC 609 - Sunil Bharti Mittal Vs. Central Bureau of Investigation, wherein it has been held that a corporate entity is an artificial person which acts through its officers, directors, managing director, chairman etc. If such a company commits an offence involving mens rea, it would normally be the intent and action of that individual who would act on behalf of the company. It is the cardinal principle of criminal jurisprudence that there is no vicarious liability unless the statute specifically provides so. When company is offender, vicarious liability cannot be imputed automatically in the absence of statutory provision to this effect. It is submitted by learned Senior Counsel that no documents have been shown to have been forged by petitioners. No evidence is available to connect petitioners with alleged offences and complaint is absolutely unfounded and, therefore, same may be quashed and proceedings arising due to said complaint may also be quashed.

5. Counsel appearing for respondent No.2 submitted that petitioner is trying to make purely civil dispute between the parties a criminal dispute. It is also submitted that important documents have not been filed and there is suppression by petitioners and on this ground petition deserves to be dismissed.

6. It is submitted that respondent No.2 is Proprietor of Firm M/s. Sapphire Heights and its office is situated at HIG-A/29, Beema Kunj, Kolar Road, Bhopal. It is submitted that various permissions for opening of office and firm was taken by respondent No.2 and respondent No.2 is

also recognized as owner of said firms by Water Resource Department and respondent No.2 is paying Income Tax, Central Sales Tax, M.P. Vat Tax, etc. for the firm and also operating bank accounts on behalf of firm. It is submitted that respondent No.3 is a paid employee of the firm and he does not have any legal right or authority to receive payment due to M/s. Sapphire Heights. Work order by M/s. R.B. Cad Coordinate System Pvt. Ltd. was given to M/s. Sapphire Heights. Respondent No.3 conveyed to petitioners change of premises and starting of new company M/s. Topo World System and request was made to petitioner No.1 to make all financial transaction hereinafter with new company M/s. Topo World System. It was also represented that respondent No.3 has closed his company M/s. Sapphire Heights. Petitioners recognized respondent No.3 as Proprietor of Sapphire Heights. Petitioners from inception had knowledge that respondent No.2 is the Sole Proprietor of M/s. Sapphire Heights and respondent No.3 has no locus or authority in law to settle claim of said company and receive payment for work done and executed by the authority. It is submitted that petitioners along with respondent No.3 has fabricated documents to show that payment has been made to respondent No.2. However, the details of cheque and other documents were not filed to show that payment has been made to respondent No.3.

Petitioners and respondent No.3 have acted for mutual benefit and fabricated documents. Though, petitioners were aware that respondent No.3 is not Proprietor and they have claimed to settle huge amount, outstanding and payable to firm of respondent No.2 and only paltry

amount has been paid to respondent No.3 for cooperating in conspiracy and to help in fabrication and forging of documents showing final settlement. It is submitted that if petition is allowed, then well narrated prosecution will be nipped in the bud. In these circumstances, petition be dismissed. It is also alleged that vouchers and other documents which are produced to show settlement and payment of amount in favour of respondent No.3 are forged and fabricated.

7. Heard the counsel for the parties.

8. On going through facts of the case, it is clear that there is dispute between respondent No.2 and respondent No.3 regarding proprietorship of the company. Admittedly, there is dispute between respondent Nos.2 and 3 regarding proprietorship of M/s. Sapphire Heights. Documents also reveal that petitioners were transacting business with respondent No.2 and document is also on record to show that respondent No.3 has represented that he has formed a new company. Due to financial difficulty and henceforth, business may be transacted with respondent No.3. Respondent No.2 has filed documents on record to show that respondent No.2 is owner. Petitioners was also making transaction with respondent No.2, but on representation of respondent No.3, has started making transaction to respondent No.3 with new company M/s. Topo World System. There is allegation that petitioners acting hand in glove with respondent No.3 had refused payment of huge sum of money to M/s. Sapphire Heights and has settled the claim in favour respondent No.3 by paying less amount. If said averment is taken to be true, then petitioners are also guilty of committing offences of cheating and forgery by making

less payment to respondent No.3 and depriving respondent No.2 of his rightful claim. It has also been averred that forged documents had been prepared and details of payment etc. has not been shown. There is also allegation that in fact, no payment has been made to respondent No.3 or very less payment has been made to deprive respondent No.2 of his rightful claims. By said arrangement, petitioners as well as respondent No.3 has gained financially.

9. Another question to be considered in this case, is whether complaint can be filed against the person not impleading Company as party in it.

10. Learned Senior Counsel appearing for the petitioners has relied on judgment passed by Apex Court in case of Thermax Limited and Others Vs. K.M. Johny and Others reported in (2011) 13 SCC 412 and submitted that offence is said to have been committed by Company, therefore, Company ought to have been impleaded as party in the case. Judgement relied upon by learned senior counsel is in respect of offence committed under Negotiable Act. Section 141 of Negotiable Act, 1881 specifically lays down that person committing the offence who was in charge and responsible to Company for conduct of business as well as Company has to be impleaded as party in the case. In this case, allegations are made under Sections 406, 420, 467, 468, 471, 120-B of the IPC. Though, agreement may have been signed on behalf of Company but it was signed by petitioners who is Director of the Company. Company as well as Director may be benefited by the act committed by the petitioners.

Petitioners are personally responsible for committing the act and further corporate veil can always be lifted in criminal cases where offence of cheating and forgery has been committed under corporate identity.

11. There is dispute between the parties regarding forging of documents, payment of money and proprietorship of M/s. Sapphire Heights which could be adjudicated in trial. It cannot be said that petitioners have nothing to gain as they had already made payment. Petitioners have made less payment as alleged and, therefore, they may have financial benefits and may gain wrongfully.

12. Complaint case cannot be quashed at initial stage. There are serious allegations made against the petitioners which requires evidence to be recorded.

13. In these circumstances, this petition filed by petitioners is dismissed.

(VISHAL DHAGAT) JUDGE nd/sp/-shabana Digitally signed by SHABANA ANSARI Date: 2023.08.10 16:42:50 +05'30'