Madras High Court
Abhishek Pesala vs The State Rep By Its on 5 December, 2023
Author: G.K.Ilanthiraiyan
Bench: G.K.Ilanthiraiyan
Crl.O.P.No.773 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved on : 24.11.2023
Pronounced on : 05.12.2023
CORAM:
THE HONOURABLE MR.JUSTICE G.K.ILANTHIRAIYAN
CRL.O.P.No.773 of 2021 and
Crl.M.P.Nos.448 & 452 of 2021
Abhishek Pesala ... Petitioner
Vs.
1.The State rep by its
Sub Inspector of Police,
Team EDF-1 Central Crime Branch,
Chennai
2.Manjit Singh Nayar ... Respondents
PRAYER:
Criminal Original petition is filed under Section 482 of Criminal
Procedure Code, to call for the records in CC.No.1569 of 2020 on the file of
the Chief Metropolitan Magistrate Court at Egmore, Chennai and to quash the
same.
For Petitioner : Mr.S.T.S.Moorthy,
Senior Counsel
for Mr.M.Krishnamoorthy
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Crl.O.P.No.773 of 2021
For Respondents
For R1 : Mr.A.Gopinath,
Government Advocate(crl.side)
For R2 : Mr.K.P.Anantha Krishna
ORDER
This criminal original petition has been filed to quash the
proceedings in CC.No.1569 of 2020 on the file of the Chief Metropolitan
Magistrate Court at Egmore, Chennai, thereby taken cognizance for the offence
under Sections 420 and 120(b) of IPC as against the petitioners.
2. The case of the complainant is that Gaurav Tripathi (A2)
approached the defacto complainant through some contacts from Punjab
National Bank where he had an account. The Gaurav Tripathi (A2) was then
working as the Assistant General Manager of Phillips India Private Limited,
Health Care division. Gaurav (A2) offered two business modules mainly one of
institutional Trading (purchase directly from Philips) and the other of buying
from the Distributors and selling to their dealers. In order to induce confidence
with Philips India, Gaurav (A2) impressed the complainant that he needs to
build a track record with the present existing distributor who was GK Health
care. Gaurav (A2) also represented that he would find the buyers for the
commodity and that the product purchased from GK health Care could be
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given to the identified buyer. Gaurav Tripathi (A2) introduced a company
called M/s. Joy Marketing who would purchase the products from the
complainant. Gaurav Tripathi (A2) also wanted the complainant to build a
track record of dealing with products of Philips India and this would aid to
show bosses namely Philips India, financial net worth. Further represented that
he could impress Philips India to directly give the complainant distributorship.
The agreement with the distributor as represented was that he would give the
complainant a margin of 10% or less and that he could claim the same amount
from M/s. Joy marketing as profit. Gaurav Tripathi (A2) lured the complainant
into by saying he has market orders worth Rs.120 crores and based on this, he
could ensure that the complainant became a distributor within a period of six
months.
2.1 Believing the words of Gaurav (A2) and led by the fact that
Philips India was a well-recognised and reputed company and being a
distributor of this company would be of reputation the complainant agreed to
do this business. The first transaction took place with GK Health care Private
Limited which was an authorised distributor of Philips India. It is informed that
after a few initial transactions, Gaurav Tripathi (A2) approached the
complainant and said that there is another authorised distributor from whom
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also they could buy the commodity/products namely RBS India. When
questioned the reason given by Gaurav was that GK health care and other
Distributors did not have sufficient stock and that RBS then, the new
distributor had ready stock and there would be instant dispatch of materials
whereby we could satisfy the urgent requirement of M/s Joy marketing. RBS
India would always insist on advance money being paid for the stock to be
supplied. The complainant was in the dark about these companies and was
completely led by the statements of Gaurav Tripathi (A2). The end buyer
always remained as Joy marketing. This company M/s. Joy marketing was run
by Abishek Pesala (A1/ petitioner herein). Both the accused personally visited
the complainant regularly. They insisted on quick delivery of the products.
Abhishek (A1) however would increase the Purchase and attempt to increase
the credit repayment period to a minimum 30 days credit period. The accused
made it appear a genuine transaction. Gaurav Tripathi (A2) also supported the
complainant always and together induced confidence on the complainant to do
business on their methods and terms.
2.2 The main business was managed by the complainant. The
complainant is the owner and maintain many businesses. The company used to
receive the material as given by GK health care and repack the same after
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confirming the contents received. In the process, my manager made regular
markings as approval for the goods received by them and subsequently sold to
Joy marketing. This is also done to ensure that the same material is returned in
the event of any warranty related issues. Later purchases began from the new
distributor namely RBS India. To the shock of the company persons, the
complainant realised their own markings/ handwriting appearing on the
materials supplied by RBS India.
2.3 When the complainant's office brought this to the complainant's
notice, a deeper scrutiny was done. Enquiries revealed that no person from the
complainant's company had ever met/ interacted with any person of RBS
except through the accused (Gaurav and Abishek). It was then realised that the
accused (Gaurav and Abhishek) never permitted any person to visit the new
distributor (RBS) but would just say that the material would be supplied
instantly. In this manner, even the genuinity of the existence of a distributor
could not be identified as there was no physical interaction or transaction with
the new distributor.
2.4 The transactions were completely done by Gaurav Tripathi (A2)
more so in the presence of Abishek (A1). Then the complainant's company
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person visited the address of the new distributor RBS India only to realise that
it was the same office of Joy marketing. Further investigation revealed that RBS
India was also concerned that it is owned and controlled by Abhishek (A1) and
his wife both of them incharge and responsible for the day-to-day affairs of this
company (RBS India). It transpires that they have floated this company only to
deal with the complainant. In other words, Abhishek(A1) made the
complainant pay the amount for the goods by making advance payments to
RBS India and then received the same from the complainant on credit basis for
Joy Marketing. In this manner, the money for the goods were completely paid
by the complainant and the goods continued to reach and remain with the
accused until sold. The accused enjoyed the goods on credit without making
any payment and was able to do business at the complainant's cost. This
candidly brings out the criminality in the case and the intent of the accused.
This was done by both the accused jointly and in collusion.
2.5 The whole transaction period was three months and
Rs.8,01,15,575/-have been the total transaction with the accused. The wrongful
loss traceable is Rs.3,79,52,709/- as the materials are also presently not
traceable nor is there money with the accused in the bank. The first accused
has appropriated and converted to his use the money received from the
complainant and from the sale of the products resulting in loss. Hence, the
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complaint. The first respondent registered FIR in crime No.400 of 2018 for the
offence punishable under Section 420 r/w 120(b) of IPC. After completion of
investigation, final report was filed and the same has been taken cognizance by
the trial court.
3. Mr.S.T.S.Moorthy, the learned Senior Counsel appearing for the
petitioner submitted that the entire transactions are commercial in nature and
civil in nature. The present proceedings is nothing but arm twisting method in
order to extract money from the petitioner. There are totally two accused, in
which the petitioner is arrayed as A1. Even according to the second respondent,
in the transaction, part of amount received out of total due of Rs.4,30,54,724/-.
Further a sum of Rs.1,34,37,130/- was paid to purchase material from RBS
India for which no material was received. Therefore, no offence under Section
420 of IPC is attracted as against the petitioner. The entire transaction revolves
around sale of goods. Therefore, no criminality was committed by the
petitioner. In support of his contention, he relied upon the judgment in the case
of Haji Iqbal alias Bala Through S.P.O.A Vs. State of UP and others
reported in 2023 SCC Online SC 946, wherein the Hon'ble Supreme Court of
India held that the complainant decides to proceed against the accused with an
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ulterior motive for wreaking personal vengeance, etc., then he would ensure
that the complaint is very well drafted with all the necessary pleadings. The
complainant would ensure that the averments made in the complaint are such
that they disclose the necessary ingredients to constitute the alleged offence.
Therefore, it will not be just enough for the Court to look into the averments
made in the complaint alone for the purpose of ascertaining whether the
necessary ingredients to constitute the alleged offence are disclosed or not. In
frivolous or vexatious proceedings, the Court owes a duty to look into many
other attending circumstances emerging from the record of the case over and
above the averments and, if need be, with due care and circumspection try to
read in between the lines.
3.1 He further submitted that the entire transactions are civil in nature.
In this regard, he also relied upon the judgment in the case of Paramjeet Batra
Vs. State of Uttarakhand and others reported in (2013) 11 SCC 673, wherein
the Hon'ble Supreme Court of India held as follows:
7. While exercising its jurisdiction under Section 482 of
the Code the High Court has to be cautious. This power is to
be used sparingly and only for the purpose of preventing
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abuse of the process of any court or otherwise to secure ends
of justice. Whether a complaint discloses a criminal offence or
not depends upon the nature of facts alleged therein. Whether
essential ingredients of criminal offence are present or not has
to be judged by the High Court. A complaint disclosing civil
transactions may also have a criminal texture. But the High
Court must see whether a dispute which is essentially of a civil
nature is given a cloak of criminal offence. In such a situation,
if a civil remedy is available and is, in fact, adopted as has
happened in this case, the High Court should not hesitate to
quash criminal proceedings to prevent abuse of process of
court.
3.2 He also relied upon the judgment of the Hon'ble Supreme Court
of India in the case of Satishchandra Ratanlal Shah Vs. State of Gujarat and
Another reported in (2019) 9 SCC 148, wherein it is held that the distinction
between mere breach of contract and cheating would depend upon the
fraudulent inducement and mens rea. The mere inability of the appellant to
return the loan amount cannot give rise to a criminal prosecution for cheating
unless fraudulent or dishonest intention is shown right at the beginning of the
transaction as it is this mens rea which is the crux of the offence. Therefore, in
the case on hand, on perusal of the materials on their face value, no such
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dishonest representation or inducement could be found or inferred.
3.3 He also relied upon the judgment of the Hon'ble Supreme Court of
India in the case of Mitesh Kumar J.Sha Vs. State of Karnataka and others
reported in (2022) 14 SCC 572, wherein it is held as follows:
38. Having considered the relevant arguments of the
parties and decisions of this court we are of the considered
view that existence of dishonest or fraudulent intention has
not been made out against the Appellants. Though the instant
dispute certainly involves determination of issues which are of
civil nature, pursuant to which Respondent No. 2 has even
instituted multiple civil suits, one can by no means stretch the
dispute to an extent, so as to impart it a criminal colour. As
has been rightly emphasised upon by this court, by way of an
observation rendered in the case of M/s Indian Oil
Corporation Vs. M/s. NEPC India Ltd & Ors.7, as under :-
“14. While no one with a legitimate cause or grievance
should be prevented from seeking remedies available in
criminal law, a complainant who initiates or persists with a
prosecution, being fully aware that the criminal proceedings
are unwarranted and his remedy lies only in civil law, should
himself be made accountable, at the end of such misconceived
criminal proceedings, in accordance with law.”
39. It was also observed:-
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“13. While on this issue, it is necessary to take notice of
a growing tendency in business circles to convert purely civil
disputes into criminal cases. This is obviously on account of a
prevalent impression that civil law remedies are time
consuming and do not adequately protect the interests of
lenders/creditors….There is also an impression that if a
person could somehow be entangled in a criminal
prosecution, there is a likelihood of imminent settlement. Any
effort to settle civil disputes and claims, which do not involve
any criminal offence, by applying pressure though criminal
prosecution should be deprecated and discouraged.”
40. On an earlier occasion, in case of G. Sagar Suri
and Anr. Vs. State of UP and Ors.8, this Court has also
observed:-
“8. Jurisdiction under Section 482 of the Code has to
be exercised with a great care. In exercise of its jurisdiction
High Court is not to examine the matter superficially. It is to
be seen if a matter, which is essentially of civil nature, has
been given a cloak of criminal offence. Criminal proceedings
are not a short cut of other remedies available in law. Before
issuing process a criminal court has to exercise a great deal
of caution. For the accused it is a serious matter. This Court
has laid certain principles on the basis of which High Court is
to exercise its jurisdiction under Section 482 of the Code.
Jurisdiction under this Section has to be exercised to prevent
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abuse of the process of any court or otherwise to secure the
ends of justice.”
4. Heard, the learned counsel appearing on either side.
5. On perusal of records and the counter filed by the second
respondent revealed that there are totally two accused, in which the petitioner is
arrayed as A1. The second respondent has account with Punjab National Bank.
Second accused was working as Assistant General Manager of Phillips India
Private Limited, Health Care Division. He offered two business modules, one of
institutional trading (purchase directly from Philips) and the other of buying
from the distributors and selling to their dealers. The second accused also
assured that he would find buyers for the commodity. The second respondent
was impressed on the offer made by the second accused. He agreed for the
same. In turn, the second accused introduced company called M/s.Joy
Marketing who would purchase the products from the second respondent. The
second accused also lured the second respondent by saying that he had market
orders worth about 120 crores and as such, the second respondent became a
distributor within a period of six months. He also stated that another authorised
distributor from whom also they could buy the commodity i.e. RBS India. It
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always insisted advance money for the stock to be supplied. Both the
companies are completely led by the second accused. The end buyer always
remained as Joy Marketing. It was run by the petitioner.
6. After the said offer, both the accused personally visited the second
respondent and insisted for quick delivery of products. The petitioner herein
would increase the purchase and attempt to increase the credit repayment
period to a minimum 30 days credit period thereby made it appear to be a
genuine transaction. The second respondent is the owner and maintain so many
businesses. They used to receive the material as given by GK Healthcare and
repacked the same after confirming the contents received. In the said process,
the Manager of the second respondent used to make regular markings as
approval for the goods received by them and subsequently sold to Joy
Marketing. It is also done to ensure that the same material is returned in the
event of any warranty related issues. Later purchases began from the new
distributor i.e. RBS India. Then only they have realised that their markings/
handwriting appearing on the materials supplied by RBS India. It was brought
to the notice and on scrutiny revealed that no person from the company had
ever met / interacted with any person of RBS. The accused never permitted any
person to visit the new distributor, but would just say that the material would
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be supplied instantly. Thereafter, they came to understand that both the
distributor i.e. RBS India and Joy Marketing are one and the same. It is owned
and controlled by the petitioner and his wife and they are responsibility for day
to day affairs of the Company RBS India. Therefore, the petitioner made the
second respondent to pay the amount for the goods by making advance
payments and then received the said goods from the second respondent on
credit basis for Joy Marketing.
7. In this manner, the money for the goods were completely paid by
the second respondent and goods continued to reach and remain with the
accused until sold. Thereby, the accused enjoyed the goods on credit without
making any payment and was able to do business at the cost of the second
respondent. Therefore, it appears to be a commercial transaction but fraudulent
intention categorically available at the first instance itself from the accused in
order to cheat the defacto complainant. They misappropriated huge amount
under the guise of commercial transaction. Therefore, the initiation of the
present prosecution would not amount to arm twisting method or cloak the
criminal act. Further, the amount was collected from the second respondent and
the petitioner is doing business and never intended to make payment towards
the first set of material purchased or the material on credit. Therefore, the
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judgments cited by the learned Senior Counsel appearing for the petitioner are
not helpful to the case on hand since there are ingredients to attract the offence
under Sections 420 and 120B of IPC. In this regard, it is relevant to rely upon
the judgment of the Hon'ble Supreme Court of India rendered in Crl.A.No.579
of 2019 dated 02.04.2019 in the case of Devendra Prasad Singh Vs. State of
Bihar & Anr., wherein it is held as follows:-
" 12.So far as the second ground is concerned, we are of
the view that the High Court while hearing the application under
Section 482 of the Cr.P.C. had no jurisdiction to appreciate the
statement of the witnesses and record a finding that there were
inconsistencies in their statements and, therefore, there was no
prima facie case made out against respondent No.2. In our view,
this could be done only in the trial while deciding the issues on
the merits or/and by the Appellate Court while deciding the
appeal arising out of the final order passed by the Trial Court
but not in Section 482 Cr.P.C. proceedings.
13.In view of the foregoing discussion, we allow the
appeal, set aside the impugned order and restore the
aforementioned complaint case to its original file for being
proceeded with on merits in accordance with law.
8. The Hon'ble Supreme Court of India dealing in respect of the very
same issue in Crl.A.No.1572 of 2019 dated 17.10.2019 in the case of Central
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Bureau of Investigation Vs. Arvind Khanna, held as follows:
“19. After perusing the impugned order and on hearing
the submissions made by the learned senior counsels on both
sides, we are of the view that the impugned order passed by the
High Court is not sustainable. In a petition filed under Section
482 of Cr.P.C., the High Court has recorded findings on several
disputed facts and allowed the petition. Defence of the accused
is to be tested after appreciating the evidence during trial. The
very fact that the High Court, in this case, went into the most
minute details, on the allegations made by the appellant-C.B.I.,
and the defence put-forth by the respondent, led us to a
conclusion that the High Court has exceeded its power, while
exercising its inherent jurisdiction under Section 482 Cr.P.C.
20.In our view, the assessment made by the High Court at
this stage, when the matter has been taken cognizance by the
Competent Court, is completely incorrect and uncalled for.”
9. Further the Hon'ble Supreme Court of India also held in the order
dated 02.12.2019 passed in Crl.A.No.1817 of 2019 in the case of M.Jayanthi
Vs. K.R.Meenakshi & anr, as follows:
"9. It is too late in the day to seek reference to any
authority for the proposition that while invoking the power
under Section 482 Cr.P.C for quashing a complaint or a charge,
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the Court should not embark upon an enquiry into the validity of
the evidence available. All that the Court should see is as to
whether there are allegations in the complaint which form the
basis for the ingredients that constitute certain offences
complained of. The Court may also be entitled to see (i) whether
the preconditions requisite for taking cognizance have been
complied with or not; and (ii) whether the allegations contained
in the complaint, even if accepted in entirety, would not
constitute the offence alleged.
..............
13. A look at the complaint filed by the appellant would
show that the appellant had incorporated the ingredients
necessary for prosecuting the respondents for the offences
alleged. The question whether the appellant will be able to prove
the allegations in a manner known to law would arise only at a
later stage...................."
10. In view of the above discussion, this Court is not inclined to quash
the impugned proceedings and this criminal original petition is liable to be
dismissed. Accordingly, this criminal original petition is dismissed.
Consequently, connected miscellaneous petitions are closed.
05.12.2023
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Index :Yes/No
Internet : Yes/No
Speaking order/non-speaking order
lok
To
1.The learned Chief Metropolitan Magistrate Court at Egmore,
Chennai
2.Sub Inspector of Police,
Team EDF-1 Central Crime Branch,
Chennai
3.The Government Advocate,
High Court of Madras
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G.K.ILANTHIRAIYAN, J.
lok
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05.12.2023
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