Madras High Court
C.Y. Sathaya Narayanan vs The State Rep.By on 18 March, 2025
Author: G.K.Ilanthiraiyan
Bench: G.K.Ilanthiraiyan
Crl.O.P.No.19151 of 2023
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 18.03.2025
CORAM:
THE HONOURABLE MR. JUSTICE G.K.ILANTHIRAIYAN
Crl.O.P.No.19151 of 2023
and
Crl.M.P.No.14369 of 2023
1.C.Y. Sathaya Narayanan
2.Indra Devi ... Petitioners
Versus
1.The State Rep.by,
Inspector of Police,
Central Crime Branch,
Veppery, Chennai – 54.
(Crime No.214 of 2023)
2.Vijay Ganesh Kumar .. Respondents
[ Amended as per order dated 30.08.2023 in Crl.M.P.No.13746 of 2023]
PRAYER: Criminal Original Petition is filed under Section 528
of the Bharatiya Nagarik Suraksha Sanhita, 2023, to call for the records
pertaining to Crime No.214 of 2023 pending on the file of the Inspector
of Police, Central Crime Branch, Veppery, Chennai – 54, and quash the
same.
Page 1 of 17
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Crl.O.P.No.19151 of 2023
For Petitioners : Mr. M. Velmurugan
For Respondents : Mr. R. Vinothraja, (for R1)
Government Advocate (Criminal Side)
: Mr. N. Manoharan (for R2)
ORDER
This petition has been filed to quash the proceedings in the First
Information Report in Crime No.214 of 2023 pending on the file of the
first respondent.
2. On the complaint lodged by the second respondent, the first
respondent registered the First Information Report in Crime No.214 of
2023 for the offence under Sections 406 and 420 of the Indian Penal
Code, 1860 (IPC.,) as against the petitioners. The second respondent,
who runs a trading and investment business in the name and style of M/s.
Revenza Global Ventures Private Limited, in Chennai. The 1st petitioner
claimed himself as a Manager Director of the company, namely, M/s.
VTS Enterprises India Private Limited, offerred a joint venture business
and induced the second respondent to appoint one of the directors from
his company to the petitioner compan to monitor the day-to-day affairs,
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and thereby one Mrs. Aarthilalwani acted as a director of the petitioner's
company from 01.11.2021 to 29.11.2021. Thereafter, the petitioners and
the second respondent entered into business agreements, intially sharing
profits. However, the petitioners allegedly misrepresented the petitioner
company's financial performance, stating that it was Rs.22,83,00,000/-
and assured the second respondent that the company would earn a profit
of Rs.83,28,922/-. Accordingly, the second respondent supplied goods
worth Rs.4,97,96,572/-, to various suppliers, and being the inducers, the
petitioners are liable to pay the said sum. Therefore, the petitioner
company issued a cheque to discharge their liability which was
dishonored. Consequently, the petitioners were accused of cheating the
second respondent. Hence, the said case in Crime No.214 of 2023 was
registered for the offence under Sections 406 and 420 of IPC., as against
the petitioners.
3. Learned counsel for the petitioners would submit that the
petitioners are arrayed as A1 and A2 in Crime No.214 of 2023. The
second respondent had voluntarily joined in the petitioners company by
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way of joint venture business. Further, the second respondent's
company's director was also inducted as one of the directors of the
petitioner's company. Subsequently, the directorship was withdrawn. The
second respondent had made payment to various suppliers of M/s. Sai
Balaji Agro Foods and M/s. P.S.M. Viswanathan Chetty & Co., M/s.
Presanna Flour Mills Private Limited, Way Cool Foods and Products
Private Limited, etc., from 01.12.2021 to 16.12.2022 and the petitioners
had no knowledge about the payments made by the second respondent
and the petitioners did not authorise him to make those payments. That
apart, it is completely a commercial transaction between the suppliers
and second respondent. Now, the petitioners are made as scape goats for
the business loss. For the very same set of allegations on the petitioners,
the second respondent had already initiated proceedings for the offence
under Section 138 of the Negotiable Instruments Act, 1818 in
C.C.No.3069 of 2023 pending on the file of Metropolitan Magistrate,
Fast Track Court, Chennai. Now, it is ended in the confession of the
petitioners that the petitioners are convicted for the offence under
Section 138 of the Negotiable Instruments Act, 1818. Aggrieved by the
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same, the petitioners have preferred an appeal, which is pending before
the Appellate Court. Therefore, for the very same set of allegations, that
too after filing the complaint for the offence under Section 138 of NI
Act, the present complaint has been lodged and the same has been
registered in Crime No.214 of 2023. Therefore, the present complaint is
not at all maintainable and is liable to be set aside. There is absolutely no
averments to attract the offence under Sections 406 and 420 of IPC.
4. He further submitted that there is a bar under Section 300(1) of
Cr.P.C., that once a person is convicted for an allegation, no further
complaint can be lodged for the very same set of allegation. The
petitioner was already convicted for the offence under Section 138 of NI
Act, for the very same set of allegation levelled as against the
petitioners, therefore, the present First Information Report in Crime
No.214 of 2023 is not sustainble and is liable to be quashed.
5. Further, he pointed out that a similar issue, in the case of, J.
Vedasingh v. R.M. Govindan and Others., reported in 2022 SCC
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OnLine SC 1010, has already been referred to a larger bench of the
Hon'ble Supreme Court of India, by a two judge bench to resolve the
conflicting interpretations and provide clarity on the legal issues.
6. Further, he submitted that the ingredients of Section 420 of IPC,
is not made out. In the case of Archana Rana v. State of Uttar Pradesh
and Another in Crl.A.No.167 of 2021 dated 01.03.2021, the ingredients
to constitute an offence under Section 420 of IPC were stated as
follows:-
(i) A person must commit the offence of
cheating under Section 415 and
(ii) The person cheated must be dishonestly
induced to
(a) Deliver property to any person or
(b) Make, alter or destroy valuable security
or anything signed or sealed and capable of being
converted into valuable security.
7. The learned counsel for the petitioner also submitted that as per
the business agreement dated 01.12.2021 and the Master supply
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agreement dated 25.01.2022 there is an arbitration clause to settle the
issue amicably before the arbitrator. Therefore, the present complaint
cannot be maintainable.
8. Learned counsel for the second respondent submitted that the
petitioners induced the second respondent to invest huge money and
offered a joint venture business. The first petitioner introduced himself as
the Managing Director of M/s. VTS Enterprises India Private Limited
and it is a reputable supplier of Dhall products in and around Tamilnadu.
Utilizing the said circumstances, the petitioners induced the second
respondent to invest huge money, by way of financial support to expand
their business. Thereafter, the second respondent's company director
also was inducted as a director of the petitioners company and both the
companies entered into a business agreement dated 01.12.2021 and
25.01.2022. As per the terms and conditions, the second respondent had
ventured into the business with various suppliers and purchased goods
from 01.12.2021 to 16.12.2022. Thereafter, the second respondent raised
invoices and paid to the respective suppliers. As per the terms and
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conditions, the petitioners have to share their profits in the said business
transactions to the second respondent. The petitioners have also shown
their Provisional Balance Sheet and GST transaction of the petitioners
company as a proof and thereby induced the second respondent to invest
huge money. Accordingly, the second respondent had supplied goods to
the tune of Rs.4,97,96,572/- to various suppliers. Towards the said
liability, the petitioners company had issued a cheque for the said sum.
When it was presented for collection, and it was returned as
“dishonored”. Therefore, the second respondent initiated proceedings for
the offence under Section 138 of Negotiable Instruments Act, 1881, as
against the petitioners.
9. Heard the learned counsel on either side and perused the
materials available on record.
10. After the fullfledged trial, the Trial Court convicted the
petitioner for the offence under Section 138 of NI Act. Aggrieved by the
same, the petitioners had preferred an appeal and their sentences were
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suspended on condition that the petitioners shall deposit 20% of the
cheque amount. However the petitioners did not even comply with the
condition so far. Therefore, issuance of the cheque itself attracts the
offence under Section 420 of IPC. Thereafter the dishonored cheque
itself attracts the offence under Section 138 of NI Act. Therefore, both
are distinct offences and both the offences can be invoked as against the
petitioners/accused as stated supra, from the day-one of the transactions,
the petitioners induced the second respondent to invest in the joint
venture business and received huge supply of goods. Thereafter, the
petitioners did not pay any amount for the received goods. Therefore, the
offence under Sections 406 and 420 of IPC, are clearly made out as
against the petitioners.
11. The Hon'ble Supreme Court of India, in the case of, Bijoy
Kumar Moni v. Paresh Manna and Another, reported in 2024 INSC
1024, referred to the issue of cognizance of the offence under Section
138 of NI Act, on filing a private complaint and the complaint filed for
the offence under Sections 406 and 420 of IPC., can be proceeded
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simultaneously or one after another. This was held by a two Judge
Division Bench of the Hon'ble Supreme Court of India. Therefore, in this
case, the Hon'ble Supreme Court of India, referred this issue to the larger
bench. The issues raised in the case cited supra by the two Judge Bench
of the Hon'ble Supreme Court of India, are stated as follows:-
“12.
...................................................................
........................................................
.......................................
(1) Whether the ratio of the judgment, in the
case of G. Sagar Suri (supra) and Kolla Veera
Rahav Rao (supra), lay down the correct law?
Or
The view taken in the case of Sangeetaben
Mahendrabhai Patel (supra) as followed in M/s. V.S
Reddy and Sons (supra) which is subsequent and
conflicting, lay down the correct proposition of law?
(2) Whether on similar set of allegations of
fact the accused can be tried for an offence under NI
Act which is special enactment and also for offences
under IPC unaffected by the prior conviction or
acquittal and, the bar of Section 300(1) of Cr.P.C.,
would attract for such trial?”
12. The above judgements is squarely applicable to the case on
hand for the simple reason that from the day-one the petitioners had
induced the second respondent to invest huge sums by showing
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fabricated documents such as provisional balance sheet and GST
transactions of the first petitioner's company as if their turnover was huge
and thereby decieved the second respondent to supply huge quantity of
materials. Thereafter, they have not shared any profits with the second
respondent. When the second respondent asked for payments the
petitioners had issued a cheque and the same was presented for
collection. Thereafter it got dishonored and as such the second
respondent initiated prosecution for the offence under Section 138 of NI
Act. Therefore, the dishonoring of cheque alone attracts the offence
under Section 138 of NI Act. Whereas in order to attract the offence
under Section 406 and 420 of IPC., there must be an inducement while
entering into the business.
13. The above said averments very much attract the offence under
Section 406 and 420 of IPC. Therefore, both transactions are completely
different and it cannot be said both the complaints are lodged for the
same set of allegations.
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14. On perusal of both agreements referred by the learned counsel
for the petitioner, and as per the above said averments, the offence under
Sections 406 and 420 of IPC are clearly made out, and as such, the First
Information Report cannot be quashed and in view of the same, this
Criminal Original Petition is liable to be dismissed.
15. It is seen from the First Information Report that there are
specific allegations as against these petitioners to attract the offences,
which has to be investigated in depth. Further the FIR is not an
encyclopedia and it need not contain all facts and it cannot be quashed in
its threshold. This Court finds that the FIR discloses prima facie
commission of cognizable offence and as such this Court cannot interfere
with the investigation. The investigating machinery has to step in to
investigate, grab and unearth the crime in accordance with the procedures
prescribed in the Code.
16. Therefore, despite the presence of the arbitration clause in the
agreement of the parties, this Court does not find any reason to quash the
proceedings, as per the law laid down by the Hon'ble Supreme Court of
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India, in the judgment reported in 2019 (14) SCC 350 in the case of
Sau. Kamal Shivaji Pokarnekar vs. The State of Maharashtra & ors.,
(Crl.A.No.255 of 2019 dated 12.02.2019) held that the learned
Magistrate while taking cognizance and summoning, is required to apply
his judicial mind only with the view to taking cognizance of the offence
whether a prima facie case has been made out for summoning the
accused person. The learned Magistrate is not required to evaluate the
merits of the materials or evidence in support of the complaint, because
the Magistrate must not undertake the exercise to find out whether the
materials would lead to conviction or not. Only in a case where the
complaint does not disclose any offence or is frivolous, vexatious or
oppressive, the complaint/FIR can be taken for consideration for
quashment. If the allegations set out in the complaint do not constitute
the offence of which cognizance has been taken by Magistrate, it can be
considered for quashment. Therefore, it is not necessary that a meticulous
analysis of the case should be done before the trial to find out whether
the case would end in conviction or acquittal. If it appears on a reading
of the complaint and consideration of the allegations therein, in the light
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of the statement made on oath that the ingredients of the offence are
disclosed, there would be no justification to interfere. At the initial stage
of issuance of process, it is not open to the Court to stifle the proceedings
by entering into the merits of the contentions made on behalf of the
accused. Therefore, the criminal complaint cannot be quashed only on
the ground that the allegations made therein appear to be of a civil
nature. If the ingredients of the offence alleged against the accused are
prima facie made out in the complaint, the criminal proceeding shall not
be interdicted.
17. Further, the Hon'ble Supreme Court of India issued directions
in the judgment reported in 2021 SCC Online SC 315, in the case of
M/s.Neeharika Infrastructure Pvt. Ltd., Vs. State of Maharashtra &
ors., as follows :-
“23. ....................
vi) Criminal proceedings ought not to be
scuttled at the initial stage;
vii) Quashing of a complaint/FIR should
be an exception rather than an ordinary rule;
..............
xii) The first information report is not an
encyclopaedia which must disclose all facts and
details relating to the offence reported.
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Therefore, when the investigation by the police
is in progress, the court should not go into the
merits of the allegations in the FIR. Police must
be permitted to complete the investigation. It
would be premature to pronounce the
conclusion based on hazy facts that the
complaint/FIR does not deserve to be
investigated or that it amounts to abuse of
process of law. After investigation, if the
investigating officer finds that there is no
substance in the application made by the
complainant, the investigating officer may file
an appropriate report/summary before the
learned Magistrate which may be considered
by the learned Magistrate in accordance with
the known procedure;
.............
xv) When a prayer for quashing the FIR
is made by the alleged accused and the court
when it exercises the power under Section 482
Cr.P.C., only has to consider whether the
allegations in the FIR disclose commission of a
cognizable offence or not. The court is not
required to consider on merits whether or not
the merits of the allegations make out a
cognizable offence and the court has to permit
the investigating agency/police to investigate
the allegations in the FIR; .......”
18. In view of the above discussions, this Court is not inclined to
quash the First Information Report. However, considering the crime is of
the year 2024, the first respondent is directed to complete the
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investigation in Crime No.21 of 2024 and file a final report within a
period of 12 weeks from the date of receipt of copy of this order, before
the jurisdiction Magistrate, if not already filed.
19. With the above observations and direction, this Criminal
Original Petition is dismissed. Consequently, connected miscellaneous
petition is also closed.
18.03.2025
Index : Yes/No
Neutral citation : Yes/No
Speaking/non-speaking order
klt
To
1.The State Rep.by,
Inspector of Police,
Central Crime Branch,
Veppery, Chennai – 54.
(Crime No.214 of 2023)
2. The Public Prosecutor,
High Court, Madras.
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G.K.ILANTHIRAIYAN, J.
klt
and
18.03.2025
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