Orissa High Court

Jitendra Kumar Behera vs State Of Odisha And Others on 1 September, 2021

   AFR

                       HIGH COURT OF ORISSA, CUTTACK

                              CRLMP No.527 of 2021

         (In the matter of application under Section 226 of the Constitution
         of India)

         Jitendra Kumar Behera
         and another                                ...        Petitioners

                                               Versus

         State of Odisha and others             ...          Opposite Parties


                 For Petitioners    : M/s. V. Narasingh, S. Das and
                                      S. Devi, Advocates

                 For Opp. Parties   : Mr. Karunakar Gaya,
                                     Additional Standing Counsel

                                    Mr. B.K. Satpathy, Advocate
                                    (For Opp. Party No.5)

                                    Mr. B.P.B. Bahali, Advocate
                                    (For Intervenor)

   PRESENT

                THE HONOURABLE SHRI JUSTICE S.K. PANIGRAHI

    Date of Hearing: 17.08.2021             Date of judgment: 01.09.2021

S. K. Panigrahi, J.

1. The petitioners in this petition seek to quash the proceeding in

C.T. Case No.1460 of 2021 arising out of INFOCITY P.S. Case

No.053 dated 08.03.2021 pending before the court of the learned

S.D.J.M., Bhubaneswar under Sections 341/294/420/506/34 of

IPC.

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2. On perusal of the FIR on record, the facts are such that

Shankar Kumar Jha, CEO, Omnitude Services Pvt. Ltd.

(hereinafter 'Opp. Party No. 5') purchased a Piling Rig Machine

after taking loan from SREI Finance Company (hereinafter

'financer'). Jitendra Kumar Behera, Owner, Trayesh Construction

Pvt. Ltd. (hereinafter 'Petitioner-Company') leased the

aforementioned machine from Omnitude Services for 48 months

at a monthly rent of Rs.12,98,000.00 for the first 12 months and

rent of Rs.8,26,000.00 per month for the remaining 36 months.

The petitioner-company also paid Omnitude Services

Rs.20,00,000.00 as a security deposit. The petitioner-Company

defaulted his monthly payments in March 2020 after paying two

instalments. Consequentially, Opposite Party No.5 terminated the

lease agreement and intimated the same to the petitioner. On

04.03.2021, Opposite Party No.5 tried to recover the

aforementioned property but the petitioner did not let them take

possession of the same.

3. Learned counsel for the petitioners refuted the version as

presented by the Opposite Party No. 5. He submitted that the

financer wanted to recover the leased property from the petitioners

because the Opposite Party No. 5 failed to pay the instalments of

Finance Company in the first place. He also highlighted Clause

19.8 of the lease agreement wherein it was agreed that in case the

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Lessor fails to make EMI payments to the financer, the lessee can

make direct payment to the financer. Accordingly, the petitioner

has paid a sum of Rs.21,02,000.00 directly to the financer on

behalf of Opposite Party No.5. Moreover, the lease agreement is

self-contained and provides remedy for breach of contract. He,

therefore, contended that the matter in question is purely

civil/contractual and devoid of any ingredients of criminal nature.

Hence, the impugned FIR and consequential proceedings may be

quashed as it is clear abuse of the process of law.

4. Learned counsel for the Opposite Party No.5 submitted that as

per Clause 10(iii) of the aforementioned lease agreement, the

lessor ('Opp. Party No. 5') has the right to repossess the leased

property, without demand or notice, if the lessee ('petitioner')

defaults in payment of rent. As the petitioner-Company defaulted

in his payments and the agreement was terminated, the Petitioner

is obliged to hand over the leased property to Opposite Party No.5.

He urged that in view of the highhanded conduct of the Petitioner,

the petition be dismissed.

5. Heard Mr. V. Narasingh, learned Counsel appearing for the

petitioners, Mr. B.K. Satpathy, learned Counsel for Opposite Party

No.5 and Mr. B.P. Bahali, learned counsel appearing for the

intervenor. In addition, this Court perused the case records.

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6. There might be a dispute between the parties, which may be,

purely civil or criminal in nature. For deciding the dispute purely

of civil in nature, the aggrieved person is required to seek civil

remedy in a civil court of law whereas for dispute of criminal

nature, the aggrieved person has to approach appropriate forum

for initiating criminal proceedings against the offender. In a mixed

or hybrid kind of case involving both civil disputes and criminal

offences, the aggrieved person can file a civil suit as well

as approach the concerned authorities or a criminal court for

taking criminal action against the offender. These disputes can be

personal or private or may relate to commercial transactions or a

contractual dispute. In Indian Oil Corporation v. NEPC India

Ltd., 1 it was observed:

"12 (v). A given set of facts may make out: (a) purely a civil wrong; or(b) purely a criminal offence; or(c) a civil wrong as also a criminal offence.

A commercial transaction or a contractual dispute, apart from furnishing a cause of action for seeking remedy in civil law, may also involve a criminal offence. As the nature and scope of a civil proceeding are different from a criminal proceeding, the mere fact that a complaint relates to a commercial transaction or breach of contract, for which a civil remedy is available or has been availed, is not by itself a ground to quash the criminal proceedings. The test is whether the allegation in the complaint disclose a criminal offence or not." [emphasis supplied]

(2006) 6 SCC 736

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7. Essentially, the present dispute is concerning the possession of

the leased Piling Rig machine with respect to a lease agreement

between the disputing parties. Out of all the criminal charges

alleged in the complaint, one of Section 420 of IPC is essential for

the court to consider; for adjudication of this matter.

8. An offence punishable under Section 420 IPC speaks of an

offence of cheating and dishonestly inducing any person for

delivery of property. The essential ingredients as elucidated in

Dalit Kaur vs. Jagnar Singh 2, in paragraphs-

1) Deception of any person, either by making a false or misleading representation or by other action or by omission;

2) Fraudulently or dishonestly inducing any person to deliver any property, or

3)To consent that any persons shall retain any property and finally intentionally inducing that person to do or omit to do anything which he would not do or omit.

9. However, if the tenant or lessee has defaulted in making

payment of rent on the basis of the agreement reduced in writing,

the same by itself, would not amount to cheating. It was further

reiterated by the Supreme Court in Hridaya Ranjan Prasad

Verma v. State of Bihar 3 as below:

"15. In determining the question it has to be kept in mind that the distinction between, mere breach of

(2009) 14 SCC 696

AIR 2000 SC 2341

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contract and the offence of cheating is a fine one. It depends upon the intention of the accused at the time of 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. Therefore, it is the intention, which is the gist of the offence. To hold a person guilty of cheating it is necessary to show that he had fraudulent or dishonest intention at the time of making the promise. From his mere failure to keep up promise subsequently such a culpable intention right at the beginning, that is, when he made the promise cannot be presumed."

[emphasis supplied]

10. In view of the position of law explained in the aforesaid

decisions, the Court believes that no case is made out against the

petitioner-Company under Section 420 Indian Penal Code. There

is nothing in the complaint to show that the respondents had

dishonest or fraudulent intention at the time the petitioner No.1

defaulted in his monthly rentals. There is also nothing to indicate

that the petitioner No.1 induced the Opposite Party No.5 to lease

the property by deceiving him or that a representation was made,

the petitioner No.1 knew the same to be false. However, the fact

that the respondents subsequently did not abide by their

commitment of timely payment of monthly rentals might create

civil liability on the petitioner No.1 against Opposite Party No.5.

11. At this juncture this Court shall take a moment to point out

that during the last couple of years, there has been a significant

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hike in the number of frivolous criminal complaints being filed to

settle civil disputes. This mechanism of settling civil disputes has

been increasingly used for recovery of alleged outstanding

amounts payable by one party to another in the course of

business transactions bound by contracts. For this troubling

trend of criminalizing purely civil matters, it is trite to recall the

authoritative pronouncement of the Apex Court in G. Sagar Suri

vs. State of UP 4, where it was observed:

"8. Jurisdiction under Section 482 of the Code of Criminal Procedure, 1973, 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 abuse of the process of any court or otherwise to secure the ends of justice."

12. In Indian Oil Corporation v. NEPC India Ltd. & Others

(supra) The Supreme Court has emphasized on careful application

of criminal law into civil disputes:

"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

(2000) 2 SCC 636

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impression that civil law remedies are time consuming and do not adequately protect the interests of lenders/creditors. Such a tendency is seen in several family disputes also, leading to irretrievable break down of marriages/families. 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 through criminal prosecution should be deprecated and discouraged."

13. In Mohammed Ibrahim & others vs. State of Bihar 5 the

Hon'ble Supreme Court specifically proscribed the use of criminal

law as a degenerate tool of harassment. It was held that:

"8. ...there is growing tendency of the complainants attempting to give the cloak of a criminal offence to matters which are essentially and purely civil in nature, either to apply pressure on the accused, or out of enmity towards the accused, or to subject the accused to harassment. Criminal Court should ensure that the proceedings before it are not sued for settling scores or to pressurize parties to settle civil dispute. But, at the same time, it should be noted that several dispute of a civil nature may also contain the ingredient of criminal offences and if so, will have to be tried as criminal offences, even if, they also amount to a civil dispute."

14. In Shiji @ Pappu & others vs. Radhika and another 6, the

Apex Court has laid down the scope and ambit of courts' powers

under Cr.P.C. Every High Court has inherent power to act ex

debito justitiae to do real and substantial justice, for the

(2009) 8 SCC 751

(2011) 10 SCC 705

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administration of which alone it exists, or to prevent abuse of the

process of the court:

"18.....we must hasten to add that the plenitude of the power under Section 482 Cr.P.C. by itself, makes it obligatory for the High Court to exercise the same with utmost care and caution. The width and the nature of the power itself demands that its exercise is sparing and only in cases where the High Court is, for reasons to be recorded, of the clear view that continuance of the prosecution would be nothing but an abuse of the process of law. It is neither necessary nor proper for us to enumerate the situations in which the exercise of power under Section 482 may be justified. All that we need to say is that the exercise of power must be for securing the ends of justice and only in cases where refusal to exercise that power may result in the abuse of the process of law. The High court may be justified in declining interference if it is called upon to appreciate evidence for it cannot assume the role of an appellate court while dealing with a petition under Section 482 of the Criminal Procedure Code. Subject to the above, the High Court will have to consider the facts and circumstances of each case to determine whether it is a fit case in which the inherent powers may be invoked."[emphasis supplied]

15. Upon a reading of the FIR, other documents and the position

of law explained hereinabove, as a whole, it is not possible to

conclude that they make out even a prima facie case against the

Petitioners for the offences in question. While it is true that other

charges alleged could be investigated but this Court believes that

it is not imperative to solve the primary dispute at hand by

criminalising the said dispute. Moreover, those other allegations

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against the Petitioner(s) are casual and sweeping, and need not be

determined in further prosecution.

16. Hence, this application is allowed. The proceeding in C.T Case

No.1460 of 2021 arising out of INFOCITY P.S. Case No.053 dated