Patna High Court
Jet Knitears Ltd Manufacturers Of ... vs The State Of Bihar Through S.P. Patna on 6 March, 2024
IN THE HIGH COURT OF JUDICATURE AT PATNA
Criminal Writ Jurisdiction Case No.265 of 2022
Arising Out of PS. Case No.-5518 Year-2019 Thana- PATNA COMPLAINT CASE District-
Patna
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1. JET KNITEARS LTD MANUFACTURERS OF EXPORTS QUALITY
UNDERGARMENTS THROUGH DIRECTOR ANKUR NARULA, Son of
Balram Kumar Narula having its registered office at B/0119/410, B- 1,
Darshan Purwa, Kanpur- 208012, U.P. (India). Resident of 125/67-C, Block
- K, Govind Nagar, S.O.- Kanpur U.P.
2. ANKUR NARULA Son of Balram Kumar Narula, Resident of 125/67-C,
Block - K, Govind Nagar, S.O.- Kanpur U.P.
3. Rakesh Kumar Narula Son of F.C. Narula, Resident of 125/67-C, Block - K,
Govind Nagar, S.O.- Kanpur U.P.
4. Anil Kumar Narula Son of F.C. Narula, Resident of 125/67-C, Block - K,
Govind Nagar, S.O.- Kanpur U.P.
... ... Petitioner/s
Versus
1. The State Of Bihar through S.P. Patna, Bihar
2. Mohan Kumar, Son of Shri Rajnandan Prasad Bihariji Kona Chanpurbela,
P.S. - Jakkanpur, District - Patna.
... ... Respondent/s
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Appearance :
For the Petitioner/s : Mrs. Archana Sinha @ Archana Shahi, Advocate
Mr. Alok Kumar, Advocate
For the O.P. No. 2 : Mr. Rajnandan Prasad, Advocate
Mr. Vishesh Kumar Singh, Advocate
For the State : Mr. Deepak Kumar, AC to GP 4
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CORAM: HONOURABLE MR. JUSTICE BIBEK CHAUDHURI
CAV JUDGMENT
Date : 06-03-2024
The petitioners have approached this Court under
Article 226 of the Constitution, praying for setting aside the order
of cognizance dated 06th October 2021 passed by the learned
Judicial Magistrate Ist Class, Patna, in complaint Case No. 5518(c)
of 2019 against the petitioners, holding inter alia that the
Patna High Court CR. WJC No.265 of 2022 dt.06-03-2024
complainant/ opposite party no. 02 had been able to establish
sufficient ground for proceeding against the petitioners under
Section 406/34 of the IPC and thereby issued process against the
petitioners. Case of the complaint, in brief, is that on 29 th May
2018, one Vikash Kumar Soni, proprietor of Fuel India Company,
claimed to be authorized by the petitioner no. 01 company
executed a franchise operated (FOFO) agreement with the
complainant, under the terms and conditions that Fuel India,
proprietorship concerned of Vikash Kumar Soni has been
authorized by the petitioner no. 01, Jet Knitwears Ltd., Kanpur to
sell and do marketing of the goods and products manufactured by
Jet Knitwears Ltd.. It was agreed that Fuel India would open
(FOFO) stores, as per the guidelines of petitioner no. 01 and
accepts such appeals, to act as a FOFO stores for LYCOT brand of
Jet Knitwears Ltd., to be only to the customers located in the
territory. The exclusive stock point of the company was named as
F.S. in the said agreement. As per the agreement, it was the duty
of the F.S. to raise bill of products in face to face transactions to
physical stores being the exclusive outlets in the territory. The FS
was prohibited to market or sell the products using any internet
site or mail order catalog, online mobile applications and other
modes of Information technology without specific written
Patna High Court CR. WJC No.265 of 2022 dt.06-03-2024
authorization by the petitioner no. 01. It was also agreed that the
complainant would deposit an amount of Rs. 10,00,00/- (Ten lakhs
only) in favour of Jet Knitwears Ltd., Kanpur. As per the
agreement, all billings to the second party will be done by the Fuel
India, Kanpur and all the payment by second party will be
deposited to Fuel India. Jet Knitwears Ltd. would assure in
writing that agreement of business is as per its business policy. It
was further stipulated in the agreement that goods would be
supplied by the Jet Knitwears Ltd. on instructions of Fuel India.
After getting the proper order on mail by FS, to FS which further
would be distributed to FOFO in designated area as per the
instructions of Fuel India. The complainant as well as Fuel India
would get commission at the rate of 3% of the sale to FOFO
stores which would be paid to Fuel India to the exclusive stock
point company, i.e., the FS. It was further agreed by and between
the parties that Fuel India would open FOFO stores on advance
basis, for which goods would be supplied by FS. The payments for
the same would be collected by Fuel India. The cheque/RTGS/DD
of all FOFO stores collected would be in the name of Fuel India
only. FF will not be responsible for any payment, collection or
outstanding of the market. However, FS would help in future to
resolve the issue of market amicably.
Patna High Court CR. WJC No.265 of 2022 dt.06-03-2024
2. It is the case of the complainant that after execution of
the said agreement on 29th May 2018, the complainant gave Rs.
5,00,000/- (Five lakhs only) by two cheques on 30 th May 2018 and
06th June 2018 to the petitioner no. 01. The complainant also
pleaded that he spent Rs. 4,00,000/- (Four lakhs only) in
advertisement of business of accused no. 01, as per the instruction
of the accused persons. He altogether paid Rs. 2,40,000/- (Two
lakhs Forty Thousand only), in favour of Fuel India on several
dates starting from 28th June 2018, thereafter on 20th July 2018, the
complainant also transferred Rs. 40,000/- (Forty Thousand only)
and on 30th July 2018, he transferred Rs. 50,000/- (Fifty Thousand
only) through NEFT in favor of the accused person. Thus, it is the
case of the complainant that the accused person has not received
Rs. 1141000/- (Eleven lakh forty one thousand only) from the
complainant. In spite of discharging his part of agreement the
accused persons failed to establish any shops or stores till date and
thereby misappropriated the said sum of Rs. 1141000/- (Eleven
lakh forty one thousand only).
3. It is already mentioned that the petitioner no. 01 is a
private limited company dealing with the manufacturing and
distributionship of LYCOT brand undergarments. Petitioner Nos. 2
Patna High Court CR. WJC No.265 of 2022 dt.06-03-2024
and 3 are the Directors of petitioner no. 1 and petitioner no. 4 of
the Chief Exceutive Officer of the said company.
4. The learned counsels appearing on behalf of the
petitioners as well as the respondent no. 02/ complainant have
advanced their submissions. They have also filed notice of written
arguments during hearing of the writ petition.
5. It is urged by the learned advocate appearing on
behalf of the petitioners that the petitioners are not parties to the
agreement in question dated 29th May 2018. the said agreement
was executed between the proprietor and one Fuel India who
represented themselves as the agents of Jet Knitwears Pvt. Ltd.,
and the complainant. As per Clause 3 of the agreement, it was the
obligation of Fuel India to open FOFO stores as per the guideline
of the petitioners and accepts such appeals to act as FOFO stores
for selling the products of Jet Knitwears Ltd. The FS stated, as per
agreement, they are only to raise bills in support of the products in
face to face transactions to physical stores, exclusive outlets in
the territory. The FS was also prevented from carrying on any
business, in respect of the products of petitioner no. 01 company
through online mode. The learned advocate for the petitioners next
refers to the Clause 5 of the agreement. It is stipulated in Clause 5
of that as well as that of the petitioners company's product to
Patna High Court CR. WJC No.265 of 2022 dt.06-03-2024
FOFO stores shall be made pursuant to the agreement at such
prices and on such terms and conditions, as per the policy decided
by the petitioner company and implemented by Fuel India. Clause
6 of the agreement clearly states that Jet Knitwears Ltd., will not
be responsible with regard to the billing. The job of billing and
delivery of product was decided to be made by Fuel India. It is
also the duty of Fuel India to open FOFO stores on advance basis
for which goods will be supplied by FS. The payment for the same
will be collected by Fuel India through the cheques, RTGS/DD/
NIFT by virtue of which payments would be decided to be made,
would be in the name of Fuel India.
6. Therefore, it is submitted by the learned advocate for
the petitioners that they are nowhere in the picture for any fraud
committed by the proprietor of the Fuel India, namely, Vikash
Kumar Soni, who has been aggrieved as accused no. 06 in the
above stated complaint case. The said accused no. 06 was given
the agency to carry out marketing activities and appoint the dealers
and FOFO stores in Bihar, Jharkhand and Nepal on 01st May 2018.
7. It is submitted by the learned advocate for the
petitioners that the petitioners received in all Rs. 5,00,000/- (Five
Lakhs Only) by way of bank transfers from the complainant. The
complainant failed to deposit Rs. 10 lakhs as per Clause 06 of the
Patna High Court CR. WJC No.265 of 2022 dt.06-03-2024
agreement dated 29th May 2018. Due to the dispute between the
complainant and accused no. 05 and 06, the petitioners cannot be
held liable. Moreover, the petitioners have declared that they are
always ready and willing to pay Rs. 5,00,000/- (Five lakhs only) in
favour of the complainant, which was accepted by the petitioner
no. 01 company.
8. The learned counsels for the petitioners next
submitted that the proposed business speaks about execution of a
tripartite agreement. First agreement was made between Fuel
India and the complainant. Subsequently, it was decided that after
establishment of new FOFO shops by Fuel India, a tripartite
agreement would be executed between Jet Knitwears Ltd., Fuel
India and the proprietor of the new FOFO shops. As no shop cold
be estalished by Fuel India, the said tripartite agreement was not
executed. The petitioner no. 01/ complainant and other petitioners
are all alone ready and willing to make repayment of Rs.
5,00,000/- which was communicated to the complainant, in reply
to the legal notice which was served upon the petitioners.
9. For the reasons stated above, it is submitted by the
learned advocate for the petitioners that the complainant failed to
establish even prima facie ground of proceeding against the
petitioners under Sections 406/34 of the IPC. The dispute is
Patna High Court CR. WJC No.265 of 2022 dt.06-03-2024
exclusively between the complainant and the accused no. 05 and
06. The said dispute arose out of an agreement and the
complainant practically discloses a case on breach of the contract
as civil remedy.
10. Referring to a decision of Hon'ble Supreme Court in
Vijay Kumar Ghai v. State of W.B., reported in (2022) 7 SCC
124. It is submitted by the learned advocate for the petitioner that
in order to establish the case under Section 406 of the IPC, it is a
duty of the complainant to prove criminal breach of trust. The
essential ingredients of the offence of criminal breach of trust are:
"(1) The accused must be entrusted with the property or with
dominion over it,
(2) The person so entrusted must use that property, or;
(3) The accused must dishonestly use or dispose of that property
or wilfully suffer any other person to do so in violation,
(a) of any direction of law prescribing the mode in which such
trust is to be discharged, or;
(b) of any legal contract made touching the discharge of such
trust."
11. Thus, entrustment of the property under Section 405
of the IPC is the basic ingredient to constitute an offence under
Section 406. The word used are, " in any manner entrusted with
property". So, it extends to entrustment of all kinds, whether to
clerks, servants, business partners or other partners provided that
they are holding a position of trust. A person who, dishonestly
misappropriate property entrusted to them contrary to the terms of
Patna High Court CR. WJC No.265 of 2022 dt.06-03-2024
an obligation imposed is liable to criminal breach of trust and is
punished under Section 406 of the IPC.
12. Coming to the instant case, it is submitted by the
learned advocate appearing on behalf of the petitioners that the
complainant / respondent no. 02 failed to make out any case that
the petitioners were entrusted with or as otherwise dominion over
the property. Such an act must not only be done dishonestly, but
also in violation of any direction of law or any contract expressed
or employed relating to carry out the trust.
13. In the instant case, no contract, either employed or
executed between the complainant and Jet Knitwears Ltd.
Therefore, no process can be issued against them.
14. In Anand Kumar Mohatta v. State (NCT of Delhi),
reported in (2019) 11 SCC 706, it was held by the hon'ble
Supreme Court that the essence of Section 405 and 406 of the IPC
lays in the use of the property entrusted to a person by that person
in violation of any direction of law or any legal contract which he
has made during discharge of such trust. In the instant case, no part
of the property was entrusted to the petitioner no. 01 company. It
was agreed between the complainant and accused nos. 05 and 06
that in order to carry out the business the complainant would
require to make initial deposit of Rs. 10 lakhs in favour of
Patna High Court CR. WJC No.265 of 2022 dt.06-03-2024
petitioner no. 01 company. The complainant deposited Rs.
5,00,000/- in two installments, however, since, FOFO stores were
not established by accused no. 05 and 06, the petitioner no. 01
consistently urged that they are ready and willing to pay the said
Rs. 5,00,000/- which was deposited by the complainant to them.
Referring to the same judgment, it is contended by the learned
advocate for the petitioners that the Hon'ble Supreme Court under
the facts and circumstances of the aforesaid report held that in case
of security deposit by one person to another person in a business
transaction, allegation of misappropriation of non-payment of
security money makes a civil dispute and not a case under Section
406 of the IPC.
15. Learned advocate for the opposite party no. 02, on
the other hand, submits that the instant application under Article
227 of the Constitution is not maintainable because the order of
cognizance taken by the Judicial Magistrate VI, at Patna, in
complaint case no. 5518(c)/2019 is assailable in criminal revision
or by final obligation under Section 482 of the CrPC. The Court
cannot assume jurisdiction under Article 227 of the Constitution in
the instant writ petition. Referring to the indisputable factual
circumstances, it is submitted by the learned advocate for the
opposite party no. 02 that M/s Fuel India has been authorized to
Patna High Court CR. WJC No.265 of 2022 dt.06-03-2024
carry out business and to sign agreement with Jet Knitwears Ltd.,
Kanpur and such letter of authorization was issued by the
petitioner no. 01, in favour of Fuel India on 01 st May 2018.
Learned advocate for the opposite party no. 02 has also interpreted
Clause 3, 5 and 6 of the FOFO agreement. Clause 5 clearly states
that all sells of Jet Knitwears Ltd., Kanpur, products to FOFO
storage shall be made pursuant to the agreement at such price on
such terms and conditions as per the policy decided by Jet
Knitwears Ltd., and implemented by Fuel India. The petitioner
paid Rs. 2,40,000/- to Fuel India on different dates. The petitioner
also spent Rs. 4,00,000/- (Four Lakhs only) for advertisement of
Jet Knitwears Ltd., which are liable to be adjusted by Fuel India.
16. It is submitted by the learned advocate for the
opposite party, referring to Section 24 of the IPC, submits that "
whoever, does anything with the intention of causing wrongful
gain to one person or wrongful loss to another is said to do that
thing dishonestly." It is submitted by the learned advocate for the
respondent no. 02 that it is essential in every case to prove or show
how the accused has misappropriated the case of his master. The
intention, hence, there is no need to have direct proof of
misappropriation. Accused no. 06 by executing the agreement in
question authorized the complainant to pay money to Jet
Patna High Court CR. WJC No.265 of 2022 dt.06-03-2024
Knitwears Ltd., who spent huge amount for advertising and also
handed over a sum of Rs. 2,40,000/- to accused no. 06. The entire
act was done by the petitioners in collusion with accused nos. 05
and 06 to misappropriate the money of the complainant. In such
view of the matter, the petitioners were also held to be liable for
proceeding for offence under Section 406 of the IPC.
17. Having heard the learned counsels for the parties and
on careful perusal of the materials on record, I would like to record
at the outset that the Code of Criminal Procedure vests inherent
power to this Court under Section 482 to prevent miscarriage of
justice. It is no longer res integra that Section 482 of the CrPC
should be used by the High Court very sparingly and cautiously.
The High Court would be loath and circumscribed to exercise its
extra-oridnary power under Section 482 of the CrPC or under
Article 226 of the Constitution. The relief available under Section
482 of the CrPC can also be claimed under Article 226 or 227 of
the Constitution. Under Article 227 of the Constitution, the High
Court has the power of superintendence over all Courts sub-
ordinate to it.
18. In the instant case, it is ascertained from the
pleadings of the parties that petitioners were not in the picture
while the accused no. 5 and 6 executed an agreement with the
Patna High Court CR. WJC No.265 of 2022 dt.06-03-2024
complainant. It is vehemently urged by the learned advocate for
the respondent no. 02 that the principle is lying for the act of the
agent. The Fuel India and its proprietor are the agents of the
petitioner no. 01 company. Therefore, they are liable for
misappropriation of money.
19. I am not in a position to accept such contentions,
advanced on behalf of the learned advocate for the respondents,
because of the fact that the petitioner no. 01 company or its
Directors and other office bearers were in no way connected in
the agreement executed by and between the complainant and the
accused no. 05 and 06. Moreover, the petitioners are always ready
and willing to return Rs. 5,00,000/- to the complainant. In view of
the above circumstances, this Court directs that the order of
cognizance taken against the petitioners is bad in law, inoperative
and liable to be quashed. The complainant failed to make out any
case under Section 406/34 of the IPC against the petitioners.
20. However, since the petitioners are ready and willing
to repay the said sum of Rs. 5,00,000/-, the aforesaid criminal
proceeding in Complaint Case No. 5518 of 2019, be quashed as
against the petitioners on petitioners' payment/deposition of Rs.
5,00,000/- (Five lakhs only) along with interest at the rate of 8%
Patna High Court CR. WJC No.265 of 2022 dt.06-03-2024
per annum from the date of bank transfer till the date of
repayment.
21. Since, accused no. 05 and 06 have not challenged the
aforesaid criminal proceeding, this Court refrains from passing any
order, in relation to accused no. 05 and 06.
22. Accordingly, this Cr. writ application is allowed on
contest, subject to the terms and conditions enumerated above.
(Bibek Chaudhuri, J)
Suraj Dubey/-
AFR/NAFR NAFR
CAV DATE 22.02.2024
Uploading Date 06.03. 2024
Transmission Date 06.03. 2024
