Mr. Rohan Raj Savara S/O Mr. Rahul ... vs State Of Rajasthan
2023 Latest Caselaw 4493 Raj/2

[2023:RJ-JP:19432]

        HIGH COURT OF JUDICATURE FOR RAJASTHAN
                    BENCH AT JAIPUR

        S.B. Criminal Miscellaneous (Petition) No. 2581/2023

Mr. Rohan Raj Savara S/o Mr. Rahul Savara, Aged About 32
Years, Director Of Tropical Industries International Pvt. Ltd.
Having Its Registered Office At F-04 And 05, Triveni Commercial
Complex, Sheikh Sarai Phase-1, New Delhi-110017
                                                                    ----Petitioner
                                    Versus
1.       State Of Rajasthan, Through Pp
2.       Mr. Ashish Periwal S/o Mr. Narendra Periwal, Partner Of
         M/s Balaji Steel Trade And Having A Permanent Address
         At C-112, Satya Vihar, Lokkothi Scheme, Lalkothi, Jaipur-
         302007, Rajasthan
                                                                 ----Respondents

For Petitioner(s) : Mr. Rajendra Prasad, Sr. Adv. with Mr. Susshil Daga, Adv.

Mr. Chitrans Mathur, Adv.

Ms. Parul Singhal, Adv.

Mr. Akshat Khandelwal, Adv.

For Respondent(s) : Mr. V.R. Bajwa, Sr. Adv. with Mr. Ankit Juneja, Adv.

Mr. Manish Parmar, Adv.

Mr. Amar Kumar, Adv.

Ms. Savita Nathawat, Adv.

                                Mr. Prashant Sharma, PP



            HON'BLE MR. JUSTICE BIRENDRA KUMAR

  Judgment reserved on                             :               22.08.2023
Judgment pronounced on                             :               02.09.2023

1.    Heard the parties.

2. The petitioner has sought for quashment of FIR No.73/2023

dated 17.02.2023 registered with Police Station Malviya Nagar for

offences under Sections 420, 406, 504, 506 and 120-B of IPC.

3. Mr. Rajendra Prasad, learned senior counsel for the petitioner

contends that a contractual dispute between the parties, which

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may be redressed by a civil proceeding has been ventured to be

given a colour of criminal prosecution with ulterior motive, hence

the impugned FIR and consequential proceedings would amount to

abuse of the process of law.

Learned Senior Counsel next contends that no offence is

made against the petitioner on bare perusal of the FIR. Learned

Senior counsel next contends that the petitioner had no role in

execution of the agreement or its execution. Hence, the petitioner

need not be compelled to go to traumatic criminal proceeding.

Moreover, there is an arbitration clause in the agreement to take

care of dispute between the parties. Therefore, the impugned FIR

needs to be quashed to prevent abuse of the process of law.

Learned senior counsel has relied on the judgment of the

Hon'ble Supreme Court in Anil Mahajan vs. Bhor Industries

Limited reported in (2005) 10 SCC 228, for his submission

that the substance of the complaint is to be seen and not mere

use of words "cheating", "deceive", "dishonest and fraudulent

intention" would suffice.

Learned senior counsel has relied on Weyth Limited and

Ors. vs. State of Bihar, reported in MANU/SC/1515/2022,

for his submission when the complaint itself does not disclose

anything more than a commercial relationship which broke, it is

not possible for respondent No.2 to enlarge the scope of his

complaint by merely adding the language used in the text of the

Indian Penal Code.

In Sarabjit Kaur vs. State of Punjab and Anr., reported

in (2003) 5 SCC 360, Hon'ble Supreme Court said that a breach

of contract does not give rise to the criminal prosecution for

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cheating unless fraudulent or dishonest intention is shown right at

the beginning of the transaction. Merely on the allegation of failure

to keep promise will not be enough to initiate criminal

proceedings.

Learned senior counsel has relied on Murari Lal Gupta vs.

Gopi Singh, reported in MANU/SC/28.06/2005, for his

submission that merely because an agreement to sale was entered

into which agreement the petitioner failed to honour, it cannot be

said that the petitioner had cheated to the respondent.

In G. Sagar Suri and Ors. vs. State of U.P. and Ors.,

reported in MANU/SC/0045/2000, the Hon'ble Supreme Court

said that it is to be seen if a matter, which is essentially of civil

nature, has been given a cloak of criminal offence.

4. Mr. V.R. Bajwa, learned senior counsel for respondent No.2

submits that remedy in the civil side is no bar for criminal

prosecution, if cognizable offences are disclosed in the FIR, which

is there in the present case.

Learned senior counsel next contends that arbitration clause

and pendency of arbitration proceeding would not come in the way

of criminal prosecution, if the FIR discloses criminal offence.

5. Learned senior counsel has placed reliance on the following

judgments:-

"1. Trisuns Chemical Industry vs. Rajesh Agarwal and Others, (1999) 8 SCC 686.

2. State of Orissa vs. Ujjal Kumar Burdhan, (2012) 4 SCC 547.

3. Priti Saraf and Another vs. State of NCT of Delhi and Another, AIR 2021 SC 1531.

4. Lalmuni Devi vs. State of Bihar, (2001) 2 SCC 17,"

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6. The law regarding appreciation of case for quashing of FIR

when civil cause is also made out is well settled. In Trisuns

Chemical Industry vs. Rajesh Agarwal and Others reported

in (1999) 8 SCC 686, the Hon'ble Supreme Court stated as

follows:-

"7. Time and again this Court has been pointing out that quashment of FIR or a complaint in exercise of inherent powers of the High Court should be limited to very extreme exceptions (vide State of Haryana vs. Bhajan Lal 1992 Supp (1) SCC 335 and Rajesh Bajaj vs. State NCT of Delhi (1999) 3 SCC 259).

8. In the last referred case this court also pointed out that merely because an act has a civil profile is not sufficient to denude it of its criminal outfit. We quote the following observations: (SCC p. 263, para 10) "10. It may be that the facts narrated in the present complaint would as well reveal a commercial transaction or money transaction. But that is hardly a reason for holding that the offence of cheating would elude from such a transaction. In fact, many a cheatings were committed in the course of commercial and also money transactions."

In Kamaladevi Agarwal vs. State of West Bengal and

Ors. reported in (2002) 1 SCC 555, the Hon'ble Supreme Court

said that the criminal proceedings should not be quashed merely

because of pendency of civil proceedings between the same

parties even if it be pending in a higher Court. Nature and scope

of and standard of proof required in civil and criminal proceedings

are distinct.

In Lalmuni Devi (Smt) vs. State of Bihar and Ors.

reported in (2001) 2 SCC 17, it was held:-

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"8. There could be no dispute to the proposition that if the complaint does not make out an offence it can be quashed. However, it is also settled law that facts may give rise to a civil claim and also amount to an offence. Merely because a civil claim is maintainable does not mean that the criminal complaint cannot be maintained. In this case, on the facts, it cannot be stated, at this prima facie stage, that this is a frivolous complaint. The High Court does not state that on facts no offence is made out. If that be so, then merely on the ground that it was a civil wrong the criminal prosecution could not have been quashed."

In State of Orissa and Ors. vs. Ujjal Kumar Burdhanm,

reported in (2012) 4 SCC 547 it was held:-

"14. Further, the impugned order also notes that in view of the arbitration agreement between the agent and the Government, all the alleged violations fell within the purview of Arbitration and Conciliation Act, 1996 and therefore, the respondent could not be held liable for any criminal offence. This observation is against the well settled principle of law that the existence of an arbitration agreement cannot take the criminal acts out of the jurisdiction of the courts of law.

15. On this aspect, in S.W. Palanitkar & Ors. Vs. State of Bihar & Anr. reported in (2002) 1 SCC 241, this Court has echoed the following views: (SCC p. 250, para 22) "22. Looking to the complaint and the grievances made by the complainant therein and having regard to the agreement, it is clear that the dispute and grievances arise out of the said agreement. Clause 29 of the agreement provides for reference to arbitration in case of disputes or controversy between the parties and the said clause is wide enough to cover almost all sorts of disputes arising out of the agreement. As a matter of fact, it is also brought to our notice that the complainant issued a notice dated 3-10-1997 to the appellants invoking this arbitration clause claiming Rs.15 lakhs. It is thereafter the present complaint was filed. For the alleged breach of the

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agreement in relation to commercial transaction, it is open to the Respondent 2 to proceed against the appellants for his redressal for recovery of money by way of damages for the loss caused, if any. Merely because there is an arbitration clause in the agreement, that cannot prevent criminal prosecution against the accused if an act constituting a criminal offence is made out even prima facie."

In Priti Saraf & Anr. vs. State of NCT of Delhi and Anr.

reported in AIR 2021 SC 1531, the Hon'ble Supreme Court

stated in Para 32 as follows:-

"In the instant case, on a careful reading of the complaint/FIR/charge-sheet, in our view, it cannot be said that the complaint does not disclose the commission of an offence. The ingredients of the offences under Sections 406 and 420 IPC cannot be said to be absent on the basis of the allegations in the complaint/FIR/charge-sheet. We would like to add that whether the allegations in the complaint are otherwise correct or not, has to be decided on the basis of the evidence to be led during the course of trial. Simply because there is a remedy provided for breach of contract or arbitral proceedings initiated at the instance of the appellants, that does not by itself clothe the court to come to a conclusion that civil remedy is the only remedy, and the initiation of criminal proceedings, in any manner, will be an abuse of the process of the court for exercising inherent powers of the High Court under Section 482 CrPC for quashing such proceedings."

7. Keeping the aforesaid settled principles in mind, the fact of

this case needs to be appreciated. The averment made in the

counter affidavit by the complainant-respondent No.2 has not

been controverted by the petitioner, rather some of the facts are

established by the documents available on record and some are

[2023:RJ-JP:19432] (7 of 15) [CRLMP-2581/2023]

admitted by the petitioner, in the petition and written submission

which are being narrated below.

8. The petitioner is Director of Tropical Industries International

Private Limited an Indian entity of Tropical Group of Companies.

The Tropical Group of Companies is operating worldwide. Two

other Companies relevant for this purpose are Fludor Benin S.A. in

West Africa and Vink Corporation DMCC in Dubai. The accused

persons named in the FIR are shareholders / Directors / Mangers

of each of the three companies.

The petitioner has admitted in the written arguments that

the petitioner's company had entered into certain High Sea Sale

Agreements with the complainant as a trading arm of Fludor

Benin. The High Sea Sale Agreement was in relation to the

transportation of particular quantity of shipments as specified in

the High Sea Sale Agreements. The petitioner was only bridging

the communication gap between the Fludor Benin and

complainant. The petitioner being a Director in the Indian entity

was asked to facilitate the smooth execution of the Addendum

dated 9.2.2021 to the Buyer-Seller Agreement dated 6.6.2019.

9. Complainant-respondent No.2 is one of the partner of Balaji

Steel Trade and is engaged in business of steel along with

business of Agro Products and cattle feed since 2016. Co-accused

Rahul Savara, who is father of the present petitioner and Director

of Indian entity of Tropical group allegedly approached the

complainant and persuaded the complainant to set up business of

cotton seeds processing in the Republic of Benin, a West African

Country. Co-accused Rahul Savara portrayed himself to be a key

player having abundant supplies of cotton seeds as raw material

[2023:RJ-JP:19432] (8 of 15) [CRLMP-2581/2023]

from a cotton seeds distributor at Benin in the name and style of

SODECO, which was duly supported by the Government of Benin.

10. Before entering into an agreement, one Ram Krishna, a

Technical Director of Fludor Company at Benin, to learn technical

and operational knowledge about the machinery and equipments

to be supplied by the complainant was sent to the complainant

and was made to learn operation of the machine. On 10.12.2018,

a collaboration cum buy-back agreement was signed between the

complainant and Fludor Benin. Under the agreement, the

complainant was to supply machinery and equipments from India

to Benin and the Fludor Company was to supply 1600 tons of

cotton cakes every month and the machine was to operate whole

of the years. The oils of cotton seeds was to be used by the Fludor

Company. The agreement was for 5 years and depreciation value

of the machinery was 20% every years. Accordingly, after 5 years,

the machinery would be of Fludor Company. The cost of the cotton

seed cakes was agreed at 160 US dollar per ton for one year.

Under the agreement, only the complainant was to sale the cotton

cakes in India.

11. The accused persons had dishonest and fraudulent intention

in pursuing the complainant to enter into agreement dated

10.12.2018 as they had connived not to adhere to the agreement.

Resultantly, as soon as the original export documents, fall into

custody of the accused persons and the Machine reached the coast

of Benin and technical person of the complainant Mr. Anil Kumar,

reached there for installation of the Machine, co-accused Mr. Rahul

Savara abruptly asked the complainant to change the terms and

conditions of the aforesaid collaboration agreement dated

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10.12.2018, otherwise they would not get custom clearance of the

machinery. The complainant was threatened, intimidated and

arms-twisted by the petitioner and his father Rahul Savera saying

that if the complainant does not agree to the changes in the terms

of corroboration agreement, the accused persons will not get the

machines cleared from the Custom and for loss, the complainant

would be responsible. In fact, the pressure to change the terms

and conditions of the first agreement continued for 45 days and

the machines were left on the harbour lying low and idle. The

complainant was not in a position to get back the Machinery which

would have burdened the complainant with heavy cost. As such

the complainant was forced to succumb to the pressure of the

Directors of Indian entity, who had collusion with Directors of

South Africa entity as the accused persons were asserting that

unless the complainant agrees to new terms and condition, the

custom clearance of the Machinery would not be done and the

complainant would be solely responsibly for the loss.

12. The complainant could not visualize dishonest and fraudulent

intention of the accused persons and entered into a fresh

agreement titled as "buyer seller agreement" on 06.06.2019.

Under the new agreement, the supply of cotton cakes were

reduced from 1600 to 1250 metric ton. The rate was revised from

160 to 165 US dollar per ton. The petitioner was asked to submit

invoice of Machinery and equipments to be purchased by Fludor

Company and the petitioner was asked to sale the cotton cakes

only in Rajasthan, Punjab and Haryana and in rest of India, the

accused company would sale the cotton cakes. Since the accused

were aware that raw material i.e. cotton seeds were cheaper in

[2023:RJ-JP:19432] (10 of 15) [CRLMP-2581/2023]

Benin than India, they played a fraud upon the complainant by

putting him under pressure. On 09.01.2021 an addendum to the

aforesaid buyer seller agreement was placed before the

complainant and the complainant was compelled to sign it, since

the complainant had already invested a lot. The consent of

complainant was obtained by fraud putting him under pressure

within 6 months of the first agreement.

13. The complainant further alleged that the complainant was

not paid the entire consideration money of the Machinery as

agreed through buyer seller agreement, nor the complainant was

ever supplied full quantity of seed cake as agreed, rather the

accused persons just causing wrongful loss to the complainant,

sold the produc to some other persons. Collusion of all the entity

is evident from the fact that sometimes the company at Dubai

Generated the invoice and sometime the India entity. Once the

complainant went into the hands of the accused persons by

supplying Machinery etc. and investing money for that, within few

months without disclosing any rise in the cost of raw material, the

cost of seed cake was raised. On 20.01.2022 the complainant paid

Rs.14,00,000/- (Rupees fourteen lakhs only) to the company at

Benin for supply of cakes but the cakes were not supplied. Hence,

the complainant was made to understand that the accused

persons have dishonestly misappropriated the cost of Machinery

and the advanced money. If the complainant would have been

aware of their ulterior design, the complainant must not have

entered into the agreement with the accused persons.

14. Learned Senior counsel for the petitioner contends that initial

agreement which is superseded by subsequent agreement and

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Addendum are voluntary and well thought action of the

complainant. As such after execution of the same, complainant

should not be allowed to abuse the process of law and resort to a

criminal proceeding. The advance money of 14 lacs paid by the

complainant is subject to accounting which shall be looked into

during arbitration proceedings by examination of the details of the

evidence.

FINDING

15. On careful consideration of the averment made in the FIR

and surrounding materials it is not a case of bald allegation with

technical words of the offences. The allegation of fraudulent and

dishonest intention can be gathered from the acts/omission

alleged. The first agreement between the complainant and the

accused company dated 10.12.2018 was for a period of 5 years.

There is no stipulation that terms and conditions of the agreement

could be changed in the mid-way. The complainant supplied

machinery etc. to the accused persons to be installed at Benin.

The technical person of the accused company learnt before-hand

regarding handling and operation of the machine. The total

depreciation value of the machine was 20% every year and after

completion of 5 years, it would have no cost and would remain

with the accused persons. The complainant was to get 1,600 tons

of cotton seeds per month @ 160 U.S. Dollar per ton. This rate

was to run at least for one year and thereafter only based of

freight per 20 feet container, the cost may be 250 U.S. Dollar for

the next year. Within six months of the aforesaid agreement, a

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fresh agreement was proposed by the accused persons

whereunder the accused was allegedly pressurised to submit

invoices of the cost of the machinery and get the price of the

machinery. It was also asked that out of two invoices of the cost

of machinery, one would be paid and another would be retained as

advance for supply of cotton cakes. Under new agreement, the

quantum of supply of cotton cakes was reduced from 1600 tone to

1250. In the first agreement, complainant was to sell the cotton

cakes in India whereas the subsequent agreement dated 6.6.2019

restricted that the complainant would sale in Rajasthan, Punjab

and Haryana and in rest of India, the accused company would

sale. Evidently, the aforesaid conditions in the second agreement

was not beneficial to the complainant, hence claim of the

complainant that the subsequent agreement was obtained by

putting the complainant in undue pressure due to fraudulent and

dishonest intention of accused persons has substance for the

purpose of consideration of the prayer of the petitioner. It is not

disputed that the complainant had paid advance of Rs. 14 lacs in

the year 2022 as cost of cotton cakes but neither cotton cakes

was supplied nor money was refunded.

16. Now, examination of provisions of law is necessary to

examine the allegation of cognizable offences in the FIR which

reads as under:

"Section 405 IPC Criminal breach of trust.--Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of

[2023:RJ-JP:19432] (13 of 15) [CRLMP-2581/2023]

law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or wilfully suffers any other person so to do, commits "criminal breach of trust".

[Explanation 2[1].--A person, being an employer 3[of an establishment whether exempted under section 17 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952), or not] who deducts the employee's contribution from the wages payable to the employee for credit to a Provident Fund or Family Pension Fund established by any law for the time being in force, shall be deemed to have been entrusted with the amount of the contribution so deducted by him and if he makes default in the payment of such contribution to the said Fund in violation of the said law, shall be deemed to have dishonestly used the amount of the said contribution in violation of a direction of law as aforesaid.]

[Explanation 2.--A person, being an employer, who deducts the employees' contribution from the wages payable to the employee for credit to the Employees' State Insurance Fund held and administered by the Employees' State Insurance Corporation established under the Employees' State Insurance Act, 1948 (34 of 1948), shall be deemed to have been entrusted with the amount of the contribution so deducted by him and if he makes default in the payment of such contribution to the said Fund in violation of the said Act, shall be deemed to have dishonestly used the amount of the said contribution in violation of a direction of law as aforesaid."

Section 415 IPC. Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind,

[2023:RJ-JP:19432] (14 of 15) [CRLMP-2581/2023]

reputation or property, is said to "cheat". Explanation.--A dishonest concealment of facts is a deception within the meaning of this section.

Section 24 IPC. "Dishonestly".--Whoever does anything with the intention of causing wrongful gain to one person or wrongful loss to another person, is said to do that thing "dishonestly".

Section 25 IPC. "Fraudulently".--A person is said to do a thing fraudulently if he does that thing with intent to defraud but not otherwise."

17. The requirement of offence of cheating is to deceive a person

fradulently or dishonestly to deliver any property to any person or

to consent that any person shall retain any property or

intentionally induces the person so deceived to do or omit to do

anything which he would not do or omit if he were not so deceived

and which act or omission causes or is likely to cause damage or

harm to that person in mind reputation or property. The

allegation made, discloses that if complainant would have been

aware of the dishonest connivance of the accused person, he

would not have supplied the machinery. After supply of the

machinery, the original agreement was superseded by a

subsequent agreement which certainly had effect to cause harm to

the complainant at least in property and mind. Therefore, the

Court considers that offence of cheating is made out.

18. Further, it is a case of entrustement of property to the

accused persons by the complainant because till completion of

period of 5 years, as per first agreement the complainant was

owner of the machinery. Only after the complainant was reduced

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to a position not to get back the machine, certain conditions were

imposed on the complainant and consent was obtained by fraud.

The entrusted property was to be disposed of in terms of the legal

contract between the parties (first contract) wherein there was

provision that the machinery would get depreciated in value to

20% every year. After supply of the machinery invoices of total

cost of the machinery was obtained from the complainant and no

payment was made of the entire cost which goes to show the

dishonest and fraudulent intention of the accused persons. In the

legal notice of the complainant, relied by the petitioner herein, the

complainant raised specifically that unilateral raising of the price of

cotton cakes by the accused company in between March-April,

2022 was against the agreed terms and conditions. It is worth to

notice that certain invoices were raised by the petitioner company,

therefore, it is not acceptable that there was no role of the

petitioner as a Director of the Company which is also an accused.

Since the companies and its Directors are accused and prima facie

cognizable offence is disclosed in the FIR, it would be subject

matter of investigation/ trial regarding individual and collective

role of the individual Directors.

19. On totality of the consideration of the facts narrated above,

this Court is of the view that the impugned FIR requires to be

investigated, hence this petition stands dismissed as devoid of

merit.

(BIRENDRA KUMAR),J

Bm gandhi/Ashwani/

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