Dishonest Intention should Exist at the very Inception of the Promise Made [Case Law] | First Law

Indian Penal Code, 1860 - Ss. 420, 409, 384 & 120 B - Essential Ingredients - Dishonest intention should exist at the very inception of the promise made.

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR

HON'BLE MR. JUSTICE DEEPAK MAHESHWARI

22/03/2018

S.B. Criminal Misccellaneous (Petition) No. 2775/2017 

Karanpal Singh & Others Vs.  State Of Rajasthan & Others

For Petitioner(s) : Mr. Anuroop Singhi Mr. O.P. Pareek Mr. G.P. Sharma For 

Respondent(s) : Mr. V.S. Godara, PP Mr. Biri Singh Sinsinwar, Sr. Adv. assisted by Mr. Mukesh Saini. Mr. Pankaj Gupta.

J U D G M E N T

Heard learned counsel for the petitioners as also learned counsel for the complainant-respondent No.2 and learned Public Prosecutor.

Two separate criminal misc. petitions have been preferred on behalf of the accused-persons with the prayer to quash and setaside FIR No.145/2016, registered at PS Sadar, Jaipur (West) for the offences under Sections 420, 409, 384 & 120-B IPC.

Briefly stated, the facts mentioned in the FIR are that Shri Karanpal Singh, Shri Pawan Kumar Ahluwalia and Shri Prashant Kumar Ahluwalia, who happened to be Directors of Kamal Sponge Steel & Power Ltd. (for short ‘KSSPL’) purchased iron billets through Omprakash Agarwal and Smt. Sushila Agarwal, Manager & Proprietor respectively of M/s. Maa Ganga Ispat from complainant Akhilesh Agarwal, Director of Maruti Product Pvt. Ltd. (for short ‘MPPL’). In the year 2012-2013 KSSPL purchased iron billets worth Rs.1,91,28,775/-. Out of this, iron billets of Rs.1,89,36,232/- were purchased through accused Nos.4 & 5 i.e. Shri Omprakash Agarwal and Smt. Sushila Agarwal. Iron billets worth Rs.1,92,543/- was purchased directly by the accused Nos.1 to 3 from MPPL. It was agreed upon between the parties to pay the amount within 15 days from the date of purchase of goods and in case of failure, to pay the interest amount @ 18% p.a. When the payment was not made within due time, complainant contacted the accused-persons. On 14.05.2013, accused Nos. 4 & 5 wrote a letter on their letter head to the complainant stating that payment of Rs.1,89,36,232/- would be made directly by the company of accused Nos.1 to 3 to the complainant. Accused Nos.1 to 3 also gave recognition to the letter written by accused Nos.4 & 5 and owned the responsibility for the same, but the payment was not made despite reminders. Ultimately, the accused-persons having dishonest intention and to cause wrongful loss to the complainant and to make wrongful gain to themselves, denied to make the payment. It has been alleged in the FIR that right from the beginning intention of the accused-persons was dishonest and they wanted to grab the iron billets without making payment therefor. On telephonic call made by the complainant on 18.03.2016, the accused-persons completely denied any responsibility for payment and threatened him for dire consequences.

On the complaint filed by the complainant mentioning the aforesaid allegations, FIR No.145/2016 came to be lodged at PS Sadar, Jaipur (West) for the offences under Sections 420, 409, 384 & 120-B IPC.

Learned counsel appearing for petitioners Karanpal Singh, Prashant Kumar and Pawan Kumar Ahluwalia has contended that KSSPL, of which petitioners are Directors, was having regular business transactions with MPPL since 2011-2012. On certain occasions, on account of defect in quality or deficiency of goods certain issues cropped up between them, but payment was used to be made considering the healthy business relations. Counsel submits that the facts alleged in the FIR clearly reveal that the dispute pertains to commercial transaction and arising out of business relations. No criminal offence is made out. FIR has been lodged by the complainant just to pressurize the petitioner- Company to make payment of the amount, which is not otherwise legally payable. The FIR was lodged with inordinate delay. No criminality can be assigned to the petitioners. The petitioners are Directors of KSSPL, who cannot be held vicariously liable for any default made by the Company. It has further been contended that after due investigation made in the FIR, a Negative Final Report was proposed but later on for some extraneous reasons, the investigation was changed and consequently, direction of investigation has also been changed. Counsel submits that in view of above stated facts, FIR deserves to be quashed and setaside.

Learned counsel appearing for petitioners Omprakash Agarwal and Smt. Sushila Agarwal in S.B. Cr. Misc. Petition No.1049/2017 has also placed arguments on the similar lines. It has further been contended by him that at the behest of accused Nos.1 to 3, petitioners have been named as agents in the business transactions between the complainant and them. The allegations made against them in the FIR does not give rise to any criminal offence against the petitioners. Counsel submits that FIR may kindly be quashed and set-aside qua the present petitioners.

Reliance has been placed on the following judgments on behalf of the petitioners :- 

I. Sahib Singh Vs. State of Haryana, reported in 1997(2) SCC 231.

II. G.Sagar Suri & Anr. Vs. State of U.P. & Ors., reported in 2000(2) SCC 636.

III. Kishan Singh (D) through LRs. Vs. Gurpal Singh & Ors., reported in 2010(8) SCC 775.

IV. Gorige Pentaiah Vs. State of A.P., reported in 2008(12) SCC 531.

V. Indian Oil Corporation Vs. NEPC India Ltd. & Ors., reported in 2006(6) SCC 736.

VI. Anil Dudha Bhai Kaneria & Ors. Vs. The State of Raj. & Anr. (S.B. Cr. Misc. Petition No.1910/2016), decided on 17.05.2017.

VII. L.G. Electronics India Pvt. Ltd. Vs. State of Rajasthan, reported in 2012 RLW(2) Raj. 1663.

VIII. Inder Mohan Goswami & Anr. Vs. State of Uttaranchal & Ors., reported in 2007(12) SCC 1.

IX. State of Haryana & Ors. Vs. Ch. Bhajan Lal & Ors., reported in 1992 (Supp.)(1) SCC 335.

X. Madhavrao Jiwajirao Scindia & Ors. Vs. Sambhajirao Chandrojirao Angre & Ors., reported in 1988(1) SCC 692.

XI. Zandu Pharmaceutical Works Ltd. & Ors. Vs. Md. Sharaful Haque & Ors., reported in 2005(1) SCC 122.

Per contra, counsel appearing for the complainantrespondent has vehemently opposed the prayer made on behalf of the petitioners. It has been contended that right from the beginning when the iron billets were purchased by the accusedpersons, their intention was to defraud and to make wrongful loss to the complainant. Despite repeated reminders made by the complainant, no payment was made by the accused Company for the amount due in the tune of Rs.1,89,36,232/-. It has also been contended that despite the letter written by accused Nos. 4 & 5 on 14.05.2013 stating therein that the payment of Rs.1,89,36,232/- will be directly made by the Directors of KSSPL to the complainant, no such payment was made. It has also been stated that the responsibility of making payment was admitted by accused Nos.1 to 3 despite that no payment was made. It has also been stated that after investigation, the allegation made against the accused-persons has been found established, therefore, no case arises to quash and set-aside the FIR No.145/2016.

Counsel appearing for the respondent-complainant has relied on the following judgments :- 

I. Dineshbhai Chandubhai Patel Vs. State of Gujarat & Ors., reported in 2018 SCC OnLine SC 6.

II. D.Venkatasubramaniam & Ors. Vs. M.K. Mohan Krishnamachari & Anr., reported in (2009) 10 SCC 488.

III. Ajay Kumar Das Vs. State of Jharkhand & Anr., reported in 2011 AIR (SC) 3652.

IV. M.Vinod Kumar Vs. H.D. Kumaraswamy & Ors., reported in 2017 All SCR (Crl.) 147.

V. State of Haryana Vs. Bhim Sain & Ors., reported in 2000(10) JT 308.

VI. M/s. Medohl Chemicals & Pharma Pvt. Ltd. Vs. Biological E. Ltd., reported in 2000(3) SCC 269.

VII. Pratibha Vs. Rameshwari & Ors., reported in 2007(12) SCC 369.

VIII. Guru Granth Saheb Sthan Meerghat Vanaras Vs. Ved Prakash & Ors., reported in 2013 AIR (SC) 2024.

IX. State of Orissa & Anr. Vs. Saroj Kumar Sahoo, reported in 2005(13) SCC 540.

Learned Public Prosecutor has submitted the status report of investigation received from SHO, PS Sadar, Jaipur (West) vide letter No.1610 dated 15.02.2018, wherein the facts found during investigation have been mentioned. It has been stated that the offences under Sections 420, 406 & 120-B IPC are prima facie established against the accused-persons.

I have gone through the rival arguments advanced by learned counsels and have also gone through the relevant documents available on record.

The facts stated in the FIR prima facie disclose that the business transactions were going on between the rival parties in regard to the sale and purchase of iron billets since 2011-2012. Various ledger accounts (Annex.5) maintained by KSSPL and MPPL and submitted on record also depict that regular business transactions were going on between the parties since 2011. Various VAT-cum-Excise Invoice have also been submitted on record showing the transaction between the rival parties. Some of such invoices show the name of Maa Ganga Ispat as Consignee/Buyer while depicting the fact that delivery was made at the address of KSSPL. Copies of the ledgers also depict the details of bank payments made on various dates in regard to the sale/purchase of M.S. Billets.

In S.B. Cr. Misc. Petition No.1049/2017, Annexure-2 to Annexure-4 have also been annexed, which are reminders claiming deduction of Rs.1,83,83,400/- due to poor quality of material. These reminders were issued by KSSPL to Shri Omprakash, Prop. of Om Ispat. These reminders show that during the business transactions, there arose some contentious issues between the parties as regards the quality of material supplied. This appears to be a reason of dispute between the parties which can be termed as defence of the respondent. Though the material creating any defence in favour of the respondent need not be considered at the stage of disposing the misc. petition, however this material, is of course, sufficient to show that there were contentious issues between the parties for which the payment might have become due. Allegations and counter allegations raised by rival sides in this regard are sufficient to show that this was the dispute of civil nature for which the amount became due.

It is also pertinent to note here that the copies of the ledger accounts maintained by Maa Ganga Ispat showing the entry of an amount of Rs.1,89,36,232/- have also been acknowledged. Had there been any criminal intent to defraud the complainant, this acknowledgment would not have been made in the account books. This shows the absence of criminal intent but can merely be termed as the dispute of civil nature arising out of the business transactions.

Copy of S.B. Company Petition Nos.11/2015 & 12/2015 titled as Smt. Sushila Agarwal Vs. KSSPL and Omprakash Agarwal Vs. KSSPL respectively have also been annexed as Annexure-4. Copy of the order dated 03.03.2017 passed in S.B. Company Petition No.12/2015 has also been annexed, whereby the petition has been admitted. This also goes to show that there was a dispute pending between the parties essentially of civil nature for which no criminal intent can be presumed against the petitioners herein. Letter written by authorised signatory of Maa Ganga Ispat on 14.05.2013 to Mr. Chirag, KSSPL also shows that the outstanding amount of Rs.1,89,36,232/- has been acknowledged as on 05.05.2013. Request has been made to Mr. Chirag to pay the amount directly to MPPL. This liability has further been acknowledged by the authorised signatory of KSSPL on 14.05.2013 making M/s. Maa Ganga Ispat free in regard to this liability. These documents also indicate that there was no criminal intent behind this outstanding amount which appears to be a dispute of purely civil nature.

In the background pertaining to factual matrix of the case in hand, the judgments relied upon by learned counsel for the respondent do not appear to extend any assistance to the respondent.

The offences alleged against the petitioners in the FIR No.145/2016 are punishable under Sections 420, 409, 385 and 120-B IPC. On going through the relevant provisions and the essential ingredients of the aforesaid offences, it does not appear that the facts mentioned in the FIR, if taken on their face value, reveal the commission of such alleged offences. It is established legal principle that dishonest intention should exist at the very inception of the promise made. The facts mentioned in the FIR do not disclose that at the time when M.S. Billets were delivered by the complainant to accused-petitioners, there was any intention of the petitioners to cheat and to deceive him to deliver the M.S. Billets. It appears that during the course of business transactions, on account of some dispute regarding the quality or deficiency in goods, some contentious issue regarding payment cropped up. On perusal of the FIR, no allegation to this effect appear that the complainant was in any manner, intentionally put in the fear of any injury and there was dishonesty induced to deliver any property. Thus, the offences defined under Section 415 or 483 IPC are not made out on the bare reading of the allegations made in the FIR. Similarly, the fact of criminal conspiracy having been hatched between the accused-petitioners does not, per se, appear after reading the facts mentioned in the FIR. Thus, the offence defined under Section 120-A IPC is also not revealed by bare reading of the FIR.

It will be of profit to reproduce relevant part of the judgment rendered by the Hon’ble Supreme Court in Inder Mohan Goswami & Anr. Vs. State of Uttaranchal & Ors. (supra), which is as follows :- 

“39. In the instant case, the first information report has been registered under Sections 420/467/120B IPC. The allegations leveled in the first information report are of (1) cheating and (2) forgery.

Analysis of relevant provisions of law 

Firstly, we shall deal with the Section 420 IPC.

Cheating is defined in Section 415 IPC and is punishable under Section 420 IPC. Section 415 set out below: 

415. Cheating.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, reputation or property, is said to ’cheat’.

Explanation. A dishonest concealment of facts is a deception within the meaning of this section.

Section 415 IPC thus requires - 

1. deception of any person.

2. (a) fraudulently or dishonestly inducing that person- 

(i) to deliver any property to any person; or 

(ii) to consent that any person shall retain any property; or 

(b) intentionally inducing that person 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, reputation or property.

40. On a reading of the aforesaid section, it is manifest that in the definition there are two separate classes of acts which the person deceived may be induced to do. In the first class of acts he may be induced fraudulently or dishonestly to deliver property to any person. The second class of acts is the doing or omitting to do anything which the person deceived would not do or omit to do if he were not so deceived. In the first class of cases, the inducing must be fraudulent or dishonest. In the second class of acts, the inducing must be intentional but need not be fraudulent or dishonest. 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 a fraudulent or dishonest intention at the time of making the promise. From his mere failure to subsequently keep a promise, one cannot presume that he all along had a culpable intention to break the promise from the beginning.

41. We shall now deal with the ingredients of Section 467 IPC. Section 467 IPC reads as under: 

467. Forgery of valuable security, will etc.-- Whoever forges a document which purports to be a valuable security or a will, or an authority to adopt a son, or which purports to give authority to any person to make or transfer any valuable security, or to receive the principal, interest or dividends thereon, or to receive or deliver any money, moveable property, or valuable security, or any document purporting to be an acquittance or receipt acknowledging the payment of money, or an acquittance or receipt for the delivery of any moveable property or valuable security, shall be punished with imprisonment for life, or with imprisonment of either description for a term which may extend to ten years, and shall also be liable to fine.

42. The following ingredients are essential for commission of the offence under Section 467 IPC : 

1. the document in question so forged; 

2. the accused who forged it.

3. the document is one of the kinds enumerated in the aforementioned section.

The basic ingredients of offence under Section 467 are altogether missing even in the allegations of the FIR against the appellants. Therefore, by no stretch of the imagination, the appellants can be legally prosecuted for an offence under Section 467 IPC.

43. Even if all the averments made in the FIR are taken to be correct, the case for prosecution under Sections 420 and 467 IPC is not made out against the appellants. To prevent abuse of the process and to secure the ends of justice, it becomes imperative to quash the FIR and any further proceedings emanating therefrom.

44. The court must ensure that criminal prosecution is not used as an instrument of harassment or for seeking private vendetta or with an ulterior motive to pressure the accused. On analysis of the aforementioned cases, we are of the opinion that it is neither possible nor desirable to lay down an inflexible rule that would govern the exercise of inherent jurisdiction. Inherent jurisdiction of the High Courts under Section 482 Cr.P.C. though wide has to be exercised sparingly, carefully and with caution and only when it is justified by the tests specifically laid down in the Statute itself and in the aforementioned cases. In view of the settled legal position, the impugned judgment cannot be sustained.” 

Aforesaid legal principles are directly applicable to the case in hand.

In the factual matrix of the case, it appears that the FIR has been lodged by the complainant in order to pressurize the respondent to make payment of amount which had become time barred and thus, not liable to be re-paid. The transactions giving rise to this dispute appear to be completely civil in nature and the criminal intent at the inception of the transactions appears to be completely missing.

In the result, both the misc. petitions are allowed. The FIR No.145/2016, registered at PS Sadar, Jaipur (West) deserves to be and is accordingly ordered to be quashed and set-aside qua the petitioners in S.B. Cr. Misc. Petition Nos. 2775/2017 & 1049/2017 are concerned.