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U. Dhar And Another v. State Of Jharkhand And Another
Factual and Procedural Background
Bokaro Steel Plant, a unit of Steel Authority of India Limited (SAIL), awarded a contract to TISCO Growth Shop. The supply component of this contract was completed by TISCO, and the erection component was subcontracted to Tata Construction & Project Ltd. (TCPL). TCPL, in turn, awarded certain work to M/s Singh Construction Co. (the complainant). After allegedly completing the work, the complainant sought payment of the remaining contract amount from TCPL. On 11 January 2001, alleging non-payment, the complainant filed a criminal complaint under Sections 403, 406, 420 and 120-B of the Indian Penal Code (IPC) before the Chief Judicial Magistrate, Bokaro. The Magistrate took cognizance on 19 June 2001 and issued summons to the appellants—U. Dhar (Managing Director, TCPL) and Asis Ray (Vice-President (Operations), TCPL).
The appellants moved Criminal Miscellaneous Petition No. 4780 of 2001 in the High Court of Jharkhand seeking quashing of the summoning order. On 3 May 2002, the High Court dismissed that petition. The present appeal before the Supreme Court challenges the High Court’s refusal to quash the criminal proceedings. A connected appeal (Criminal Appeal No. 71 of 2003) arises on identical facts and was disposed of in the same judgment.
Legal Issues Presented
- Whether the allegations in the complaint, taken at face value, disclose the essential ingredients of offences under Sections 403, 406, 420 and 120-B IPC against the appellants.
- Whether the order of the Chief Judicial Magistrate taking cognizance and issuing summons, as affirmed by the High Court, should be quashed on the ground that the dispute is purely civil in nature.
Arguments of the Parties
Appellants' Arguments
- The complaint discloses, at most, a civil dispute concerning non-payment under a contract; essential ingredients of the alleged criminal offences are absent.
- The complainant’s own pleading (paragraph 14 of the complaint) acknowledges that its payment was not dependent on payments made by Bokaro Steel Plant to TCPL, underscoring the civil nature of the dispute.
- Consequently, the Magistrate’s order taking cognizance is without jurisdiction and should have been quashed by the High Court.
The opinion does not contain a detailed account of the complainant’s counter-arguments.
Table of Precedents Cited
No precedents were cited in the provided opinion.
Court's Reasoning and Analysis
The Supreme Court examined the contractual framework and found two distinct and independent contracts:
- The contract between Bokaro Steel Plant (SAIL) and TCPL.
- The contract between TCPL and the complainant, Singh Construction Co.
Even if Bokaro Steel Plant had paid TCPL, that money did not constitute the complainant’s “property” for the purpose of Sections 403 or 406 IPC. The Court underscored that:
- Essential elements of Section 403—“dishonest” misappropriation of another’s movable property—were absent.
- There was no allegation or material suggesting dishonest intention, a prerequisite for offences under Sections 403, 406, or 420 IPC.
The Court held that the complainant’s grievance, if any, pertained to recovery of contractual dues—a matter suited for civil action, not criminal prosecution. Permitting the criminal trial to continue would impose unwarranted hardship on the appellants where no prima facie case existed.
Holding and Implications
Appeal Allowed; summoning order and High Court judgment quashed.
The criminal proceedings against the appellants are terminated. A connected appeal (Criminal Appeal No. 71 of 2003) was also allowed on the strength of this ruling. The decision resolves the dispute between the immediate parties but sets no new precedent, as the Court applied settled principles distinguishing civil disputes from criminal offences.
Arun Kumar, J.—
Criminal Appeal No. 70 of 2003 @ SLP (Crl.) No. 2654 of 2002
1. Leave granted.
2. This appeal is filed by U. Dhar, Managing Director and Mr Asis Ray, Vice-President (Operations), both of Tata Construction & Project Ltd. against an order dated 3-5-2002 passed by the High Court of Jharkhand in Crl. MP No. 4780 of 2001, whereby the High Court dismissed the petition filed by the appellant herein for quashing an order dated 19-6-2001 whereby cognizance was taken of offences against the appellants under Sections 403, 406, 420 and 120-B of the Indian Penal Code by the learned Chief Judicial Magistrate, Bokaro.
3. Briefly, the facts are that Bokaro Steel Plant, a unit of Steel Authority of India Limited (for short SAIL) awarded a contract to M/s Tata Iron & Steel Co. Ltd. (for short TISCO) growth shop for certain works. TISCO growth shop completed supply part of the work and erection part of the work was entrusted by it to M/s Tata Construction & Project Ltd. (for short TCPL). TCPL in turn issued tender enquiry and awarded the work to M/s Singh Construction Co., the complainant. According to the complainant, after completing the work it demanded payment of the balance amount under the contract from TCPL. The appellants herein are the Managing Director and Vice-President (Operations) of TCPL. When the complainant failed to receive the payment for the work done, they filed a complaint on 11-1-2001 under Sections 403, 406, 420 and 120-B IPC at Bokaro. The Magistrate concerned took cognizance of the alleged offences and issued summons vide order dated 19-6-2001 to the appellants. The appellants challenged the said order by filing Crl. MP No. 4780 of 2001 in the High Court of Jharkhand at Ranchi. The impugned order was passed by the High Court dismissing the said petition on 3-5-2002.
4. The present appeal has been filed against the said order of the High Court whereby the High Court refused to quash the order of the learned Chief Judicial Magistrate taking cognizance of the alleged offences against the appellants. The learned counsel for the appellants argued that a perusal of the complaint would show that no case is made out against the appellants for the alleged offences, and, therefore, the order passed by the learned Chief Judicial Magistrate is wholly without jurisdiction. According to the learned counsel for the appellants, the controversy relates to a purely civil dispute regarding payment of money and no case for criminal complaint for the alleged offences is made out. We have been taken through the complaint as well as our attention has been drawn to the impugned order passed by the Chief Judicial Magistrate and the confirming order of the High Court. After careful consideration of the facts placed on record, it appears to us that the dispute between the parties is purely of a civil nature. The grievance of the complainant is about the failure of TCPL to pay the balance amount under the contract even though according to it the work stands completed. The appellants have disputed this.
5. In our view, what is relevant is that the contract between TCPL and the complainant is an independent contract regarding execution of certain works and even assuming the case of the complainant to be correct, at best it is a matter of recovery of money on account of failure of TCPL to pay the amount said to be due under the contract. The complainant has alleged that TCPL has already received the money from SAIL for the work in question and it has misappropriated the same for its own use instead of paying it to the complainant and it is for this reason that the offences are alleged under Sections 403, 406 and 420 etc.
6. The courts below have overlooked the fact that the contract between Bokaro Steel (a unit of SAIL) and TCPL is a separate and independent contract. The contract between the complainant and TCPL is altogether a different contract. The contractual obligations under both the contracts are separate and independent of each other. The rights and obligations of the parties i.e the complainant and TCPL are to be governed by the contract between them for which the contract between TCPL and Bokaro Steel (SAIL) has no relevance. Therefore, even if Bokaro Steel has made the payment to TCPL under its contract with the latter, it will not give rise to plea of misappropriation of money because that money is not money or movable property of the complainant.
7. Further, Section 403 uses the words “dishonestly” and “misappropriate”. These are necessary ingredients of an offence under Section 403 IPC. Neither of these ingredients is satisfied in the facts and circumstances of the case. In para 14 of the complaint, the complainant has stated as under:
“… Release of payments to the complainant was never dependent on the payment released by Bokaro Steel Plant, a unit of SAIL to TISCO growth shop and TCPL.”
8. Thus, admittedly, the two contracts are independent of each other and payment under one has no relevance qua the other. It cannot be said that there is any dishonest intention on the part of the appellants nor can it be said that TCPL or the appellants have misappropriated or converted the movable property of the complainant to their own use. Since the basic ingredients of the relevant section in the Indian Penal Code are not satisfied, the order taking cognizance of the offence as well as the issue of summons to the appellants is wholly uncalled for. Such an order brings about serious repercussions. So far as the appellants are concerned, when no case is made out for the alleged offences even as per the complaint filed by the complainant, there is no reason to permit the appellants to be subjected to trial for the alleged offences. Hence, the appeal is allowed. The impugned orders of the High Court as well as of the Chief Judicial Magistrate are hereby ordered to be quashed.
Criminal Appeal No. 71 of 2003 @ SLP (Crl.) No. 2698 of 2002
9. Leave granted.
10. In view of the above judgment, this appeal is also allowed.
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