This petition, has been directed against the order dated 3-10-1996, passed by the learned Chief Judicial Magistrate, Indore in Criminal Case No. 5049/96/95) dismissing the application of the petitioner for recalling the order of issue of process, dated 2-9-1995 or dropping the proceedings against accused/petitioner.
2. Respondent No. 2, M/s Gilt Pack Ltd. filed a complaint against the petitioner and other persons on 8-2-1995 for the offence punishable under section 420/34. Learned trial Court, sent a copy of the complaint to the concerned Police Station calling the report as per Provisions under section 156(3) of the Criminal Procedure Code. The Police Report dated 7-3-1995, was received by the Court. According to the police report, it was a matter of business transaction between the parties and there was a breach of contract, therefore, no criminal case is made out against the petitioner. Thereafter, statement under section 200, Criminal Procedure Code of Mr. Aashutosh Rai, Manager of respondent No. 2, M/s Gilt Pack Ltd., was recorded on 28-4-1995. By order dated 2-9-1995 complaint was registered against the petitioner and other accused persons and the process was ordered to be issued for their appearance. The petitioner challenged this order dated 2-9-1995 by filing petition under section 482, Criminal Procedure Code before this Court. By order dated 15-5-1996, this Court has disposed of this petition in limine, without notice to the other side directing the petitioner to file objection before the learned Chief Judicial Magistrate, Indore, who shall pass reasoned order on the same.
3. The petitioner, submitted his objection dated 25-6-1996 before the trial Court, praying for dropping the proceedings against him. After hearing both the parties, learned Chief Judicial Magistrate declined to accept the objection raised by the petitioner and dismissed the same vide order dated 3-10-1996, which is challenged in this petition.
4. The petition has been filed for quashing the order dated 3-10-1996. By order dated 9-8-2000, this High Court dismissed the petition with the observation that the petitioner has all rights to raise all grounds at the time of framing of charge. This order dated 9-8-2000, has been challenged by the petitioner by filing S.L.P. (Criminal) No. 4290/2000 (Cr. Appeal No. 114/02) before the Supreme Court. The Supreme Court set aside the order dated 9-8-2000 and remanded the case back to this High Court for consideration of the petition on merit. That is how the matter has come up before this Court for its disposal.
5. To appreciate the controversy and the contention of the parties a reference to the relevant facts leading to filing of this petition, would be apt:-
Respondent M/s Gilt Pack Ltd, filed a complaint against the petitioner and other persons. The other persons are concerned by holding one or the other post in the Company. In substance, the respondent/complainant averred in the complaint that the petitioner presented himself as a Representative of M/s Kunstoplast Chemie BMBH AKC HAUS, AN DEN DREI HASEN 34/36 D-61440 OBERUSEL FEDERAL REPUBLIC OF BERMAY (hereinafter called "German Company"). The petitioner and his officials handed over 16 pages brochure showing as associate of German Company. On the representation made by the petitioner, the respondent/complainant placed an order for purchase of 1500 M.T. Polypropylene @ US 505 PMT. It was also settled between them that the payment for the goods will be done by Letter of Credit. In pursuance thereof, letter of credit A/c was opened in the State Bank of India and the copy of the same was faxed to the petitioner along with covering letter. It has also been alleged in the complaint that after receiving the letter of credit, accused persons have forced to make the necessary amendment in the letter of credit and the complainant had accepted their suggestion for amendment in the terms and conditions of the letter of credit. Therefore, he made telephone calls and sent messages to the petitioner upon which, the petition sent a letter dated 4-3-1994 to the complainant informing that their Principal in German are in the process of loading the consignment. Ultimately, out of 1500 MT, only 50 MT material was supplied to him. Therefore, complainant sent several telephonic reminders and fax messages for the balance material but of no avail. Finally, on 29-4-1994, complainant received the following message :-
"With reference to the learned counsel, we wish to inform you that out of 1500 MT, 50 MT of PP-Brastec H-508 has already been shipped and documents have already been negotiated. The remaining 1480 MT cannot be shipped due to some unforeseen and unavoidable circumstances and no documents will be negotiated for balance quantity. Therefore, this learned counsel may please be treated as cancelled."
According to the complainant, accused persons have not clarified what were the unforeseen and unavoidable circumstances because of which they are not able to fulfil the contract. Meanwhile, there was rise of price of contractual material and the accused persons impressed upon the complainant for compensating the deference. The accused assured the complainant that they will look into the matter, According to the complainant, because of non-fulfilment of the contract, he has to put into loss of Rs. one crore because he had purchased rest of the required material on excess price. It is alleged in the complaint that the complainant was lent by giving false assurances and representations to believe that the petitioner was the associates of the German Company and was able to supply the material. Later on, the complainant learnt to his dismay that representations made initially were raise and false to the knowledge of the maker. The accused persons have practiced deceit upon in an organized manner. In the original complaint, it was also alleged that Letter of Credit being irrevocable, the accused have encashed the same but this fact was got amended by filing the amendment application before the trial Court when the objections were filed by the petitioner. In paragraph 7.14 of the complaint, the complainant sought amendment of the complaint to the extent that the letter of credit, was encashed for an amount of supply of 50 MT only. This prayer was allowed by order dated 17-9-1996. It has also been alleged in the complaint that the accused persons have dishonest intention to chest the complainant at the very inception of the contract between them.
6. As stated above, according to the police report, no case was made out for initiation of the criminal proceedings and it was a simple case of breach of contract between the parties. Thereafter, the statement under section 200, Criminal Procedure Code of Aashutosh Rai, Manager of M/s Gilt Pack Ltd./Complainant, was recorded and the process was ordered to be issued by order dated 2-9-1995.
7. The petitioner appeared before the Court below and submitted his objection on 25-6-1996 as per directions given by this Court by order dated 15-5-1996. In short the objection was that the petitioner had acted as an Agent of the German Company which is clear from the document filed by the complainant along with the complaint. In the term and condition No. 1 of the indent is as follows :-
"It is distinctly understood that we are merely agent and not principle and no claim can be preferred on us for any reason whatsoever,"
These terms and conditions have been accepted by the complainant. Therefore, for the breach of contract by the German Company, the petitioner/company cannot be held responsible to irrevocable letter of credit, opened in favour of the German Company, Principals, and they had also withdrawn money only for the supply of 50 MT material and for the rest of the amount, letter of credit was cancelled. In the complaint, false statement was made by the complainant that for the whole amount, letter of credit was encashed, which was got amended after filing of the objection by the petitioner. This fact clearly indicates that the German Company, was not having any criminal intention. They have withdrawn money only for the material supplied by them to the complainant. For remaining quantity. Of material, they have shown their unability because of unavoidable circumstances. It is, however, contended in the objection that the complaint has been filed with an oblique motive to pressurize the petitioner to pay loss incurred by the complainant by non-supply of the material as per the contract. For this purpose, a proper forum is to move before the Civil Court. In short, the objection of the petitioner was that he acted as an Agent between the two companies. It was act in the control to fulfil the contract. The Complainant entered into contract after knowing this fact right from beginning and as per the terms and conditions of the contract, the petitioner cannot be held responsible for breach of contract by the German Company. The statement of complainant/witness Aashutosh Rai is also clear on this count. In paragraph 8, he has deposed that the petitioner/company was the Agent of German Company.
8. Learned Chief Judicial Magistrate dismissed the objection by order under challenge dated 3-10-1996 holding that there is sufficient ground for taking cognizance in the matter and prima facie case is made out on the basis of the complaint. At this stage, evaluation and appreciation of the evidence of the complainant is uncalled for and the defence of the petitioner cannot be considered.
9. Having heard the counsel for the parties and after perusing the entire cord of the case, now the mute question before this Court is that whether even accepting the complete case of the complainant, as mentioned in the complaint and the statement of complainant Aashutosh Rai as well as the documents filed in support thereof, prima facie case for taking cognizance and initiating criminal proceedings against the petitioner, is made out or not ?
10. Learned counsel for the petitioner relying on the judgment rendered in SW Palanikar and others vs. State of Bihar and another, JT 2001 (9) SC 151 submitted that a mere failure to keep promise would not be cheating. In the present case, the petitioner acted as an' Agent between two companies, which is clear from the statement of the complainant and the terms and conditions of the letter of credit and the contract. The material was to supply by the German Company and not by the petitioner. The petitioner has not gained anything by breach of contract and non-supply of material. It has also been contended that even the German Company was not having mens rea on their part, otherwise, they would have withdrawn the complete amount of letter of credit whereas they have withdrawn only price of supplied material. Learned counsel for the petitioner has also relied on a judgment in case of Ashok Chaturvedi vs. Shitul H. Chanchani, AIR 1998 SC 2796, where the Supreme Court has held that at the stage of taking cognizance, accused persons have a right to submit before the Court that no prima facie case is made out against them and Court is duty bound to consider the same. Allowing the Criminal proceedings to continue even where allegation in the complaint does not make out any offence, would tantamount to abuse of process of Court of law. Therefore, there cannot be any dispute that in such case, power under section 482, Criminal Procedure Code can be exercised.
11. In the case of Ashok Chaturvedi, the petition for quashing was filed by 7 persons, out of 9 officials of the Company, the Supreme Court has quashed the whole proceedings even against the accused persons, who have not filed petition. The petitioner has also relied on the judgment reported in AIR 1992 SC 2206, K. M. Mathew vs. State of Kerala and another on the point that the order of I issuance of process is an interim order and not a judgment. It can be varied or recalled. The fact that the process has already been issued is ho bar to drop the proceedings if the complaint on the very face of its does not disclose any offence against the accused.
12. As against this, learned counsel appearing for respondent, has relied on the following judgments mainly on the point that the trial Court or the High Court should not embark upon the enquiry by shifting evidence and coming to the conclusion with regard to making out prima facie case against the accused persons.
(i) 7999 SCC (Cri) 304; State of Kerala and others vs. O.C. K Kuttan; (ii) 2007 (4) Crimes 65 (SC); M. Krishnan vs. Vijay Singh and another; (iii) 2000 Cr. L.R. (SC) 765; Mahavir Prashad Gupta and another vs. State of National Capital, Territory, (iv) AIR 1996 SC 204; and Anil Saran vs. State of Bihar; (v) 7999 SCC (Cri) 401, Rajesh Bajaj vs. State NCT of Delhi and others.
13. There is no dispute about the proposition of law regarding consideration of the petition for quashing the criminal proceedings under inherent powers and or in revisional jurisdiction by the High Court that the same can be invoked only when after accepting the complete case of the complainant as placed in the complaint and the statement recorded under section 200, Criminal Procedure Code along with the documents filed, if ingredients of the alleged offence are not present, the Court can quash the proceedings and will not allow its continuance when there is clear abuse of process of Court of law.
14. In case of 5. N. Palanitkar vs. State of Bihar, AIR 2001 SC 2960, the Supreme Court has held as under :-
"It is clear from the allegations made in the complaint and the sworn statements that the appellant No. 1 Company entered into an agreement with the respondent No. 2 on certain terms and conditions. It is alleged that the appellant No. 7 went to Patna and contacted respondent No. 2 and induced him to enter into an agreement assuring him of huge profit. At the time of arriving at such an agreement, none of the other appellant either met with the respondent No. 2 or induced him to enter any agreement with a view to cheat him. The agreement was further renewed for a period of one year. It is not the case that there was no supply of goods at all as it has come on record that there was supply of 400 ton of fertilizer, may be it was far less than the required quantity. The allegations made against the appellants other than appellant No. 7 are very vague and bald. From the material that was placed before the Magistrate, even prima facie, it cannot be said that there was conspiracy of connivance between the other appellants and the appellant No. 7. If appellants have committed breach of agreement, it is open to respondent No. 2 to seek redressal in a competent Court or forum to recover damages. If permissible in law in case he had sustained any loss. In order to constitute an offence of cheating, the intention to deceive should be in existence at the time when the inducement was made. It is necessary to show that a person had fraudulent or dishonest intention at the time an act of cheating. A mere failure to keep up promise subsequently cannot be presumed as an act leading to cheating."
15. In case of Hridaya Ranjan Pd. vs. State of Bihar, AIR 2000 SC 2341 the Supreme Court has held as under:-
'The distinction between mere breach of conduct and the offence of cheating is a fire 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 subsequently such culpable intention right at the beginning that is, when he made the promise cannot be presumed."
16. "Cheating" is defined under section 415 of the Indian Penal Code For convenience section 415 of Indian Penal Code is reproduced as follows :-
S. 415: "Moreover, 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."
On a reading of the section it is manifest that in the definition there are set forth two separate classes of acts which the persons deceived may be induced to do. In the first place he may be induced fraudulently or dishonestly to deliver any property to any person. The second class of acts set forth in the section 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, hi the first class of cases the inducing must be fraudulent or dishonest. In the second class of acts, the inducing must be intentional but not fraudulent or dishonest.
17. In the present case by their own showing the complainant/respondent, the petitioner had acted merely as an Agent between two companies. It was not in his hand to supply the material. He was also not going to be benefited by non-supply of the material and by committing breach of contract. There is no material available in the complaint, statement of complainant and the documents filed along with the complaint to establish that the petitioner was having mens rea at the very inception of the transaction between the parties. There is no iota of evidence to make out prima facie case that the petitioner was having knowledge that the German Company would not supply the material in future because of rise of price of the material and knowing this fact, well, the petitioner Company and their officials made false representation dishonestly and induced the complainant to enter into contract which will not be fulfilled in future and the same will cause contrary' loss to them. On the other hand, as mentioned above, the petitioner acted as an agent. This is also admitted position as per reply filed by the complainant to the objection filed by the petitioner before the trial Court. In the present case, there is absolutely no false representation made by the petitioner with regard to any fact relating to the German Company. The contract was also partly performed by the German Company. So, it cannot be said that at the very inception of entering into contract, the petitioner, or their officials and other co-accused persons are having intention to cheat the complainant in future by non-fulfilment of the contract by the German Company. It is pertinent to note that the German Company with whom the complainant had entered into contract has not been made as a party and there is no allegation that by commission of breach of contract, the petitioner/company and their officials are going to be benefited.
18. In the present case, learned Court below has failed to consider police report filed by the police after investigation suggesting that the case is of Civil nature. Though this report is not binding upon the Court below but at the same time, the Court is required to assign valid reason for not accepting report. The correspondence between the complainant/respondent and German Company is also clearly establishing that upto filing of the complaint, the respondent/complainant has no vhere alleged dishonesty on the part of the German Company or the petitioner, who had acted as mediator for the contract between respondent/complainant and the German Company for supply of material. The part of the contract, has been complied with and for the rest, the German Company has expressed its unability. Only thereafter, the dispute arose between the German Company and the respondent. Even thereafter, in correspondence, the dishonesty or fraud has not been impleaded by the respondent against the German Company as well as the petitioner. Therefore, this Court has hesitation to come to the conclusion that the petitioner who acted as an agent between two companies in a contractual matter was not having any dishonest intention to chest the respondent/complainant at the initial stage and on the basis of future circumstances also, it cannot be said that he had fraudulent or dishonest intention for causing wrongful loss, damage or harm to the respondent and wrongful gain to himself. It has nowhere putforth by the respondent/complainant in a complaint or in the statement recorded under section 200, Criminal Procedure Code that the petitioner has gained any profit or monetary benefit by breach of contract.
19. This Court would not fail to mention here that there is no Provision in the Criminal Procedure Code giving right to the parties to file an application for amendment in the pleadings and give powers to lower Courts to allow the same. In the present case, learned trial Court should not have entertained the application for amendment in the complaint for correcting the factual position about withdrawal of full amount of learned counsel. If there was any mis-statement of fact in the complaint because of bonafide mistake or intention, the same could be explained in Court Statement by the complainant.
20. In the result, even after accepting the complete case of the complainant, no prima facie case, is made out against the petitioner or their officials for initiating criminal proceedings. Therefore, the same is liable to be quashed. It is a simple case of civil nature regarding commission of breach of contract by the German Company. Therefore, allowing the criminal proceedings is nothing but a sheer abuse of process of Court of law. Therefore, it is quashed.
Order accordingly.