Back
SUPREME COURT OF INDIA
J.S. KHEHAR, R. BANUMATHI, JJ.
INTERNATIONAL ADVANCED RESEARCH CENTRE FOR POWDER METALLURGY AND NEW MATERIALS (ARCI) & ORS. – Appellants
Versus
NIMRA CERGLASS TECHNICS (P) LTD. & ANR. – Respondents
CRIMINAL APPEAL NO. 2128 OF 2011
Decided On : 22-09-2015
1992 Supp.(1) SCC 335; (1995) 2 SCC 449; (2006) 7 SCC 188 – Relied upon
(b) Indian Penal Code, 1860 – Section 419 and 420 – Cheating – Ingredients – False representation – Representation made knowing it to be false, and, – Such representation made to deceive the complainant – Breach of contract and cheating – Distinction – Dishonest intention of accused – Mere failure to keep the representation – Would not attract criminal liability. (Para 13, 14)
(2002) 1 SCC 241; (2014) 13 SCC 553 – Relied upon
(c) Indian Penal Code, 1860 – Section 420 – Cheating – Dishonest intention – Agreement clearly stating that the technology was in experimental stage – Further stating that ARCI shall conduct performance tests to achieve the targeted specifications – Agreed that in case of failure, ARCI shall be liable for damages to the extent of 20% of technology transfer fee – Respondent dealt with ARCI earlier also – No complaints – Ingredients of cheating for invoking section 420 not made out – Criminal liability cannot be imposed upon appellant. (Para 16, 17)
(d) Indian Penal Code, 1860 – Section 420 – Article 21 of Technology transfer agreement providing for arbitration – Respondent invoking Article 21 – Arbitration tribunal passing the award – Case being of civil nature, criminal liability cannot be imposed – Complainant prosecuting criminal case knowing well that the dispute is of civil nature, may be liable under section 250. (Para 19, 20, 21)
(2005) 10 SCC 228; (2006) 6 SCC 736 – Relied upon
(e) Code of Criminal Procedure, 1973 – Section 482 – Appellants 2 and 3 Assistant Director and Director of ARCI, a grant-in-aid research and development institute under the Ministry of Science and Technology, Government of India – Acting in their official capacity – No question of any personal gain from the agreement – Previous sanction of Government of India u/s 197 CrPC mandatory for prosecution – Absence of sanction u/s 197 – Further, no case u/s 420 IPC made out – Proceedings against appellants 2 and 3 rightly quashed. (Para 24, 25)
(1999) 8 SCC 686; (1999) 3 SCC 259; (2008) 5 SCC 765; (2011) 1 SCC 74; (2013) 14 SCC 44; (2012) 5 SCC 424; (1976) 3 SCC 736 – Referred
Facts of the case:
On representation from the appellants ARCI, the entered into an agreement with ARCI for transfer of technology for the manufacturing process of extruded ceramic honeycombs inclusive of transfer of extrusion die fabrication technology which is an integral part of the manufacturing process for a consideration of rupees ten lakhs in instalments exclusive of royalty amount on the sales which would have been generated on the basis of products manufactured and marketed by the respondent on the basis of technology. The respondent established its unit and in the process spent huge amount besides paying the appellant-ARCI their fee.
After three years, the respondent was informed that the targeted specification of the end product could not be achieved.
The respondent filed complaint against appellant-ARCI and its officers alleging that the appellants have represented that ARCI possessed of technology for manufacture of extruded ceramic honeycombs which is used in manufacturing of catalytic converters which are used in automobiles for controlling emission and seeking prosecution of the appellants for the offences punishable under Sections 405, 415, 418, 420 IPC read with Sections 34 and 120B IPC.
The investigating officer stated in its final report that the dispute is purely of civil nature and that no offence was made out against the appellants. On protest petition filed by the respondent, the Magistrate took cognizance of the case for offences under Sections 419 and 420 IPC read with Section 34 IPC vide order dated 11.11.2008.
Aggrieved by the summoning order the appellants filed petition under Section 482 Cr.P.C. before the High Court to quash the proceedings and the same was dismissed.
Finding of the Court:
High Court ought to have quashed the proceedings.
Result: Appeal allowed.
JUDGMENT
R. BANUMATHI, J.
This appeal has been preferred assailing the judgment dated 17.03.2009 passed by the High Court of Andhra Pradesh in Criminal Petition No.7901 of 2008 dismissing the petition filed by the appellants under Section 482 Cr.P.C., thereby declining to quash the criminal proceedings initiated against the appellants in CC No. 840/2008 under Sections 419 and 420 IPC.
2. Brief facts which led to the filing of this case are as under:-The respondent-complainant is a private limited company engaged in the manufacturing and marketing of scientific devices and equipments. The respondent filed complaint against appellant-International Advanced Research Centre for Powder Metallurgy and New Materials (for short ‘ARCI’) and its officers i.e. appellant No.2-S.V.Joshi, Associate Director and appellant No.3-G.Sunderarajan, Director alleging that the appellants have represented that ARCI possessed of technology for manufacture of extruded ceramic honeycombs which is used in manufacturing of catalytic converters which are used in automobiles for controlling emission. On that representation, the respondent entered into an agreement dated 18.06.1999 with ARCI for transfer of technology for the manufacturing process of extruded ceramic honeycombs inclusive of transfer of extrusion die fabrication technology which is an integral part of the manufacturing process for a consideration of rupees ten lakhs in instalments exclusive of royalty amount on the sales which would have been generated on the basis of products manufactured and marketed by the respondent on the basis of technology. The respondent had alleged that in pursuance of the agreement, the respondent was permitted to establish its industrial unit within the campus of ARCI at Balapur, Hyderabad for the purpose of installing and commissioning production of preferred technology and for which respondent spent around rupees one crore thirty lakhs for purchasing and installing the comprehensive machinery. The respondent alleged that after having taken number of trial runs for testing the efficacy of the extruded ceramic honeycombs in the function organized by ARCI in May 2003, attended by higher officials, the technology was handed over to the respondent and accordingly the respondent was induced into remitting the third instalment of rupees two lakhs in addition to the amount already paid. Respondent states that he was informed that the initial trial runs conducted by the Scientists of ARCI succeeded and the appellants thus, handed over a few samples of the final product which were subsequently displayed at a joint programme launched at Hyderabad. As a result, respondent spent an amount of rupees fifteen lakhs for procuring raw materials in anticipation of commencing commercial production in the belief that the final perfected technology is in its hands. The respondent further alleged that after three years, the respondent was informed vide letter bearing No.ARCI/AD/2006-2007 dated 23.10.2006 addressed to Technology Information, Forecasting and Assessment Council (TIFAC) that the targeted specification of the end product could not be achieved. The respondent alleged that scientists working in ARCI had not perfected the honeycomb technology sufficient for commencing commercial production and by their false representations induced the respondent to spend huge amount and thus appellants have committed an offence of cheating.
3. The respondent lodged a criminal complaint on 06.11.2007 before the court of the II Metropolitan Magistrate Cyberabad seeking prosecution of the appellants for the offences punishable under Sections 405, 415, 418, 420 IPC read with Sections 34 and 120B IPC. After investigation, the investigating officer submitted final report dated 28.01.2008 stating that the dispute is purely of civil nature and that no offence was made out against the appellants and the same may be accepted and the case be treated as closed. On protest petition filed by the responde
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
