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SUPREME COURT OF INDIA
Ashok Bhushan, M. R. Shah, JJ.
Sushil Sethi and another – Appellants
Versus
The State of Arunachal Pradesh and others – Respondents
Criminal Appeal No. 125 of 2020 (Arising from SLP(Criminal) No. 590 of 2019)
Decided on : 31-01-2020
Indian Penal Code, 1860 – Sections 420 and 120B – Criminal Procedure Code, 1973 – Section 482 – Cheating and conspiracy – Supply of inferior quality materials in contravention with provisions of contract – There are no allegations that there was a fraudulent and dishonest intention to cheat government from very beginning of the transaction – Main allegations can be said to be against company – Company has not been made a party – Even there are no specific allegations and averments in FIR/charge-sheet that appellants were incharge of administration and management of company and thereby vicariously liable – Every breach of contract would not give rise to an offence of cheating and only in those cases breach of contract would amount to cheating where there was any deception played at the very inception – Even in a case where allegations are made in regard to failure on part of accused to keep his promise, in absence of a culpable intention at the time of making initial promise being absent, no offence under Section 420 IPC can be said to have been made out – 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 pressurise accused – There are no allegations to constitute vicarious liability – This is a fit case to exercise powers under Section 482 Cr.P.C. and to quash impugned criminal proceedings – Impugned judgment and order passed by High Court set aside – Impugned criminal proceedings quashed and set aside only against appellants and not against any other accused against whom charge sheet had been filed and proceedings shall continue against other accused, in accordance with law. (Paras 6, 7.2, 7.7, 8, 8.1, 8.2, 9 and 10)
Facts of the case:
Feeling aggrieved and dissatisfied with impugned judgment and order dated 07.09.2018 passed by High Court of Gauhati at Itanagar in Criminal Petition No. 36(AP) of 2017, by which High Court has dismissed the said criminal petition preferred by appellants herein to quash and set aside criminal proceedings being G.R. Case No. 05/200/294, original accused nos. 1 & 2 have preferred present appeal. Short question which is posed for the consideration of this Court is, whether a case has been made out to quash the FIR and the charge-sheet against appellants for the offences under Section 420 read with Section 120B of IPC, in exercise of powers under Section 482 Cr.P.C?
Findings of the Court:
Though the FIR was filed in the year 2000 and the charge-sheet was submitted/filed as far back as on 28.5.2004, the appellants were served with the summons only in the year 2017, i.e., after a period of approximately 13 years from the date of filing charge-sheet. Under the circumstances, High Court has committed a grave error in not quashing and setting aside impugned criminal proceedings and has erred in not exercising jurisdiction vested in it under Section 482 Cr.P.C.
Result : Appeal allowed.
JUDGMENT
M.R. Shah, J.
Feeling aggrieved and dissatisfied with the impugned judgment and order dated 07.09.2018 passed by the High Court of Gauhati at Itanagar in Criminal Petition No. 36(AP) of 2017, by which the High Court has dismissed the said criminal petition preferred by the appellants herein to quash and set aside the criminal proceedings being G.R. Case No. 05/200/294, the original accused nos. 1 & 2 have preferred the present appeal.
2. That appellant no.1 is the Managing Director of M/s. SPML Infra Limited, previously known as M/s Subhas Project Marketing Limited, and appellant no.2 is the Director of the said firm M/s SPML Infra Limited. M/s SPML Infra Limited is a public limited company incorporated under the Companies Act, 1956. A contract was entered into between M/s SPML Infra Limited and the Government of Arunachal Pradesh on 18.03.1993 for construction, supply and commissioning of the Nurang Hydel Power Project including three power generating units for a consideration of Rs. 24.96 crores approximately. As per clause 2(c) of the contract, the defect liability period for the works was to be for a period of 18 months. Project was commissioned in the month of July, 1996. That the defect liability period for the works of M/s SPML Infra Limited expired in the month of January, 1998. That thereafter the project became operational and started generating electricity and according to the appellants till 20.09.1998 the project had generated 90 lakhs KW units. According to the appellants even the said project is also in operation today. There were some disputes with respect to the payment of maintenance by the respondents. The appellants issued notice to the respondents to take over the project before 31.03.2000 on account of nonpayment of maintenance, vide notice dated 09.03.2000.
2.1 That thereafter the respondents - original complainant lodged the complaint against the appellants and others being Jang PS Case No. 05/2000 for the offence under Section 420 of the IPC alleging inter alia that the appellants provided inferior quality materials in contravention with the provisions of the contract which stipulated specific percentages of nickel and chromium to be used. It was alleged in the complaint that the appellants were required to supply the equipments as per the terms of the contract. As per the complaint, in course of physical inspection of the plant, the DOP found that three runners turbines, viz, turbine nos. 1, 2 and 3 were cracked and damaged. Therefore, the damaged components were sent for testing and the National Test House, Calcutta submitted its report and it was found that the chemical composition of the broken runner was found containing 5.28% Nickel and 7.5% Chromium, which composition was contrary to the specification as per the agreement. Therefore, it was alleged that M/s SPML, Calcutta had supplied sub-standard turbines containing composition of materials not in accordance with the specification of MOU, resulted in frequent damage of runner turbine buckets. On the strength of written complaint, an FIR was lodged/registered. It appears that during the course of the investigation, the Investigating Officer found/discovered the illegalities/irregularities in awarding the contract at a higher price. Even during the course of investigation, the Investigating Officer found some officials responsible for the omission and neglect of duties and it was found that the officials named in the charge sheet were involved/connived with the firm M/s SPML Infra Limited with a view to cheat the Government of Arunachal Pradesh. After conclusion of the investigation, the Investigating Officer filed the final report/charge sheet 28.05.2004 against the appellants and others for the offences under Section 120-B and 420 of the IPC.
2.2 According to the appellants, they were not aware about the filing of the FIR and the charge sheet against them till the year 2017 and on being aware of the FIR and the charge sheet against them, th
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