1. Complaint for cheating, breach of trust, and forgery involving an LPG distributorship and point-of-sale agreement — dispute over security deposits and supply refills. (Para 1 , 2 , 4 )
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2024 Supreme(SC) 163
SUPREME COURT OF INDIA
ABHAY S. OKA, UJJAL BHUYAN, JJ.
Shiv Jatia – Appellant
Versus
Gian Chand Malick & Ors. – Respondents
Criminal Appeal No.776 of 2024 with Criminal Appeal No.777 of 2024
Decided on : 23-02-2024
Important Points
IMPORTANT POINT
Order issuing process has drastic consequences – Such orders require application of mind – Such orders cannot be passed casually.
Order issuing process has drastic consequences – Such orders require application of mind – Such orders cannot be passed casually.
Subject
Criminal Law - Quashing of Complaint
Act Referred
Headnote
Essential Commodities Act, 1955 – Section 13 – Indian Penal Code, 1860 – Sections 420, 406, 467, 468 and 472 read with Section 120B – Criminal Procedure Code, 1973 – Sections 202 and 482 – Breach of Distributorship Agreement – High Court has not recorded cogent reasons for not entertaining prayer for quashing complaint – Only reason given by High Court is that there were disputed questions of fact, and controversy can be decided only after evidence is recorded – Order issuing process has drastic consequences – Such orders require application of mind – Such orders cannot be passed casually – Magistrate was not justified in passing order to issue summons – Entire dispute is of a civil nature arising out of a commercial transaction – Taking complaint and documents relied upon by 1st respondent–complainant as correct, no case was made in complaint or in evidence of 1st respondent to proceed against appellants – Continuing complaint against appellants will amount to abuse of process of law – Case is made out for quashing complaint as against appellants – Impugned judgment set aside insofar as appellants are concerned – Complaint will proceed against rest of accused. (Paras 11, 12, 15 and 16)
Facts of the case:
Appellants in these two appeals filed a petition under Section 482 of Cr.P.C. before High Court of Punjab and Haryana at Chandigarh for quashing said complaint alleging commission of offences under Sections 420, 406, 467, 468 and 472 read with Section 120B of Indian Penal Code, 1860 and Section 13 of Essential Commodities Act, 1955 and for quashing summoning order dated 16th July 2013 passed on the said complaint. High Court, by impugned judgment dated 25th August 2014, dismissed the said petition.
Findings of Court:
Complaint bearing Criminal Complaint no.128 dated 17th July 2004 pending in Court of Judicial Magistrate, 1st Class, Chandigarh is, hereby, quashed only insofar as appellants are concerned. Complaint will proceed against rest of accused. Other accused can raise appropriate defences at the time of framing charge or Trial. Appeals are partly allowed on the above terms with no order as to costs.
Result : Appeals partly allowed.
Legal Category Hierarchy
- crime and sentencing
- practice and procedure
Advocates appeared:
For the Appellant(s) : Mr. Siddharth Luthra, Sr. Adv. Mrs. B. Sunita Rao, AOR Mr. Gunmaya S Mann, Adv. Mr. Gautam Khazanchi, Adv. Mr. Subham Jain, Adv. Mr. Kushagra Raghuvanshi, Adv. Mr. Rahul Khare, Adv.
For the Respondent(s): Mr. Nikhil Jain, AOR Ms. Preeti Singh, AOR Mr. Gurmeet Singh Makker, AOR Mr. Shubham Bhalla, AOR Mr. Varun Chugh, Adv. Mr. Bhuvan Kapoor, Adv. Mr. Krishna Kant Dubey, Adv. Mr. Mukesh Kumar Maroria, AOR
For the Appellant(s) : Mr. Siddharth Luthra, Sr. Adv. Mrs. B. Sunita Rao, AOR Mr. Gunmaya S Mann, Adv. Mr. Gautam Khazanchi, Adv. Mr. Subham Jain, Adv. Mr. Kushagra Raghuvanshi, Adv. Mr. Rahul Khare, Adv.
For the Respondent(s): Mr. Nikhil Jain, AOR Ms. Preeti Singh, AOR Mr. Gurmeet Singh Makker, AOR Mr. Shubham Bhalla, AOR Mr. Varun Chugh, Adv. Mr. Bhuvan Kapoor, Adv. Mr. Krishna Kant Dubey, Adv. Mr. Mukesh Kumar Maroria, AOR
Table of Contents
2. Whether summoning without a Section 202 CrPC report is illegal and whether a distributor's unauthorized agreement creates criminal liability for the principal company. (Para 6 , 7 )
3. The Magistrate issued summons based on material previously deemed insufficient without receiving the requested police report or conducting a fresh inquiry. (Para 9 , 10 , 11 )
4. Criminal proceedings are an abuse of process when the dispute is purely civil and no contractual relationship or authorization exists to establish criminal intent. (Para 14 , 15 )
5. Appeals allowed — impugned judgment set aside — complaint quashed against the appellants. (Para 16 )
6. Is the postponement of process under Section 202(1) CrPC mandatory when the accused resides outside the Magistrate's jurisdiction?
Yes, following the 2006 amendment, it is mandatory for a Magistrate to postpone the issue of process and either inquire into the case or direct an investigation if the accused resides beyond the court's territorial jurisdiction. (Para 8 )
7. Can a Magistrate issue a summoning order based on the same material that previously prompted a request for a Section 202 CrPC report?
No. If a Magistrate postpones process because existing material is insufficient to justify a summoning order, they cannot later issue that order based on the same material without additional evidence or the requested report. (Para 11 )
8. When does a commercial dispute over contractual obligations and payments constitute an abuse of the criminal process?
When the dispute is purely civil in nature, lacks a direct contractual relationship between the parties, and there is no evidence of criminal intent or authorization for the alleged fraudulent acts. (Para 14 , 15 )
JUDGMENT :
ABHAY S. OKA, J.
FACTUAL ASPECTS
1. The appellant in Criminal Appeal no.776 of 2024 is the accused no.2 in the complaint filed by the 1st Respondent-complainant under Section 200 of the Code of Criminal Procedure, 1973 (for short, ‘the Cr.PC’) alleging the commission of offences under Sections 420, 406, 467, 468 and 472 read with Section 120B of the Indian Penal Code, 1860 (for short, ‘the IPC’) and Section 13 of the Essential Commodities Act, 1955. The appellants in Criminal Appeal no.777 of 2024 are the accused nos.1, 4 and 5 in the same Complaint. The appellants in these two appeals filed a petition under Section 482 of the Cr.PC before the High Court of Punjab and Haryana at Chandigarh for quashing the said complaint and for quashing the summoning order dated 16th July 2013 passed on the said complaint. The High Court, by the impugned judgment dated 25th August 2014, dismissed the said petition.
2. On 23rd September 2002, under the Liquified Petroleum Gas (LPG) Distributorship Agreement (for short, ‘the Distributorship Agreement’), the accused no.1 – M/s.Energy Infrastructure (India) Limited (for short, ‘the accused company’) appointed the 2nd respondent-accused no.7 (Arun Sharma, Proprietor of M/s.Arshya Max Agencies) as a distributor for distribution of LPG cylinders in the areas of Panchkula and Chandigarh. The 2nd respondent, on behalf of the accused company, purported to execute a Point of Sale agreement on 7th March 2003 (for short, ‘the POS agreement’) by which he purported to appoint the 1st Respondent-complainant as a sales outlet (Point of Sale) in the town of Dhanas to sell MaxGas to the consumers. By the POS agreement, the 2nd respondent agreed to pay a flat rate commission per cylinder sold by the 1st Respondent-complainant. A demand draft in the sum of Rs.74,900/- was issued in favour of the accused company by the 1st Respondent-complainant.
3. The accused company addressed a letter dated 3rd March 2004 to the 2nd respondent alleging serious lapses in customer services rendered by the 2nd respondent, which allegedly caused a big dent in the reputation of the accused company. Various instances of lapses in service were set out in the said letter. The accused company also stated that the 2nd respondent had illegally supplied the cylinders to the 1st Respondent-complainant beyond the assigned territory in Punjab. It was specifically stated in the said letter that the name of the 1st Respondent-complainant was not reflected in the records of the accused company as a Point of Sale. The accused company alleged that, thus, the 2nd respondent had committed a breach of the Distributorship Agreement. Another allegation in the said letter was that a cheque issued by the 2nd respondent had been dishonoured.
4. A private complaint was filed by the 1st Respondent-complainant on 17th July 2004 before the Illaqa Magistrate, Chandigarh. The allegation in the said complaint is that the 2nd respondent, along with accused nos.5 and 6, approached the 1st Respondent-complainant and disclosed that they were involved in the business of manufacturing and selling LPG. The 1st Respondent-complainant has relied upon the alleged information furnished by the three accused and their representations. There is an allegation that the accused allured the 1st Respondent-complainant to join hands with them and relinquish his old venture of supplying LPG in the market. The 1st Respondent-complainant alleged in the complaint that while the POS agreement was executed on 7th March 2004, he paid a sum of Rs.74,900/- to the accused company by way of a demand draft. It is alleged that the accused company encashed the said demand draft. Further allegation in the complaint is that the 1st Respondent-complainant paid the security deposit for 360 empty cylinders at the rate of Rs.700/- per cylinder to the accused and received the cylinders/refills. Based on the assurance that the accused company will supply at least 600 refills against 300 empty cyli
