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IN THE HIGH COURT OF GAUHATI, ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH
RUMI KUMARI PHUKAN, J.
Ajay Haldia S/o Late Amar Nath Haldia – Petitioner
Versus
The State of Assam and Another – Respondents
Crl. Pet. No. 828 of 2017
Decided On : 20-01-2022
Indian Penal Code, 1860 – Section 405,406,408,415 and 420 – Criminal Procedure Code, 1973 - Section 41A,41(a),50 and 482 - Offence of cheating - Petitioner is proprietor of which is engaged in business of manufacture and supply of engineering goods and processing machinery for tea, sesame, nuts, grains industries - Petitioner is also working as a Managing Agent for logistics in grain based distillery - M/s. Brahmaputra Biochem Pvt. Ltd. having its registered office at Jaipur and corporate office at Mumbai, had entered into a business relationship with Tea Mech and to carry on such business relation, a Contract/Agreement of Managing Agency was entered between the BBPL and Tea Mech containing various terms and conditions - BBPL independently placed order along with attached commodity trade agreement with various suppliers and traders after negotiation, agreement and fixation of price, which facilitated by petitioner - Payments were affected by the BBPL to the suppliers and traders - No payment towards purchase of grains against purchase orders were ever made to Tea Mech Company/the petitioner Company - Whether there is any ingredients or not it can be ascertained only after thorough investigation of the case.
Finding of the Court:
On touchstone of principles noted, present case, in court considered view, warrants interference, inasmuch as the ingredients of offence of cheating punishable under Section 420 and other offences 406/408 of IPC has not been made out in FIR - That being the position, the case comes within the purview of first category of observation in State of Haryana vs. Bhajan Lal, 1992 Supp. (1) SCC 335 wherein it has been held that where allegation made in the First Information Report or complaint, even if they are taken at their face value, and accepted in their entirety, do not prima-facie constitute any offence or make out a case against the accused, the power under Section 482 Cr.P.C. can be invoked - A prosecution which is bound to lame to be interdicted in interest of justice as continuance of which will amount to abuse of process of law as has been held in Sathish Mehra vs. State of NCT of Delhi, AIR 2013 SC 506.
Result: Petition allowed
Based on the provided legal document, the key legal points are as follows:
The FIR filed by the informant does not contain the essential ingredients required to establish the offences of cheating or breach of trust under the Indian Penal Code. Specifically, there is no indication of dishonest intention at the time of entering into the agreement or subsequent conduct that would amount to deception (!) (!) (!) .
The dispute between the parties is of a civil nature, relating to contractual obligations and claims, which are more appropriately resolved through arbitration as per the arbitration clause in the agreement (!) (!) .
The investigation and subsequent criminal proceedings are considered an abuse of process of law because they are based on allegations that do not prima facie constitute a cognizable offence, especially given the existence of an arbitration agreement and ongoing arbitration proceedings (!) (!) .
The criminal law is not intended to criminalize breach of civil contractual obligations unless there is clear evidence of fraudulent or dishonest conduct with the intent to deceive at the time of the transaction. Mere breach or failure to fulfill contractual obligations, without such intent, does not amount to criminal offences (!) (!) (!) .
The court emphasizes the importance of adhering to the principles of justice by not allowing criminal proceedings to proceed when the allegations do not meet the necessary legal criteria for criminal offences, especially when civil remedies are available and arbitration has been invoked (!) (!) .
The court has the authority under its inherent powers to quash criminal proceedings that are initiated without sufficient legal basis or that amount to an abuse of process, to prevent unwarranted harassment and protect the rights of the accused (!) .
The continuation of the criminal case against the petitioner is unwarranted because the allegations do not establish the requisite criminal intent or ingredients of the offences under Sections 406, 408, and 420 of the IPC. Therefore, the proceedings are liable to be quashed (!) .
In summary, the court finds that the criminal proceedings are not justified based on the facts and legal principles, and they are therefore quashed to prevent abuse of the judicial process.
JUDGMENT :
RUMI KUMARI PHUKAN, J.
1. Heard Mr. K. Gooptu, learned senior counsel appearing for the petitioner as well as Mr. K.N. Choudhury, learned senior counsel appearing for the respondent No. 2. None appears for respondent no. 1.
2. By filing this petition under Section 482 of the Cr.P.C. the petitioner sought for quashing, cancellation and setting aside the FIR, dated 01.02.2017 as well as the proceedings/ investigations and dropping of all allegations in connection with the CID P.S. Case No. 3/2017 (corresponding to G.R. No. 1083/2017), under Sections 406/408/420 of the IPC.
3. The case of the petitioner in brief is that the petitioner is the proprietor of M/s. Tea Mech (India) (in short ‘the Tea Mech’) which is engaged in business of manufacture and supply of engineering goods and processing machinery for tea, sesame, nuts, grains industries. The petitioner is also working as a Managing Agent for logistics in grain based distillery.
4. M/s. Brahmaputra Biochem Pvt. Ltd. (in short ‘the BBPL’) having its registered office at Jaipur and corporate office at Mumbai, had entered into a business relationship with Tea Mech and to carry on such business relation, a Contract/Agreement of Managing Agency was entered between the BBPL and Tea Mech on 16.01.2015, containing various terms and conditions.
5. The BBPL independently placed order along with attached commodity trade agreement with various suppliers and traders after negotiation, agreement and fixation of price, which facilitated by the petitioner. The payments were effected by the BBPL to the suppliers and traders. No payment towards purchase of grains against purchase orders were ever made to Tea Mech Company/the petitioner Company. According to the petitioner, Tea Mech had outstanding dues recoverable from BBPL in pursuance of the said agreement and on account of and for managing the grain, handling and logistics, Tea Mech sent letter to the BBPL, claiming Rs. 84,64,998/- dated 05.09.2016 (vide Annexure-3) and repeatedly requested to pay the outstanding dues, but they never bothered to reply to the said letter, although verbally made request for time to arrange the money. In the backdrop, the business transactions between the parties being purely commercial in nature and during existence of agreement, without resorting to any dispute resolution in terms of the said agreement, after a long lapse of time, BBPL suddenly filed an FIR, dated 18.07.2017, with CID, Assam, which has been registered as CID PS Case No. 3/2017, dated 01.02.2017, under Sections 406/408/420 IPC. It is submitted that as has been mentioned in the FIR, BBPL never asked for any money or dues payable to BBPL by the petitioner or had shown any intention to terminate the agreement. The FIR was dated 18.01.2017, but registered on 01.02.2017 and suddenly, on 06.02.2017, petitioner received a letter from the BBPL, making a counter claim of Rs. 1,36,97,352/- from the petitioner, contending that there is no any outstanding dues of Rs. 84,64,998/- claimed by the petitioner, with an intention to defraud the petitioner by such belated reply, which is nothing but an afterthought.
6. The petitioner, after receipt of the said reply tried to seek an explanation from them, with a view to resolve the dispute in an amicable manner in terms of the agreement, as in the agreement there is an arbitration clause, but it was not responded. Suddenly, on 01.08.2017, at 09:00 p.m. the petitioner was forcibly taken to his office at 96-D Karaya Police Station by some unidentified persons, accompanied by the agents of the BBPL and identifying as Police Officers from CID, certain documents were seized from him and provided him the seizure list, arrest memo and asked him to sign some cheques by way of threat to transfer money to BBPL. It was told that if he signed the cheques and transferred the money as directed, he would be allowed to walk free and under such threat from the police personnel of the CID, he had to sign the cheque, as dictat
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