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IN THE HIGH COURT OF JHARKHAND AT RANCHI
Sanjay Kumar Dwivedi, J.
M/s Usha Martin Limited, West Bengal - Petitioner
Versus
The State of Jharkhand and ors. - Opposite Parties
Cr.M.P. No. 690, 714 of 2022
Decided On : 29-07-2022
Criminal Breach of Trust - Agreement Dispute - Sections 156(3), 406, 420, 467, 468, 471, 120B/34 of the I.P.C. - The judgment discusses the application of sections 406 and 420 of the Indian Penal Code (I.P.C.) in the context of a criminal breach of trust arising from an agreement dispute. The court analyzes the essential ingredients of the offence of cheating and dishonestly inducing delivery of property under section 415 and cheating and dishonestly inducing delivery of property under section 420 of the I.P.C. The judgment also highlights the need for dishonest intention and fraudulent inducement in establishing the offences. The court emphasizes the importance of scrutinizing the veracity of the allegations and the existence of dishonest or fraudulent intention in determining the commission of the said offences. Additionally, the judgment underscores the abuse of the process of the court and the need to prevent the misuse of criminal proceedings in civil disputes.
Fact of the Case:
The complaint arises from an agreement for lifting slag materials, where the petitioners are accused of non-compliance with the terms and conditions of the agreement and misappropriation of funds. The complainant alleges that the accused company deliberately failed to cooperate, causing wrongful loss, and subsequently revoked the agreement to misappropriate the legitimate demands of the complainant. The accused company is alleged to have cheated the complainant with common intention and deep-rooted conspiracy. The court notes the existence of an arbitration clause in the agreement.
Finding of the Court:
The court finds that the complaint arising from the agreement dispute involves civil wrong, and the criminal color given to the entire complaint is unwarranted. The court emphasizes that the dispute is primarily of a civil nature and that the criminal proceedings amount to an abuse of the process of the court. The court quashes the entire criminal proceeding in connection with the case and the order for the institution of F.I.R.
Issues: The primary issue revolves around the application of sections 406 and 420 of the I.P.C. in the context of an agreement dispute, the existence of dishonest or fraudulent intention, and the abuse of the process of the court in converting civil disputes into criminal cases.
Ratio Decidendi: The judgment establishes the need for dishonest intention and fraudulent inducement in establishing the offences of cheating and criminal breach of trust. It emphasizes the importance of scrutinizing the veracity of the allegations and preventing the abuse of the process of the court in converting civil disputes into criminal cases.
Final Decision: The court quashes the entire criminal proceeding in connection with the case and the order for the institution of F.I.R., emphasizing that the dispute arising from the agreement is primarily of a civil nature and that the criminal proceedings amount to an abuse of the process of the court.
The judgment underscores the crucial requirement of establishing dishonest intention and fraudulent inducement to prove the offences of cheating and criminal breach of trust. It emphasizes that for such criminal offences to be made out, there must be clear evidence of deception and a wrongful intention at the inception of the transaction, rather than a subsequent development of such intent. The court highlights the importance of scrutinizing the veracity of the allegations and cautions against misusing criminal proceedings to convert civil disputes into criminal cases, which constitutes an abuse of the court's process (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) .
Furthermore, the judgment clarifies that disputes arising out of contractual agreements, especially when they involve civil rights and obligations, should primarily be addressed through civil remedies. The initiation of criminal proceedings in such contexts, without clear evidence of criminal intent or misconduct, can amount to an abuse of process and may be quashed to prevent harassment and uphold the principles of justice (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) .
The court also emphasizes the importance of the inherent powers of the courts to prevent misuse of the legal process. It states that criminal proceedings should not be allowed to continue if they are primarily based on civil disputes, especially when the allegations do not prima facie disclose a criminal offence or involve mala fide motives. The exercise of these inherent powers is intended to prevent harassment and to ensure that justice is not subverted by malicious or frivolous criminal cases (!) (!) (!) (!) (!) (!) (!) (!) (!) .
In conclusion, the judgment reinforces that criminal proceedings should be initiated and continued only when there is substantive evidence of criminal intent and conduct. When a dispute is essentially civil in nature, and the criminal allegations are based on civil rights violations, courts have the authority to quash such proceedings to prevent abuse of process and to promote justice (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) .
JUDGMENT :
In both the cases common question of facts and law are involved that is why both the petitions are being heard together with the consent of the parties.
2. Heard Mr. Kaushik Sarkhel and Mr. Indrajit Sinha, learned counsels for the petitioners, Mr. Ashutosh Anand and Mrs. Priya Shrestha learned counsel for the State and Mr. Mahesh Tewari, learned counsel for the O.P. No. 2.
3. These criminal miscellaneous petitions have been filed for quashing of entire criminal proceeding in connection with Gamharia P.S. Case No. 13 of 2022 as well as order dated 21.01.2022 whereby the learned C.J.M., Saraikella has been pleased to transmit the C.C. No. 40/2022 under section 156(3) Cr.P.C. for institution of F.I.R., pending in the Court of learned Chief Judicial Magistrate, Saraikella.
4. The complaint was filed alleging therein that complainant is one of the partners of M/s Sai Metaliks Ltd., a business firm having its head office at quarter no. 1161, sector 12 F, Bokaro Steel City, Bokaro, and the factory situated in plot nos. 132, 145, 127, 126, 125, Khata No. 9, in mouza Reghadih, P.O. and P.S. Gamharia, District Saraikella-Kharsawan, Jharkhand-832108. The other partners of the complainant company M/s Sai Metaliks are Rajiv Kumar Singh, Sanjay Kumar Rai and Ramesh Chandra Bansal are also in control and administration of the complainant company.
It is further alleged that there was an agreement with Usha Martin Ltd. with respect to 7,70,000/- tons of slag materials which were to be lifted by the complainant company from the premises of Usha Martin Ltd. and accordingly, an agreement was executed between the parties with specific terms and conditions on 05.08.2019. As per the terms of the agreement, said 7,70,000/- tons of slag materials were agreed to be lifted by the complainant company from the present Tata Steel Long Product Ltd., previously known as M/s Tata Sponge Iron Ltd, Phase 2, Adityapur Industrial Area, Gamharia, More fully known as Galaxy and Vedanta Dump Yards. As per terms the accused persons agreed to pay at the rate of Rs. 454/- per ton and the assignment was to be completed by the complainant by March, 2021. As per terms no. 4.5 and 4.6 of the agreement, it was agreed that the accused company in coordination with M/s Tata Long Products Ltd. will accommodate the transporting vehicles of complainant through a specific gate connecting to Tata-Kandra main road and so also it was agreed that the accused persons would provide separate weighbridge for the purpose.
It is further alleged that due to non-cooperation by the accused company and its officials, the slag materials could not be lifted within the stipulated time. In the meanwhile, due to Covid-19 lockdown situation from the period 22.03.2020 to 16.06.2020, no business could be carried out by the complainant. Thereafter from the period from 16.07.2020 to 09.11.2020 i.e. for about 4 months, the lifting of the slag materials job remained suspended in view of the fact that the accused company did not coordinate with Tata Steel deliberately so as to put the complainant into wrongful loss.
It is further alleged that the accused company should have allowed extension of 1 year’s time to the complainant for the completion of the job but due to negligence and deliberate inaction and evil design the accused company did not act as per the terms causing irreparable loss and injury to the complainant company.
It is further alleged that as per the terms 2.3.1 and 2.3.2, it was stipulated that in the event of more than 100 tons of non metallic slag is found in the entire slag dump of quantity 7,70,000 tons in such case the non metallic slag had to be removed by the complainant for which no payment would be charged by the accused company from the complainant, rather the accused company would pay for the transportation and loading charges to the complainant.
It is further alleged that as per the terms the complainant informed M/s Usha Martin Ltd. and its officials on 02.03.2020 via email ap
The main legal point established in the judgment is the need for dishonest intention and fraudulent inducement in establishing the offences of cheating and criminal breach of trust. The judgment also....
The Court held that the essential ingredients of the offences alleged against the petitioners are not present. The Court also noted that the dispute between the parties is essentially civil in nature....
Main Legal Point
Mere non-payment for goods in a civil transaction cannot constitute cheating or criminal breach of trust under IPC; intent must be proven.
A breach of contract does not constitute cheating unless fraudulent intent is proven at the outset of the agreement, as established in relevant legal precedents.
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