IMPORTANT POINT
The main legal point established in the judgment is the requirement of mens rea, dishonest misappropriation, and intention to cheat for the offences under Sections 406 and 420 of the Indian Penal Code, as well as the need to show dishonest disposal or retention of money for a case of criminal breach of trust.

JUDGMENT :

Heard the parties.

2. This criminal miscellaneous petition has been filed invoking the jurisdiction of this Court under Section 482 Cr.P.C. with a prayer to quash the order dated 23.05.2023 passed in Complaint Case No.1725 of 2022 by the learned Judicial Magistrate-1st Class, Jamshedpur whereby and where under the learned Magistrate has found prima facie case having been made inter alia against the petitioners besides two other co-accused persons for having committed the offences punishable under Sections 406, 420, 34 of the Indian Penal Code and took cognizance of the said offences; in connection with Complaint Case No.1725 of 2022 and also for quashing the entire criminal proceedings of Complaint Case No.1725 of 2022 which is now pending in the court of learned Judicial Magistrate-1st Class, Jamshedpur.

3. The brief facts of the case is that the petitioner No.1 supplied medicines worth Rs.74,98,262/-. The petitioners paid in total Rs.65-66 lakhs of rupees but did not pay Rs.8,00,000/- and also did not return the security deposit which was made by the complainant at the time of entering into the contract with the petitioner No.1- company for supply of the said medicine.

4. Learned counsel for the petitioners submits that the petitioner No.1 is a Government of India Enterprises and directly under the control of Department of Atomic Energy, Government of India and the petitioner No.2 is the Chairman and Managing Director of the petitioner No.1. It is next submitted that admittedly the complainant delivered the articles beyond the prescribed period of 15 days from the date of receipt of purchase order which was in violation of terms of the NIT/Contract as total delay made in supply is more than 10 weeks than the schedule date. It is next submitted that the complainant has abruptly failed to supply the first lot itself as per delivery schedule which attracts agreed liquidation damages under Clause-5 of the terms and conditions of purchase order. It is next submitted that the petitioner No.1 has right under Clause-6 of the terms and conditions of purchase order to forfeit the security deposit and the contractor has to furnish a Bank Guarantee for a sum equal to 5% of total value of the order within schedule date as per the order failing which security amount may be recovered while releasing first payment. It is further submitted that since the complainant has not supplied three medicines out of the order of 51 medicines, the petitioner No.1- company under the contract/tender has a right to forfeit the security deposit of Rs.3,83,863/- and it has been informed to the complainant vide email. It is next submitted that admittedly the petitioner No.1 has already paid Rs.74,83,241/- to the complainant. It is further submitted that the contract provides for alternative redressal mechanism for Arbitration but without complying the same, the complainant for wrecking vengeances, has instituted this criminal case. It is next submitted that though the petitioner No.2 is an employee under the Central Government undertaking and has acted in his official capacity; in view of provision of Section 197 of Code of Criminal Procedure, the prosecution against the petitioner No.2 is not maintainable in absence of sanction from the competent authority of Government of India.

5. Learned counsel for the petitioners relies upon the judgment of this Court in the case of Chandan Kumar Gupta & Another vs. The State of Jharkhand & Another dated 27th of June, 2023 passed in Cr.M.P. No.1221 of 2022, and submits that that in order to establish the offence punishable under Section 406 of Indian Penal Code the following ingredients are to be established:-

(i) Mens rea

(ii) There must be dishonest misappropriation or conversion to one’s own use, or use in violation of a legal direction or of any legal contract

(iii) The accused dishonestly used or disposed of the property

and to constitute the offence punishable under Section 420 of the Indian Penal Code, the foll