The main legal point established in the judgment is the importance of examining the chain of events and subsequent conduct to determine the intention of the accused in cases of alleged criminal breach of trust and cheating.

1. This petition is filed under Section 482 Cr.P.C to quash the private complaint in E.O.C.C.No.128 of 1999, pending on the file of the learned Additional Chief Metropolitan Magistrate (Economic Offences No.1), Egmore, Chennai, filed by M/s.Granttrust Finance Limited represented by its Authorised Agent and Credit Officer Mr.M.Prabhakar against the petitioners, along with two other accused, who are not before this Court, for offences under Section 68 and 628 of the Companies Act, 1956 and under Sections 409, 420 read with 120-B of the Indian Penal Code.

2. At the outset, I may state that neither of the parties have brought to the notice of the court that under what Section the Magistrate has taken cognizance of the complaint. However, the fact remains that the complaint is only at the initial stage and moreover, this being a private complaint, evidence has to be recorded and only then charges has to be framed by the Magistrate. Therefore, admittedly witnesses have not been examined and charges has not been framed yet. At this stage, the petitioner who are A-1 and A-2 have come forward with the present petition.

3. The gist of the complaint is as follows:

(a) The first accused namely the first petitioner M/s.Sundaram Finance Services Limited is the Sponsor for the third accused namely M/s. Vishnu Forge Industries. In order to expand their business operations, the third accused company required finance and accordingly for the said purpose, had along with the first accused approached and induced the complainant to subscribe for shares. Accordingly, the complainant believing their representation to be true subscribed for 50000 equity shares of face value Rs.10 each with a premium of Rs.6 for each share and in that process, enclosed therewith a cheque, addressed to the first petitioner along with the cheque for Rs.8,00,000. The said cheque no doubt was drawn in favour of the third accused. Accordingly the first accused received the cheque amount and placed it to the third accused for having received the said amount.

(b) Apart from the above, it was represented to the complainant by the first accused that there is a possibility of the shares being sold for a price not less than Rs.25/-per share, as the third accused company was going public. It is on the basis of this representation that the complainant purchased the shares.

(c) It is also understood that the first and the third accused entered into a Sponsorship Agreement on 1.9.95 and the very first clause in the Sponsorship Agreement dated 1.9.95 provides that the first accused shall be the Sponsor and shall arrange to offer the Equity Shares for sale to the public not later than April 30 1996 and to get them listed at the Over the Counter Exchange of India (OTCEI), on such terms and conditions as may be decided by the Sponsor in its absolute discretion. It is seen that the copy of the Sponsorship Agreement was also served on the complainant on the same day.

(d) In continuance to the above stated agreement, the first accused and the third accused as one party and the complainant along with the other Co-investors as another party, entered into a Divestment Agreement on 1.9.95. Clause 15 of the Divestment Agreement dated 1.9.95, runs as follows:

"The sponsor shall arrange to offer the Equity Shares for sale to the public not later than April 30, 1996, to get them listed at the OTCEI, on such terms and conditions as may be decided by the Sponsor in its absolute discretion"

(e) About three days prior to the last day for the company to go public i.e on 27.4.96, the first and the third accused wanted a few clause to be amended in the Divestment Agreement already entered into and therefore amended the same and entered into a Supplementary Agreement to the Divestment Agreement with the same parties, in which the second and the fourth accused being the representatives of the first and the third accused, signed the agreement. Pursuant to the substituted Clauses in the Divestme