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2006 (II) OLR (SC) — 659
H. K. SEMA AND R. V. RAVEENDRAN, JJ.
M/s. Indian Oil Corporation... Appellant
Versus
M/s. NEPC India Ltd. and others... Respondents
Criminal Appeal Nos.834 and 833 of 2002
Decided on 20th July, 2006.
(Paras - 21 to 31)
2. CRIMINAL PROCEDURE CODE, 1973 - Sec. 482 - Aircraft Act, 1934 - Sec. 8 - Quashing of - Indian Oil Corporation as per contract supplied aviation turbine fuel and aviation lubricants to the company - Huge amount due to be paid by the company - Aircraft hypothecated - Interim injunction obtained by the Corporation restraining the company from removal of the aircraft - Subsequent complaint by Corporation alleging unauthorised removal of engines and certain other parts from two hypothecated aircrafts - Application by company for quashing of proceedings - Corporation has initiated several civil proceedings to safeguard its interests and recover the amounts due - Corporation also initiated criminal proceedings - Acts show that civil remedies were and are available in law and Corporation has taken to such remedies - It does not follow therefrom that criminal law remedy is barred or Corporation is estopped from seeking such remedy - High Court justified in rejecting the contention of the company that the criminal proceedings should be quashed in view of the pendency of several civil proceedings.
(Paras - 11 to 13)
3. CRIMINAL PROCEDURE CODE, 1973 - Sec. 4 - Criminal prose¬cution - Tendency to convert purely civil disputes into criminal cases - Any effort to settle civil disputes and claims, which do not involve any criminal offence, by applying pressure though criminal prosecution should be deprecated and discouraged.
While no one with a legitimate cause or grievance should be prevented from seeking remedies available in criminal law, a complainant who initiates or persists with a prosecution, being fully aware that the criminal proceedings are unwarranted and his remedy lies only in civil law, should himself be made account¬able, at the end of such misconceived criminal proceedings, in accordance with law. One positive step that can be taken by the Courts, to curb unnecessary prosecutions and harassment of inno¬cent parties, is to exercise their power under Section 250 Cr.P.C. more frequently, where they discern malice or frivolous¬ness or ulterior motives on the part of the complainant. (Para - 10)
4. CRIMINAL PROCEDURE CODE, 1973 - Sec. 482 - Complaints and criminal proceedings - Quashing of - Principles relating to exercise of jurisdiction -
(i)A complaint can be quashed where the allegations made in the complaint, even if they are taken at their face value and accept¬ed in their entirety, do not prima facie constitute any offence or make out the case alleged against the accused.
For this purpose, the complaint has to be examined as a whole, but without examining the merits of the allegations. Neither a detailed inquiry nor a meticulous analysis of the material nor an assessment of the reliability or genuineness of the allegations in the complaint, is warranted while examining prayer for quashing of a complaint.
(ii)A complaint may also be quashed where it is a clear abuse of the process of the Court, as when the criminal proceeding is found to have been initiated with mala fides/malice for wreaking vengeance or to cause harm, or where the allegations are absurd and inherently improbable.
(iii)The power to quash shall not, however, be used to stifle or scuttle a legitimate prosecution. The power should be used sparingly and with abundant caution.
(iv)The complaint is not required to verbatim reproduce the legal ingredients of the offence alleged. If the necessary factu¬al foundation is laid in the complaint, merely on the ground that a few ingredients have not been stated in detail, the proceedings should not be quashed. Quashing of the complaint is warranted only where the complaint is so bereft of even the basic facts which are absolutely necessary for making out the offence.
(v)A given set of facts may make out : (a) purely a civil wrong; or (b) purely a criminal offence; or (c) a civil wrong as also a criminal offence. A commercial transaction or a contractu¬al dispute, apart from furnishing a cause of action for seeking remedy in civil law, may also involve a criminal offence. As the nature and scope of a civil proceedings are different from a criminal proceeding, the mere fact that the complaint relates to a commercial transaction or breach of contract, for which a civil remedy is available or has been availed, is not by itself a ground to quash the criminal proceedings. The test is whether the allegations in the complaint disclose a criminal offence or not. (Para - 9)
JUDGMENT
R. V. RAVEENDRAN, J. — These appeals are filed against the common order dated 29.3.2001 passed by the Madras High Court allowing Crl.O.P. Nos.2418 of 1999 and 1563 of 2000. The said two petitions were filed by the respondents herein under Section 482 of Criminal Procedure Code (‘Code’ for short) for quashing the complaints filed by the appellant against them in C.C. No.299 of 1999 on the file of Judicial Magistrate No.6, Coimbatore and C.C. No.286 of 1998 on the file of Judicial Magistrate, Alandur (Chen¬nai).
2. The appellant (Indian Oil Corporation, for short ‘IOC’) entered into two contracts, one with the first respondent (NEPC India Ltd.) and the other with its sister company Skyline NEPC Limited (‘Skyline’ for short) agreeing to supply to them aviation turbine fuel and aviation lubricants (together referred to as “aircraft fuel”). According to the appellant, in respect of the aircraft fuel supplied under the said contracts, the first re¬spondent became due in a sum of Rs.5,28,23,501.90 and Sky-line became due in a sum of Rs.13,12,76,421.25 as on 29.4.1997.
3. The first respondent hypothecated its two Fokker F27-500 Aircraft, bearing Registration No.VT-NEJ (12684) and VT-NEK (10687) to the appellant under Deed of Hypothecation dated 1.5.1997, to secure the outstanding amounts. Clause (2) of the said Deed provided that the two aircrafts with all parts and accessories stood hypothecated to IOC by way of charge and as security for payment of the amounts due, with effect from the date of hypothecation. Clause (3) read with the schedule set out the instalments schedule for payment of the amount due. Under Clause (6), NEPC India declared that it would not assign, sell, pledge, charge, underlet or otherwise encumber or part with the possession, custody or beneficial interest in respect of the two aircrafts without the previous written consent of IOC. It also undertook not to do any act which may diminish the value of the hypothecated property without clearing the entire outstanding amount. Clause (9) provided that if NEPC India failed to pay any of the instalments with interest within the stipulated time, or if any undertaking or assurance given by NEPC India was found to be false, IOC shall have the “right to take possession of the hypothecated property” and sell the same by public auction or by private contract and appropriate the sale proceeds towards the outstanding dues without recourse to Court of law. Clause 12 confirmed that NEPC India had handed over the title deeds relat¬ing to the aircraft to IOC, and agreed to receive them back only after paying the amounts due. It is stated that Skyline also hypothecated its aircraft (VT-ECP) under a separate Hypothecation Deed dated 14.5.1997. It is further stated that a tripartite agreement dated 6.5.1997 was entered among IOC, NEPC India and Skyline setting out the mode of payment of the dues and recovery in the event of default.
4. As NEPC India failed to pay the first two instalments as per schedule, IOC stopped supply of aircraft fuel on 3.6.1997. However, subsequently, under a fresh agreement dated 20.9.1997, a revised payment schedule was agreed and IOC agreed to re-commence supply of aircraft fuel on ‘cash and carry’ basis. Even this arrangement came to an end as the instalments were not paid.
5. Apprehending that NEPC India may remove the hypothecat¬ed aircraft (VT-NEJ) from Coimbatore Airport to a place outside its reach, IOC filed C.S. No.425 of 1997 in the Madras High Court seeking a mandatory injunction to the Airport Authority of India and Director General of Civil Aviation to detain the said air¬craft stationed at Coimbatore Airport, under Section 8 of the Aircraft Act, 1934, so as to enable it to take possession there¬of. The High Court granted an interim injunction on 16.9.1997 restraining NEPC India from removing the aircraft (VT-NEJ) from Coimbatore Airport. In regard to the other hypothecated aircraft (VT-NEK) kept at Meenambakkam (Chennai) Airport, IOC
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