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2011 Supreme(UK) 533
2011 (2) N.C.C. 804
SUPREME COURT OF INDIA
P. Sathasivam and Hon’ble Dr. Justice B.S. Chauhan
Criminal Appeal No. 1868 of 2011
M/S. THERMAX LTD. & ORS. – Appellants
Versus
K.M. JOHNY & ORS. – Respondents
Decided on : 27.09.2011
For the Respondents:Mr. Shankar Chillarge, AG, Mr. KTS Tulsi, Sr. Adv., Ms. Susmita Lal, Mr. Maheen Pradhan, Mr. Ravinder Singh, Ms. Asha Gopalan Nair and Mr. Pratik Bombarde, Advocates
Headnote:(A) Criminal Procedure Code, 1973, Sec. 156(3) and IPC, 1860, Secs. 405, 406, 420, r/w Sec. 34 — Proceedings under — Three complaints containing similar allegations already been investigated previously and all of them were closed as alleged claim was of civil nature — Then calling for a report u/Sec. 156(3) of Cr.P.C. by the Magistrate — Held to be a grave error on his part. (Paras 16, 21, 23, 28 and 29)
(B) Criminal Procedure Code, 1973, Sec. 482, 156(3) and Indian Penal Code, 1860, Secs. 405, 406, 420 r/w Sec. 34 — Dispute being of civil nature and arising out of contractual obligations — Also, three complaints containing similar allegations, already investigated and closed — Huge delay and latches in order of High Court to quash the proceedings, not sustainable — Therefore, orders of Magistrate and High Court set aside — Complaint quashed. (Paras 18 to 29)
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Certainly. Based on the provided legal document, here are the key points:
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The appeal concerns the legality of criminal proceedings initiated against the appellants, who are involved in contractual disputes with the respondent, and whether those proceedings were justified or amounted to an abuse of process (!) (!) .
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The core issue is whether the complaint filed by the respondent discloses criminal offences under Sections 405, 406, 420, and 34 of the Indian Penal Code, or whether the dispute is essentially civil in nature, requiring resolution through civil courts (!) (!) .
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The complaint alleges that the appellants, including a company and its senior managerial personnel, engaged in acts of cheating and criminal breach of trust by supplying scrap material, defaulting on payments, and misappropriating property, but the complaint lacks specific evidence of dishonest intent or fraudulent inducement at the time of the transactions (!) (!) (!) (!) .
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The complaint is based on disputes arising from contractual obligations, which are predominantly civil in nature, and previous investigations had categorized similar claims as civil disputes, leading to their closure (!) (!) .
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The proceedings under Section 156(3) of the Criminal Procedure Code were initiated without proper consideration of the civil nature of the dispute, and the Magistrate's call for a police investigation was found to be a grave error (!) (!) .
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The complaint's allegations do not establish the essential ingredients of the criminal offences alleged, particularly the element of dishonest intention or fraudulent inducement necessary for offences like cheating and criminal breach of trust (!) (!) (!) (!) .
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The delay in filing the complaint, spanning several years after the alleged events, and prior investigations concluding the matters as civil disputes, undermine the credibility of the criminal proceedings and suggest an abuse of process (!) (!) .
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The concept of vicarious liability does not extend to criminal law in this context; thus, holding senior officers or members of the management liable without specific involvement or evidence of their personal role is not justified (!) .
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The court emphasizes that criminal proceedings should not be initiated where the dispute is primarily civil, especially when previous investigations have already determined the nature of the dispute, and the complaint appears to be an attempt to bypass civil remedies or to exert undue pressure (!) (!) .
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Ultimately, the appellate court found that the proceedings initiated against the appellants were not sustainable, the complaint was based on civil issues, and the earlier investigations had already addressed the matter. Therefore, the criminal proceedings and the orders based on them were set aside, and the complaint was quashed (!) (!) .
If you require further analysis or specific legal advice based on this document, please let me know.
P. Sathasivam, J.— Leave granted.
2. This appeal is directed against the final judgment and order dated 11.01.2008 passed by the High Court of Judicature at Bombay in Criminal Writ Petition No. 1622 of 2007 wherein the Division Bench of the High Court dismissed the writ petition filed by the appellants herein as misconceived.
3. Brief Facts :
(a) M/s Thermax Ltd-the appellant-Company, is a Public Limited Company having its registered office at Chinchwad, Pune and is engaged in the field of energy and environment management. Mr. K.M. Johny-the original complainant, Respondent No. 1 herein, is the proprietor of M/s Rini Engineers and M/s Sherly Engineers, which are small-scale industries undertaking fabrication job work for the appellant Company for the past several years.
(b) On 26.05.1995, the appellant-Company placed three Purchase Orders on Respondent No.1 being Order No. 260062 for designing and manufacturing two numbers of stationary L.P.G. Storage Tanks and Order Nos. 260063 and 260064 were for the supply of consumables and other accessories to the said Tanks. On 01.06.1995, M/s Unique Engineering Services, the Consultants of the appellant Company addressed a letter specifying that they had assessed the companies of the Respondent No.1 and in their opinion even though they have not made any static bullets and have made quite a few mobile L.P.G. Tanks, however, they were capable of manufacturing the same, but needed design help.
(c) On 20.06.1995, Respondent No. 1 informed the appellant-Company their inability to procure the material (steel) and requested to supply the same and to deduct the material cost from the final bill. On 04.08.1995, the Respondent No. 1 was provided with the necessary steel of the technical specification. On 06.08.1995, an Engineer of the appellant-Company visited the company of the Respondent No. 1 and submitted a report stating that Respondent No. 1 had carried out certain work using the material purchased from the appellant-Company. It was also pointed out in the report that Respondent No.1 agreed that they would send the material to M/s Bureau Veritas for checking. The report also stated that Respondent No.1 had not ordered for consumables and no rectification and drawings had been carried out.
(d) By letter dated 10.08.1995, the Consultants informed the appellant-Company that there was no progress in the work status for the last 45 days and it was observed that Respondent No. 1 was not interested in executing the assignment. In pursuance of the same, a meeting was held between the officials of both the Companies and the Respondent No. 1 agreed to complete the job by all means by 22.09.1995. Since Respondent No.1 failed to carry out the work as per the Schedule, the appellant-Company, vide letter dated 13.09.1995 cancelled the order placed and it was made effective from 26.05.1995 i.e., from the date when the order was placed.
(e) On 06.05.2000, Respondent No.1 filed a complaint with the Crime Branch, Pune alleging that they had carried out several fabrication job works for the appellant-Company and huge amount of Rs. 91,95,054/- was outstanding till date despite several requests. In the said complaint, it was further alleged that the appellant-Company also placed Purchase Order being No. 240307 dated 22.03.1993 for Rs. 8,00,000/- for fabrication and erection of Tower Support Structural etc., for the Mehasana District Taluka Sanstha (Gujarat) Project and also represented that they will hire the machinery of the Respondent-No. 1 for the said job at the rate of Rs. 2,400/- per day and believing the same the Respondent No.1 allegedly purchased brand new machinery worth Rs. 5,80,000/- specially for the said project and dispatched the same to the Mehasana site. Respondent No. 1 completed the said job according to schedule and to the satisfaction of the appellant-Company and also carried out additional work at the site as per their request. It was alleged that balance outstandi
