Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2015 Supreme(SC) 267

SUPREME COURT OF INDIA
V. Gopala Gowda, C. Nagappan, JJ.
Vesa Holdings P. Ltd. & Anr. – Appellants
Versus
State of Kerala & Ors. – Respondents
CRIMINAL APPEAL NO.2341 OF 2011 With CRIMINAL APPEAL NOS.2342-2344 OF 2011
Decided on: 17-03-2015

Advocates:
Advocate Appeared:
For Appellants: Mr. A. Ramesh, Sr. Adv., Mr. R. Anand Padmanabhan, Adv., Mr. R. Pathak, Adv., Ms. Amritha S., Adv., Mr. Shashi Bhushan Kumar, Adv.
For Respondents: Mr. Devashish Bharuka, Adv., Mr. Jogy Scaria, Adv.

IMPORTANT POINT
For constituting an offence of cheating, the complainant is required to show fraudulent or dishonest intention of the accused at the time of making promise or representation. Merely failure to keep one’s promise does not amount to cheating.

Headnote:Indian Penal Code, 1860 – Section 420 – For constituting an offence of cheating, the complainant is required to show fraudulent or dishonest intention of the accused at the time of making promise or representation – Merely failure to keep one’s promise does not amount to cheating – Instantly complaint not showing criminal intent of the accused – Criminal proceedings mala fide and abuse of process of the court – High Court committed error in refusing to quash the proceedings. (Para 9)
       (2005) 10 SCC 336; (2007) 14 SCC 776; (2009)3 SCC 78 – Relied upon
       (2014) 3 SCC 389 – Referred
       Facts of the case:
       The appellant is a Limited company of which appellants Venkataraman and appellant Mani Prasad were Directors and the appellant Chandrasekhran was the promoter. The Company availed a loan from the Industrial Investment Bank of India and respondent No.3 herein/complainant as the AGM of the said bank at the relevant time, dealt with their loan application and had sanctioned the same.
       The company defaulted in repayment and wanted to settle the loan amount.
       The 3rd respondent on retirement from the bank agreed to act as a Consultant of the company in settling the loan and the company issued a letter dated 6.8.2008 stating that the settlement of the Company dues should be at Rs.8.25 crores and the acceptance letter from the IIBI should be obtained on or before 30.10.2008 and it was also agreed that Rs.75 lakhs would be given towards consultancy fees for the above settlement, out of which Rs.5 lakhs was given in advance to the 3rd respondent and the balance amount to be paid on the completion of the assignment. The Company also issued a cheque dated 6.8.2008 for a sum of Rs.30 lakhs drawn on HDFC Bank Limited and the same was agreed to be presented to the bank after obtaining the acceptance letter from IIBI on or before 30.10.2008 or otherwise the cheque should be returned to the company. The 3rd respondent made an endorsement in writing in the said letter agreeing to the said terms and signed it.
       However, the 3rd respondent filed a private complaint dated 13.10.2010 against the company, its Directors and Promoter and the same was forwarded to the police for investigation under Section 156(3) of the Code of Criminal Procedure and the Police registered a case for the alleged offences under Sections 417, 418, 420, 120B and 34 IPC.
       It is alleged in the complaint that the loan transaction of the company with IIBI was settled with the efforts of the complainant/respondent No.3 herein but the company, Directors and Promoter did not pay him the consultancy fee as promised and they conspired together to deceive the complainant and committed offences as alleged.
       The company and its Directors filed petitions under Section 482 Criminal Procedure Code in the High Court.
       The High Court dismissed the petitions by holding that the truth of the allegations have to be ascertained by the investigating agency.
       Finding of the Court:
       High Court committed error in refusing to quash the proceedings.
       Result: Appeal allowed.

Judgement Key Points

You should assume that the matter was initially treated as a criminal case involving allegations of cheating and conspiracy under the Indian Penal Code (!) (!) (!) (!) (!) (!) (!) (!) (!) . However, the court ultimately quashed the criminal proceedings, indicating that the case was considered to lack sufficient criminal elements and was deemed more appropriate for civil resolution or as an abuse of process (!) (!) (!) (!) (!) (!) (!) (!) (!) .

JUDGMENT

C. NAGAPPAN, J.

1. All these appeals are filed challenging the impugned common order dated 28.1.2011 passed by the High Court of Kerala at Ernakulam in Criminal Misc. Nos.220 to 222 of 2011 whereby the petition filed by the appellants under Section 482 of Criminal Procedure Code seeking to quash the FIR in Crime No.1461/2010 registered by Changanasserry Police Station against the appellants under Sections 417, 418, 420, 120B and 34 IPC was dismissed.

2. The undisputed facts in brief are as follows: The appellant in Criminal Appeal No.2341 of 2011 is a Limited company of which appellants Venkataraman in Criminal Appeal No.2344 of 2011 and appellant Mani Prasad in Criminal Appeal No.2343 of 2011 were Directors and the appellant Chandrasekhran in Criminal Appeal No.2342 of 2011 was the promoter. The Company availed a loan from the Industrial Investment Bank of India and respondent No.3 herein/complainant as the AGM of the said bank at the relevant time, dealt with their loan application and had sanctioned the same. The company defaulted in repayment and wanted to settle the loan amount. The 3rd respondent on retirement from the bank agreed to act as a Consultant of the company in settling the loan and the company issued a letter dated 6.8.2008 stating that the settlement of the Company dues should be at Rs.8.25 crores and the acceptance letter from the IIBI should be obtained on or before 30.10.2008 and it was also agreed that Rs.75 lakhs would be given towards consultancy fees for the above settlement, out of which Rs.5 lakhs was given in advance to the 3rd respondent and the balance amount to be paid on the completion of the assignment. The Company also issued a cheque dated 6.8.2008 for a sum of Rs.30 lakhs drawn on HDFC Bank Limited and the same was agreed to be presented to the bank after obtaining the acceptance letter from IIBI on or before 30.10.2008 or otherwise the cheque should be returned to the company. The 3rd respondent made an endorsement in writing in the said letter agreeing to the said terms and signed it. The 3rd respondent filed a private complaint dated 13.10.2010 against the company, its Directors and Promoter in the Court of Judicial First Class Magistrate Changanasserry and the same was forwarded to the police for investigation under Section 156(3) of the Code of Criminal Procedure and the Police registered a case in Crime No.1461 of 2010 for the alleged offences under Sections 417, 418, 420, 120B and 34 IPC. It is alleged in the complaint that the loan transaction of the company with IIBI was settled with the efforts of the complainant/respondent No.3 herein but the company, Directors and Promoter did not pay him the consultancy fee as promised and they conspired together to deceive the complainant and committed offences as alleged. The company and its Directors filed petitions under Section 482 Criminal Procedure Code in Criminal M.C.No.220 to 222 of 2011 on the file of the High Court of Kerala at Ernakulam contending that the understanding between the company and the complainant was that the settlement with the IIBI should be completed by 30.10.2008 and the complainant was not able to settle the loan before the said date and hence he could not present the cheque in the light of the condition imposed on him in the letter dated 6.8.2008 and the settlement was completed only on 5.1.2009 due to the efforts of the company itself and not at the instance of the complainant and at any rate it can only be breach of contract for which no criminal liability can be fastened against the company and its Directors. The High Court dismissed the petitions by holding that the truth of the allegations have to be ascertained by the investigating agency. Challenging the said order the present appeals have been preferred.

3. The learned senior counsel Mr. A. Ramesh appearing for the appellants contended that the contract under letter dated 6.8.2008 was time bound and there was no element of fraud or dishonest intention

Click Here to Read the rest of this document

2015 Supreme(SC) 267

SUPREME COURT OF INDIAV. Gopala Gowda, C. Nagappan, JJ.Vesa Holdings P. Ltd. & Anr. – AppellantsVersusState of Kerala & Ors. – RespondentsCRIMINAL APPEAL NO.2341 OF 2011 With CRIMINAL APPEAL NOS.2342-2344 OF 2011Decided on: 17-03-2015

IMPORTANT POINTFor constituting an offence of cheating, the complainant is required to show fraudulent or dishonest intention of the accused at the time of making promise or representation. Merely failure to keep one’s promise does not amount to cheating.

Cases Referred (4)

SUPREME COURT OF INDIA
V. Gopala Gowda, C. Nagappan, JJ.
Vesa Holdings P. Ltd. & Anr. – Appellants
Versus
State of Kerala & Ors. – Respondents
CRIMINAL APPEAL NO.2341 OF 2011 With CRIMINAL APPEAL NOS.2342-2344 OF 2011
Decided on: 17-03-2015

IMPORTANT POINT
For constituting an offence of cheating, the complainant is required to show fraudulent or dishonest intention of the accused at the time of making promise or representation. Merely failure to keep one’s promise does not amount to cheating.