VIJAY KUMAR GHAI & Ors. v. THE STATE OF WEST BENGAL & Ors.

From the Judgment and Order dated 01.10.2019 of the High Court E of Calcutta at Kolkata in C.R.R. No.731 of 2017. Dr. Menaka Guruswamy, Sr. Adv., Arandhati Kajju, Yash S. Vijay, Ms. Shristi Borthakur, Shubham Bhalla, Asheesh Bajpayee, Deepak Samota, Advs. for the Appellants. Mrs. Anjana Prakash, Sr. Adv., Anuj Prakaash, Ms. Apurva Jain, Prince Jain, Shreyas Jain, Kumar Mihir, Ms. Prachi Gupta, Ranjeet Kumar, Advs. for the Respondents. The Judgment of the Court was delivered by KRISHNA MURARI, J.

#1. Leave granted.

#2. This appeal is directed a gainst the judgment and order dated 01.10.2019 passed by the High Court of Calcutta (hereinafter referred to as “High Court”) in C.R.R No. 731 of 2017 filed by the appellants praying for quashing of proceedings being G.R. Case No. 1221 of 2013 pending before the Court of Learned Chief Metropolitan Magistrate, F G H VIJAY KUMAR GHAI v. THE STATE OF WEST BENGAL [KRISHNA MURARI, J.] 889 Kolkata and arising out of Bowbazar Police Station Case No. 168 dated 28.03.2013 under Sections 420, 406 and 120B of the Indian Penal Code, 1860 (hereinafter referred to as “IPC”). By the said judgment, the High Court dismissed the prayer for quashing of the proceedings and held that continuance of criminal proceedings against the present appellant/ accused would not be an abuse of the process of the court.

#3. Brief facts necessary for the disposal of this appeal are as under:

3.1 M/s. Priknit Retails Limited a public limited company having its registered office at BXXV, 539A, 10, Jalandhar, Bye Pass Road, Ludhiana, Punjab was incorporated in the year 2002 and subsequently changed its name to Priknit Apparels in 2007. The company is engaged in the manufacture and trade of apparels through chain of retail stores under the brand name and style of Priknit. Appellant No. 1 is the Managing Director of the Company and Appellant Nos. 2 and 3 are the Directors of the said Company. The company has been arrayed as proforma Respondent No. 3.

3.2 In January 2008, Respondent No. 2 an authorized representative of SMC Global Securities Ltd, Delhi desired to make an investment on its behalf with the appellants. It was mutually decided between the parties that Respondent No. 2 will invest an amount of Rs. 2.5 crore with the company in lieu of which they will be issued 2,50,000 equity shares of Priknit Apparel Pvt. Ltd. Subsequently, Respondent No. 2 filed their share application form along with the cheque of Rs. 2.5 crore.

3.3 Subsequently, an allotment letter dated 29.03.2008 was issued in favour of Respondent No. 2 whereby 2,50,000 shares were issued in lieu of the investment made by him. The proforma respondent no. 3 company and Respondent No. 2 arrived at an understanding, regarding the investment made by Respondent No. 2.

3.4 Having failed to bring the I.P.O as per memorandum of understanding dated 20.08.2009, Respondent No. 2 issued a legal notice dated 06.12.2011 to the Appellants, who duly replied to the legal notice denying all the allegations contained in the legal notice.

3.5 That on 06.01.2012, Respondent No. 2 filed a police complaint with PS Rajender Nagar, New Delhi and the concerned officer of PS Rajender Nagar apprised Respondent No. 2 that the complaint does not A B C D E F G H 890 SUPREME COURT REPORTS [2022] 1 S.C.R. A B C D E F G H pertain to their jurisdiction and therefore the same ought to be transferred. On 11.04.2012, Respondent No. 2 filed a complaint with the Economic Offences Wing (hereinafter referred to as “EOW”) and the said complaint was transferred to PS Darya Ganj, New Delhi.

3.6 That on 06.06.2012, Respondent No. 2 filed a complaint being CC No. 306/1/12 under Section 156(3) of Cr.P.C before the Tiz Hazari Court, New Delhi for registration of FIR against the Appellants and their company. On 01.09.2012, Respondent No. 2 also filed another Complaint No. 190 of 12 before Tis Hazari Court, New Delhi under Section 68 of the Companies Act read with Section 200 of Cr.P.C which is pending adjudication.

3.7 That the Metropolitan Magistrate (hereinafter referred to as “MM”), Tis Hazari vide order dated 28.02.2013 observed that the entire dispute raised by Respondent No. 2 was civil in nature and there was no criminality involved, thereby turning down the prayer of Respondent No. 2 for registration of an FIR and posted the case for pre-summoning evidence with regard to the application under Section 156(3) Cr.P.C filed by Respondent No.2. It is pertinent to mention here that the order of the MM, Tis Hazari Court, New Delhi attained finality as it was not put to further challenge.

3.8 That on 28.03.2013, Respondent No. 2 filed a second complaint under Section 406, 409, 420, 468,120B and 34 IPC on the basis of the same cause of action with the PS Bowbazar at Kolkata, West Bengal and the same was converted into an FIR bearing No. 168 under Section 406, 420, 120B IPC. A final closure report dated 04.03.2014 was filed by the concerned Police Station recommending closure of the case since the entire dispute was found to be civil in nature.

3.9 That Respondent No. 2 filed a protest petition being GR No. 1221/2013 with the Chief Metropolitan Magistrate (hereinafter referred to as “CMM”), Kolkata against closure report dated 04.03.2014 and vide order dated 08.03.2016, the CJM allowed the protest petition and directed for further investigation.

3.10 In the meantime, the authorized representative of Respondent No. 2 made a statement before the MM, Tish Hazari, New Delhi for withdrawing the complaint case.

3.11 Appellant No. 1 received a notice dated 14.11.2016 under Section 41(a) Cr.P.C for appearance before the Investigation Officer VIJAY KUMAR GHAI v. THE STATE OF WEST BENGAL [KRISHNA MURARI, J.] 891 (hereinafter referred to as “IO”) at PS Bowbazar, Kolkata. In his reply to the said notice, Appellant No. 1 stated that a complaint has already been filed with the same cause of action before the Tis Hazari Court and further sought time to produce the documents sought in the notice. Thereafter, Appellant No. 1 sent a letter with all the relevant documents required for investigation thereby extending full co-operation to the IO at PS Bowbazar, Kolkata in connection with Case No. 168. The IO PS Bowbazar, Kolkata sent another notice under Section 41(a) Cr.P.C dated 23.12.2016 to Appellant No. 1 and 2 to appear before him with the relevant documents.

3.12 That vide order dated 14.02.2017, the CMM, Calcutta took cognizance of the offence under Section 406, 420, 120B IPC in connection with Case No. 168 dated 28.03.2013 corresponding to GR Case No. 1221 of 2013 i.e., protest petition.

3.13 Being aggrieved, Appellants herein filed a quashing petition being CRR No. 731 of 2017 under Section 482 Cr.P.C seeking quashing of FIR No. 168 dated 28.03.2013 and also impugned the proceedings in GR Case No. 1221 of 2013 by invoking Sections 401 and 482 Cr.P.C.

3.14 That the High Court vide order dated 06.03.2017 issued notice to the Respondents and stayed further proceeding of criminal case. Respondent No. 2 filed an application for vacation of the stay order granted by the High Court but the same was dismissed vide order dated 24.03.2017 while observing that Respondent No. 2 had also filed a complaint at Delhi on the same allegations, thus the proceedings at Calcutta were intended to harass the Appellants.

3.15 However, the High Court vide impugned judgment and order dated 01.10.2019 dismissed the quashing as well as the revision petition filed by the Appellants and observed that in order to exercise the power under Section 482 Cr.P.C, the only requirement is to see whether continuance of the criminal proceedings would be a total abuse of the process of the court and the continuance of the criminal proceedings against the appellants is in no way an abuse of the process of the court. The operative portion of the aforesaid judgment reads as under: - “In the present case, the allegation in the FIR disclosed the offences alleged. Moreover, the allegations made in the FIR disclosed that the petitioner induced the complainant to purchase share or invest money by willful misrepresentation. A B C D E F G H 892 SUPREME COURT REPORTS [2022] 1 S.C.R. It is true that the complaint discloses that there was a commercial transaction between the parties but at the same time, it cannot be overlooked that the averments made in the complaint/FIR prima facie revel the commission of a cognizable offence. Moreover, when the complaint discloses that the commercial transaction between involve criminal offences, then the question of quashing the complaint cannot be allowed.” Contentions on behalf of Appellants

#4. Ms. Menaka Guruswamy, learned senior advocate appearing on behalf of the appellants has vehemently submitted that Respondent No.2 indulged in the practice of forum shopping by filing 2 complaints i.e., a complaint u/s 156(3) Cr.P.C before the Tis Hazari Court, New Delhi on 06.06.2012 and a complaint which was eventually registered as FIR No. 168 u/s 406, 420, 120B IPC before PS Bowbazar, Calcutta on 28.03.2013. FIR in connection with PS Bowbazar, Calcutta was lodged during the pendency of the complaint case at Tis Hazari Court, New Delhi and the said fact was cleverly supressed by Respondent No. 2.

4.1 It was further submitted that initially police submitted a closure report. However, Respondent No. 2 filed an application under Section 173(8) of Cr.P.C for further investigation which was allowed and after further investigation, charge sheet was filed against the Appellants herein.

4.2 It was vehemently submitted that the complaint filed in PS Bowbazar was the exact reproduction of the complaint filed in New Delhi with the only difference being the place of occurrence. In the complaint lodged at Delhi, the place of occurrence was shown to be the office at New Delhi and in subsequent complaint at Calcutta, the place of occurrence was changed to its office at Calcutta.

4.3 It was further submitted that the allegations contained in the FIR are purely contractual disputes of civil nature but Respondent No. 2 has given a criminal colour to it and that breach of contract does not come within the purview of cheating as defined in IPC. In addition to it, it was submitted that the transaction in question between the parties as revealed from the F.I.R was purely a sale transaction or what may be called as a commercial transaction, therefore the question of cheating does not arise at all. A B C D E F G H VIJAY KUMAR GHAI v. THE STATE OF WEST BENGAL [KRISHNA MURARI, J.] 893

4.4 It was further submitted that there are no allegations in the complaint filed by the Respondent No. 2 about the Appellants having fraudulent or dishonest intentions at the time of making the representation.

4.5 It was also further submitted that the High Court failed to appreciate that the two allegations recorded in the complaint against the Appellants being belated allotment of shares to the complainant company and the Appellant No. 1’s failure to bring out an IPO are clearly commercial disputes with no element of criminality.

4.6 It was further submitted that the High Court failed to appreciate that a mere failure to keep a promise does not create any presumption of a dishonest intention amounting to a criminal breach of trust under Section 409 IPC or cheating under Section 420 IPC.

4.7 Heavy reliance was placed on the decisions of this Court in V.Y.Jose & Anr. Vs. State of Gujarat & Anr.1, Murari Lal Gupta Vs. Gopi Singh2; K. Jayaram and Ors. Vs. Bangalore Development Authority & Ors.3; Union of India and Ors. Vs. Shantiranjan Sarkar4. Contentions on behalf of Respondents

#5. Mrs. Anjana Prakash, learned senior advocate appearing on behalf of the Respondents has vehemently submitted that the allegations contained in the complaint disclosed all the ingredients of the alleged offences and moreover, the criminal proceedings have not been initiated with mala fide intention and that the complaint case filed before the magistrate of Tis Hazari Court was not decided on merit and as such the complainant cannot be barred from making a fresh complaint.

5.1 It was further submitted that the complaint at Kolkata had been filed only after the prayer u/s 156(3) Cr.P.C was rejected by the Delhi Court on 28.02.2013 in order to avail legal remedies available and when the Calcutta Court on 08.03.2016 allowed further investigation, the Respondent in order to avoid multiplicity of proceedings, withdrew the complaint in Delhi on 09.09.2016. A B C D E F

5.2 It was further submitted that it is an established proposition of law that two complaints can co-exist simultaneously if the scope of two G