Sachin Garg v. State of U.P & Anr.

being Dissolved Acetylene Gas which was supplied to the factory for the purpose of battery manufacturing at EIL – No evidence for commission of offence u/s.405/406, IPC – Further, as regards criminal intimidation also there was a mere bald allegation, short of any particulars as regards to the manner in which threat was conveyed – While it is true that at the stage of issuing summons a magistrate only needs to be satisfied with a prima facie case for taking cognizance, the duty of the magistrate is also to be satisfied whether there is sufficient ground for proceeding – Magistrate’s order issuing summons reflects his satisfaction in a cryptic manner – At the stage of issue of summons, though detailed reasoning as to why a Magistrate is issuing summons is not necessary but in the present case, the allegations made by the complainant do not give rise to the offences for which the appellant was summoned for trial – A commercial dispute, which ought to have been resolved through the forum of Civil Court was given criminal colour by lifting certain words or phrases from the penal code and implanting them in a criminal complaint – Magistrate failed to apply his mind in issuing summons and the High Court failed to exercise its jurisdiction u/s.482, 1973 Code – Impugned judgment set aside, complaint and summoning order quashed. [Paras 14, 17 and 18] Code of Criminal Procedure, 1973 – s.482 – Jurisdiction – Discussed.

Code of Criminal Procedure, 1973 – Summons issued by Magistrate for trial u/ss.406, 504 and 506, IPC in the complaint case filed by Respondent no.2 – Appellant sought dismissal of the complaint on the ground that the complaint should not have been entertained without arraigning the principal company as an accused: Held: The perceived wrongdoing was attributed to the appellant, though the complaint petition acknowledges that the job-work was being done for EIL (appellant’s employer) – Moreover, the allegation of criminal intimidation was against the appellant directly, whatever be the value or quality of such allegations – Thus, for that reason the complaint case cannot be rejected at the nascent stage on the sole ground of not implicating the company – However, the complaint and the summons quashed for the reasons given. [Para 20] Sachin Garg v. State of U.P. and Anr. 1136 [2024] 1 S.C.R. Case Law Cited Sharad Kumar Sanghi vs Sangita Rane [2015] 2 SCR 145 : (2015) 12 SCC 781 – held inapplicable.

Jagdish Ram vs State of Rajasthan and Another [2004] 2 SCR 846 : (2004) 4 SCC 432 – relied on. Neeharika Infrastructure Pvt. Ltd. vs State of Maharashtra and Ors., [2021] 4 SCR 1044 : (2021) 19 SCC 401; R.P. Kapur vs State of Punjab, [1960] 3 SCR 388 : AIR (1960) SC 866; State of Haryana and Ors. vs Bhajan Lal and Ors., [1992] Supp. (3) SCR 735 : (1992) SCC (Cr.) 426; State of Bihar and Anr. vs P. P. Sharma, IAS and Anr., [1991] 2 SCR 1 : (1992) SCC (Cr.) 192; Zandu Pharmaceutical Works Ltd. and Ors. vs Mohd. Sharaful Haque and Another [2004] Supp. (5) S.C.R. 790 : (2005) SCC (Cr.) 283; Deepak Gaba and Ors. vs State of Uttar Pradesh and Another (2023) 3 SCC 423; Prof. R.K. Vijayasarathy and Anr. vs Sudha Seetharam and Anr. [2019] 2 SCR 185 : (2019) 16 SCC 739; Vijay Kumar Ghai and Ors. vs State of West Bengal and Ors. [2022] 1 SCR 884 : (2022) 7 SCC 124; Dalip Kaur and Ors. vs Jagnar Singh and Anr., [2009] 10 SCR 264 : (2009) 14 SCC 696; Birla Corporation Ltd. vs Adventz Investments and Holdings Ltd. and Ors., [2019] 7 SCR 655 : (2019) 16 SCC 610; Smt Nagawwa vs Veeranna Shivalingappa Konjalgi and Others [1976] 1 Suppl.

SCR 123 : (1976) 3 SCC 736; Fiona Shrikhande vs State of Maharashtra and Another, [2013] 9 SCR 240 : (2013) 14 SCC 44; Binod Kumar and Ors. vs State of Bihar and Another, [2014] 11 SCR 85 : (2014) 10 SCC 663; Pepsi Foods Ltd. and Anr. vs Special Judicial Magistrate and Ors., [1997] 5 Suppl. SCR 12 : (1998) 5 SCC 749 – referred to. Code of Criminal Procedure, 1973; Penal Code, 1860. List of Acts List of Keywords Commercial dispute; Criminal colour; Stage of issuing summons; Duty of Magistrate; Quashing; Quashing of summons; Dishonest misappropriation/conversion of material for personal use; Criminal intimidation; Non-application of mind; Principal company not implicated. Digital Supreme Court Reports [2024] 1 S.C.R. 1137 Case Arising From CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No.497 of 2024. From the Judgment and Order dated 23.03.2023 of the High Court of Judicature at Allahabad in A482 No.18603 of 2021.

Appearances for Parties Mukul Rohatgi, Guru Krishna Kumar, Sr. Advs., Ms. Misha Rohatgi, Sushil Shukla, Nakul Mohta, Ms. Alina Merin Mathew, Muthu Thangathurai, Advs. for the Appellant. Sarvesh Singh Baghel, Aviral Saxena, Arun Pratap Singh Rajawat, Ms. Vanshaja Shukla, Ms. Divya Jyoti Singh, Ms. Ankeeta Appanna, Manish Gupta, Advs. for the Respondents. Judgment / Order of the Supreme Court Judgment Aniruddha Bose, J. Leave granted.

The appellant, at the material point of time, stood posted as the Head of factory of Exide Industries Limited (“EIL”), a corporate entity, situated at Bawal, District Rewari, Haryana. The respondent no.2, ran a proprietary concern, Ambika Gases. He was the supplier of Dissolved Acetylene Gas (“DA Gas”), which is used for manufacturing battery in the said factory. So far as the present appeal is concerned, the dispute is over a purchase order issued for the supply of the said item. The original purchase order dated 01.04.2019 was amended twice on the basis of representations made by the respondent no.2. The first amendment was made on 18.07.2019 by which the rate was increased from Rs.1.55 per unit to Rs.1.65 per unit and the second amendment was made on 20.12.2019 through which the rate per unit was brought down to Rs.1.48 from Rs.1.65. An invoice was raised by the respondent no.2 with the aforesaid rates for a total sum of Rs.9,36,693.18/-. The dispute revolves around non-payment of the said sum. However, it has been contended by the appellant that EIL, after ascertaining the market price of DA Gas from other vendors, by a letter dated 29.06.2020, reconciled the accounts by informing respondent no.2 of what it claimed was foul play with respect to Sachin Garg v. State of U.P. and Anr. 1138 [2024] 1 S.C.R. revision of rates and appropriated the alleged illegal amounts claimed by the vendor (respondent no.2) from the invoice.

The respondent no.2 instituted a complaint case in the Court of the Chief Judicial Magistrate, Ghaziabad and the substance of the complaint would be revealed from the following passages of the petition of complaint (registered as Misc. Application No.317/2020):- “….The Applicant through his aboenamed work do the job work of D.A. Gas. Opposite Party Sachin Garg is posted as Material Head of Exide Industries Ltd. situated at Plot No. 179, Sector-3, Bawal, District- Rewari, Haryana and Opposite Party Sachin Garg also used to issue Purchase Order to the Applicant’s company on behalf of the Exide Company and only the Opposite Party Sachin Garg used to make payment of Job Work to the Applicant. Previously, the Transaction of Opposite Party was normal with the Applicant’s company and no problem was ever persisted in the payment, due to which, the Applicant started trusting on the Opposite Party and Company.

The learned Magistrate upon recording initial deposition of Saurabh Sharma, the proprietor of the supplier firm and his father Padam Kant Sharma issued summons for trial under Sections 406, 504 and 506 of the Indian Penal Code, 1860 (“1860 Code”) on 18.08.2021.

The appellant had approached the High Court at Allahabad under Section 482 of Code of Criminal Procedure, 1973 (“the 1973 Code”) Sachin Garg v. State of U.P. and Anr. 1140 [2024] 1 S.C.R. by filing, Criminal Miscellaneous Application No.18603/2021, for quashing the said summons and also the complaint case itself. The judgment of the High Court was delivered dismissing the application filed by the appellant on 23.03.2023 and it is this judgment which is under appeal before us. The main reason for dismissal of the appellant’s quashing plea was that the subject-complaint involved adjudication of disputed questions of fact. Referring to the judgments of this Court in the cases of Neeharika Infrastructure Pvt. Ltd. -vs- State of Maharashtra and Ors. [(2021) 19 SCC 401], R.P. Kapur -vs- State of Punjab [AIR 1960 SC 866], State of Haryana and Ors. -vs- Bhajan Lal and Ors. [1992 SCC (Cr.) 426], State of Bihar and Anr. -vs- P. P. Sharma, IAS and Anr. [1992 SCC (Cr.) 192] and lastly Zandu Pharmaceutical Works Ltd. and Ors. -vs- Mohd. Sharaful Haque and Another [2005 SCC (Cr.) 283], the High Court refrained from considering the defence of the accused.

In the case of Neeharika Infrastructure Ltd (supra), a three-judge Bench of this Court examined the factors which were to be considered by the High Court for quashing an F.I.R. at the threshold, relating to factors which would apply to a proceeding which forms the subject- matter of the present case. Referring to the judgment in the case of R.P. Kapur (supra), principles for quashing were set down as:- “10.1 The first case on the point which is required to be noticed is the decision of this Court in the case ofc8R.P. Kapur (supra). While dealing with the inherent powers of the High Court under Section 561-A of the earlier Code (which is pari materia with Section 482 of the Code), it is observed and held that the inherent powers of the High Court under Section 561 of the earlier Code cannot be exercised in regard to the matters specifically covered by the other provisions of the Code; the inherent jurisdiction of the High Court can be exercised to quash proceedings in a proper case either to prevent the abuse of the process of any court or otherwise to secure the ends of justice; ordinarily criminal proceedings instituted against an accused person must be tried under the provisions of the Code, and the High Court would be reluctant to interfere with the said proceedings at an interlocutory stage.

In the same decision (i.e. Neeharika Infrastructure Ltd.) (supra), the seven-point edict laid down in the case of Bhajan Lal (supra) was also referred to. These are:-

102.(1) Where the allegations made in the first information report or the complaint, even if they are taken at their Sachin Garg v. State of U.P. and Anr. 1142 [2024] 1 S.C.R. face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused. (2) Where the allegations in the first information report and other materials, if any, accompanying the FIR do not disclose a cognizable offence, justifying an investigation by police officers under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section 155(2) of the Code. (3) Where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused. (4) Where the allegations in the FIR do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code. (5) Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused. (6) Where there is an express legal bar engrafted in any of the provisions of the Code or the Act concerned (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the Act concerned, providing efficacious redress for the grievance of the aggrieved party. (7) Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge.

Digital Supreme Court Reports [2024] 1 S.C.R. 1143

It was observed in the judgment under appeal that the applicant has got the right of discharge which could be freely taken up by him before the Trial Court. Mr. Mukul Rohatgi, learned senior counsel has appeared in this matter on behalf of the appellant along with Mr. Guru Krishna Kumar, while the case of respondent no.2 has been argued by Ms. Divya Jyoti Singh. State was represented before us by Mr. Sarvesh Singh Baghel. The main contentions urged by Mr. Rohatgi is that the complaint made against the appellant does not disclose any criminal offence and at best, it is a commercial dispute, which ought to be determined by a Civil Court. In so far as the allegations of commission of offence under Sections 405 and 406 are concerned, he has relied on a judgment of this Court in the case of Deepak Gaba and Ors. -vs- State of Uttar Pradesh and Another [(2023) 3 SCC 423]. This decision deals with the basic ingredients of a complaint under Sections 405 and 406 of the 1860 Code and it has been held in this judgment:-

15. For Section 405 IPC to be attracted, the following have to be established: (a) (b) the accused was entrusted with property, or entrusted with dominion over property; the accused had dishonestly misappropriated or converted to their own use that property, or dishonestly used or disposed of that property or wilfully suffer any other person to do so; and (c) such misappropriation, conversion, use or disposal should be in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract which the person has made, touching the discharge of such trust.

The judgment in Deepak Gaba (supra) was delivered in a case in which there was subsisting commercial relationship between the parties and the complainant had made allegations of a forged demand, for a sum of around rupees six and a half lakhs. On that basis a summoning order was issued for trial under Section 406 of the 1860 Code. A coordinate Bench of this Court held:- “17. However, in the instant case, materials on record fail to satisfy the ingredients of Section 405 IPC. The complaint does not directly refer to the ingredients of Section 405IPC Sachin Garg v. State of U.P. and Anr. 1144 [2024] 1 S.C.R. and does not state how and in what manner, on facts, the requirements are satisfied. Pre-summoning evidence is also lacking and suffers on this account. On these aspects, the summoning order is equally quiet, albeit, it states that “a forged demand of Rs 6,37,252.16p had been raised by JIPL, which demand is not due in terms of statements by Shubhankar P. Tomar and Sakshi Tilak Chand”. A mere wrong demand or claim would not meet the conditions specified by Section 405IPC in the absence of evidence to establish entrustment, dishonest misappropriation, conversion, use or disposal, which action should be in violation of any direction of law, or legal contract touching the discharge of trust. Hence, even if Respondent 2 complainant is of the opinion that the monetary demand or claim is incorrect and not payable, given the failure to prove the requirements of Section 405 IPC, an offence under the same section is not constituted. In the absence of factual allegations which satisfy the ingredients of the offence under Section 405IPC, a mere dispute on monetary demand of Rs 6,37,252.16p, does not attract criminal prosecution under Section 406IPC.”

The same view was expressed by this Court in the cases of Prof. R.K. Vijayasarathy and Anr. -vs- Sudha Seetharam and Anr. [(2019) 16 SCC 739] and Vijay Kumar Ghai and Ors. -vs- State of West Bengal and Ors. [(2022) 7 SCC 124]. The judgment of this Court in the case of Dalip Kaur and Ors. -vs- Jagnar Singh and Anr. [(2009) 14 SCC 696] has also been cited in support of the appellant’s case and in this decision it has been, inter-alia, held:-

10. The High Court, therefore, should have posed a question as to whether any act of inducement on the part of the appellant has been raised by the second respondent and whether the appellant had an intention to cheat him from the very inception. If the dispute between the parties was essentially a civil dispute resulting from a breach of contract on the part of the appellants by non-refunding the amount of advance the same would not constitute an offence of cheating. Similar is the legal position in respect of an offence of criminal breach of trust having regard to its definition contained in Section 405 of the Penal Code.

Digital Supreme Court Reports [2024] 1 S.C.R. 1145 This goes for allegations relating to Section 406 of the 1860 Code.

So far as the allegations of commission of offence under Sections 504 and 506 of the 1860 Code are concerned, we have gone through the petition of complaint as well as the initial depositions. The allegations pertaining to the aforesaid provisions of the 1860 Code surfaces in the last portion of the petition of complaint. The complainant, in his initial deposition has not made any statement relatable to criminal intimidation. But his father made the following statement at that stage under Section 202 of the 1973 Code:-

…With effect from 18.07.2019, the Opposite Party had fixed rate of job work as Rs.1.65/- per piece with the company of my son, which remained continued till December, 2019 and Opposite Party used to make payment of job work to my son, also on this rate and an amount of Rs. 9,36,693.18/- of my son was due for payment on the Opposite Party, due to which, he demanded the Opposite Party to make payment, but, Opposite Party did not make payment and after doing calculation on less rates, he said that no amount is due for payment and on demanding money, the Opposite Party has abused my son with filthy language and has threatened him to kill. An amount of Rs. 9,36,693.18/- of my son is due for payment on the Opposite Party, which he clearly refused to pay the same.

(quoted verbatim from paperbook)

On behalf of the complainant, it has been urged that a detailed description of the offending acts need not be disclosed at the stage at which the appellant wants invalidation of the complaint. He has drawn our attention to the judgment of this Court in the case of Jagdish Ram -vs- State of Rajasthan and Another [(2004) 4 SCC 432]. In this judgment it has been, inter-alia, held:-

10…. It is well settled that notwithstanding the opinion of the police, a Magistrate is empowered to take cognizance if the material on record makes out a case for the said purpose. The investigation is the exclusive domain of the police. The taking of cognizance of the offence is an area exclusively within the domain of a Magistrate. At this stage, the Magistrate has to be satisfied whether there is sufficient Sachin Garg v. State of U.P. and Anr. 1146 [2024] 1 S.C.R. ground for proceeding and not whether there is sufficient ground for conviction. Whether the evidence is adequate for supporting the conviction, can be determined only at the trial and not at the stage of inquiry. At the stage of issuing the process to the accused, the Magistrate is not required to record reasons.