Pervez Ahmad, Managing Director, The Best Towers Pvt. Ltd v. BIADA Industrial Area, Patliputra, P.S. Patliputra, Patna
Case Details
IN THE HIGH COURT OF JUDICATURE AT PATNA Criminal Miscellaneous No.1052 of 2013 ============================================== Anil Manibhai Naik (A M Naik) son of Sri Anil Manilal Naik L&T House, Ballard Estate, Mumbai .... .... Petitioner/s 1. The State Of Bihar 2. Pervez Ahmad, Managing Director, The Best Towers Pvt. Ltd. Versus BIADA Industrial Area, Patliputra, P.S. Patliputra, Patna .... .... Opposite Party/s ====================================================== With Criminal Miscellaneous No.1612 of 2013 ====================================================== 1. Uma Charan Rath son of Sri Kishore Chandra Rath, L & T Ltd. Saki Vihar Road, Powai, Mumbai 400076 2. Devendra Kumar Goel, son of Sri Mahesh Chand Goel, L & T Ltd. Railway Business Unit, 12/4 Delhi Mathura Road, Faridabad 121003 3. Shyam Sunder Sharma, son of Sri Jatan Lal Sharma, L & T Ltd. Railway Business Unit, 12/4 Delhi Mathura Road, Faridabad 121003 4. Pramod Kumar Das, son of Juti Das, L &T Ltd., C-1, Baleshwar Vihar, West Boring Canal Road, Patna .... .... Petitioner/s 1. The State Of Bihar 2. Pervez Ahmad, Managing Director, The Best Towers Pvt. Ltd. Versus BIADA Industrial Area, Patliputra, P.S. Patliputra, Patna .... .... Opposite Party/s ====================================================== Appearance: (In Cr.Misc. No.1052 of 2013) For the Petitioner/s : Mr. Shashi Anugrah Narain For the opposite party no.2: Mr. D. K. Sinha For the State Mr. R.C. Singh (In Cr.Misc. No.1612 of 2013) For the Petitioner/s : Mr. Sandeep Kumar For the opposite party no.2 Mr. D. K. Sinha For the State Mr. R.C. Singh ====================================================== CORAM: HONOURABLE MR. JUSTICE KISHORE KUMAR MANDAL ORAL ORDER 6. 07-05-2013 Both the applications raise an issue with regard to legal pregnability of the order dated 14.09.2012 passed by the Judicial Magistrate 1st Class, Patna in Complaint Case No. 1894 (C)/2012. 2 Patna High Court Cr.Misc. No.1052 of 2013 (6) dt.07-05-2013 2 / 17 They have, therefore, been heard together with the consent of the party. The order present shall govern them. By the aforesaid order dated 14.9.2012 learned Judicial Magistrate 1st Class, Patna, upon conclusion of enquiry as contemplated under the provisions of the Code of Criminal Procedure (for short „the Code‟) found a prima facie case made out under sections 406 and 420 IPC and initiated the criminal proceeding against the petitioners and directed for issuance of processes. The factual score as depicted is that the complainant (opposite party no.2) lodged the aforesaid complaint alleging therein that he is the Managing Director of the Best Tower Pvt. Ltd (the company). Petitioner of Cr. Misc. No. 1052 is the Chairman of M/S Larsen & Tubro Ltd (for short „L&T‟), a Company registered under the Companies Act, whereas petitioners of Cr. Misc. No. 1612 of 2013 are the Senior Officers of the said Company employed and retained in the capacity as mentioned in para 7 of the petition (Cr. Misc. No 1612/2013). The Government decided to install a railway wheel factory at Bela, Chapra in the State of Bihar. The contract job of installation of the said company was assigned to L&T which is a pioneer company in the field. An agreement was reached by and between L&T and the 3
Facts
Patna High Court Cr.Misc. No.1052 of 2013 (6) dt.07-05-2013 3 / 17 complainant for supply of certain construction materials to be used in the construction work against payment at agreed rate(s). In due course, several purchase order(s)/work order(s) between 9.11.2009 to 15.01.2012 were placed by L&T with the company of the complainant. The complainant is stated to have supplied several articles/materials as per the purchase order(s)/work order(s). It has been alleged that before placing both the orders for supply of articles/materials, the Chairman of the company (petitioner in Cr. Misc. No. 1052 of 2013) and some of the accused petitioners in the second case had visited his factory in order to oversee the infrastructure of the Company and quality of articles/materials produced thereat. After accounting of the articles/materials supplied by the complainant it was found that a sum of Rs. 2,44,93,061.56 p. were outstanding to be paid by the L.& T to the complainant (opposite party no. .2) but while making payment to the complainant the L&T had unauthorizedly withheld amount to the tune of Rs. 87,90,944.03. The complainant, therefore, suffered wrongful loss which was a wrongful gain in the hands of the accused person(s). The complainant served legal notice(s) on the petitioner(s) but the dues were not cleared. The said amount remained outstanding with the L&T. The L&T replied to the legal notice dated 02.05.2012 which was found wholly unsatisfactorily. 4 Patna High Court Cr.Misc. No.1052 of 2013 (6) dt.07-05-2013 4 / 17 Continued withholding of the aforesaid amount persuaded the complainant to visit the office of the head of the Accounts of L.&T, namely Uma Charan Rath on 02.07.2012 and his persistent requests annoyed the said officer who torn into pieces the documents carried by the complainant. The complainant again met another accused (employee of L&T) on 4.7.2012 at his Boring Canal Road Office and requested to release the payment of the aforesaid outstanding amount., but he too, became angry and disclosed that such payment has been withheld under the direction of the higher officers of the L&T. The complainant thus alleged that in these fact situations the accuseds have committed offence punishable under section 420/34 IPC as also under sections 409 and 120B IPC as from very inception there was an intention on the part of the accused persons to cheat him. An enquiry was conducted into the said complaint wherein few witnesses were examined and accordingly the impugned order was passed whereby cognizance under section 406 and 420 IPC was taken and processes were directed to be issued. Aggrieved thereby, the present application(s) have been filed.
Legal Reasoning
then no offence even, prima facie, under sections 420 & 406 IPC can be said to have been made out as there is complete lack of dishonest intention to misappropriate or convert the property to its own use. The facts of the case display a case where the complaint appears to have been filed giving a cloak of criminal offence to matters which are essentially civil in nature arising out of commercial dispute. In Neelu Chopra [(2009)10 SCC 184], the Supreme 15 Patna High Court Cr.Misc. No.1052 of 2013 (6) dt.07-05-2013 15 / 17 Court held that mere mentioning of relevant penal section(s) and language of those sections in the complaint would not be sufficient for allowing the prosecution to continue and cause unnecessary harassment to the accused(s). The case at hand reflects the same. Mr. D. K. Sinha learned counsel for the complainant has urged that every transaction between them be treated as separate and exclusive. The complainant supplied certain articles against the work order and L&T was legally obliged to pay the bill(s) raised thereagainst. Withholdment thereof would constitute offence. I respectfully disagree with the said contention of the complainant in the light of the facts noticed hereinabove. Another aspect of the matter which has been urged in course of argument needs attention of the Court. It has been contended that in absence of the company made as an accused the vicarious liability has been fastened on the petitioner which is not permissible in law. Before I consider the said submission, let it be noticed that nothing has been brought to the notice of this Court that a written agreement was reached between L&T and the complainant. The invoices/bills raised by the complainant are also not on record in order to show that those bills/invoices were raised against any accused person. This Court, therefore, presumes 16 Patna High Court Cr.Misc. No.1052 of 2013 (6) dt.07-05-2013 16 / 17 that bills were raised against L&T. L&T is a juristic person is not in dispute. In R. Kalyani vs. Janki C. Mehta & Ors. (2009 (1) SCC 516), on which reliance has been placed by the petitioner(s), the Apex Court held that vicarious liability can be fastened only by reason of a provision of statute and not otherwise. For the said purpose, a legal fiction has to be created. The company which is a legal entity, therefore, is required to be made an accused as legal fiction is raised both against the company as well as the persons/employees responsible for the acts of the company. Keeping in focus the ratio laid down therein, it is seen that the accuseds being senior employees of L&T have been charged in their individual capacities for commission of offence of cheating and criminal breach of trust. The complainant under some understanding, if not written agreement, supplied materials/articles. Such supply, therefore, was made to L&T and not to any individual employee of the company (L & T). The accuseds, in such circumstances, ought to have been charged along with the company. In any event, it would be a fair thing to do so as legal fiction is raised both against the company as well as the person(s) responsible for the acts of the company. In the light of the discussions made hereinabove, this Court is persuaded to conclude that continuance of the present 17 Patna High Court Cr.Misc. No.1052 of 2013 (6) dt.07-05-2013 17 / 17 prosecution shall be sheer abuse of the process of the court and to secure the ends of justice the same should not be allowed to continue and, therefore, quashed. The complainant by filing the complaint has made a veiled attempt to give a cloak of criminal liability to matters which arise out of commercial transaction and, therefore, essentially a commercial dispute. Resultantly, both the applications are allowed. Order dated 14.9.2012 passed in Complaint Case No. 1894 (C)/2012 is quashed. (Kishore Kumar Mandal, J) HR/-
Arguments
I have heard Shri Shashi Anugrah Narain in support of Cr. Misc. No. 1052 of 2013, Shri Sandeep Kumar in support of Cr. Misc. No.1612 of 2013 and Shri D.K.Sinha for the complainant 5 Patna High Court Cr.Misc. No.1052 of 2013 (6) dt.07-05-2013 5 / 17 (opposite party no.2). Parties have exchanged their pleadings. Mr. Narain submitted that the present prosecution arises out of a business transaction between L&T and the petitioner firm which is reflective from the complaint itself. Even if the allegations contained in the complaint are accepted on their face value, no ingredients constituting offence(s) under sections 415 and 405 are made out. The petitioner even after filing of complaint made certain supplies of material(s) and payments have been released in his favour which has been accepted by the complainant. The work assigned to L&T has not been completed and final accounting shall be made and the legal dues of the complainant shall be paid. Dispute relating to business transaction has been given a shape of criminal liability by the complainant for oblique reasons and, therefore, this Court should invoke its inherent jurisdiction and quash the proceeding arising out of the complaint case which is sheer abuse of the process of the Court. It has also been submitted that in such matter the company which is a legal entity is required to be arrayed as an accused in order to fasten vicarious liability on the petitioners but the company (L&T) has not been impleaded as an accused. The petitioner(Cr. Misc. No. 1052 of 2013) being the Chairman of L&T is not 6 Patna High Court Cr.Misc. No.1052 of 2013 (6) dt.07-05-2013 6 / 17 required to give instruction in day-to-day affairs of L&T in various departments/fields of activities of L&T. Only major policy decisions are brought to his consideration. No prudent person would believe that in connection with the present business transaction entered by and between L&T and the complainant‟s firm the Chairman visited the complainant‟s business premises as interluded in the complaint. The work in the railway wheal factory at Bela Chapra is still going on/underway and is likely to be completed by June, 2013. The final accounting of the company shall be made and the dues of the petitioner for which the prosecution has been launched shall be released and paid. It has been highlighted again that even after filing of the complaint payments of certain dues have been made to the complainant. As about actual amount outstanding against the company, it has been submitted that the figure(s) set out in the complaint are yet to be examined/verified whereafter the payments shall be made to the complainant. Mr. Narain in support of his aforesaid contentions has relied on diverse judgments of this Court as well as the Apex Court which shall be examined in later part of the order. Mr. Sandeep Kumar learned counsel appearing in support of Cr. Misc. No. 1612 of 2013, has adopted the submissions advanced by Mr. Narain. He submits that in connection with the 7 Patna High Court Cr.Misc. No.1052 of 2013 (6) dt.07-05-2013 7 / 17 establishment of railway wheel factory at Bela Chapra. Part of fabrication work in the shape of supply of materials/articles at the construction site was assigned to the complainant firm by the L&T. Interim payments against supply of materials/articles have been made. Part of the allegations with which the complaint has been embellished have already been disbelieved by the court. The allegations made in the complaint are essentially a dispute with respect to the business transaction between the company and the complainant. A conscious effort has been made to give it a shape of criminal liability. On a closer scrutiny of the complaint it would appear that they completely lack ingredient(s) of the offence(s) with which the petitioners, who are responsible and senior officers of L&T, have been charged. Per contra, Shri D.K. Sinha appearing for the complainant supported the impugned order. He urged that from perusal of the complaint it would not appear that there was any written agreement arrived by and between the parties. It is, therefore, not a case of breach of contract. The company and its officials placed purchase orders to the complainant which was /were supplied and the payments have been illegally withheld for undisclosed reasons. From the facts averred in the complaint and the evidence/materials adduced in support thereof a prima facie 8 Patna High Court Cr.Misc. No.1052 of 2013 (6) dt.07-05-2013 8 / 17 case is made out against the petitioners and as such the order passed by the learned court below does not merit interference. Let first scan the ingredients of the penal provision(s) which are relevant in the present case. In S.W. Palanitkar vs. State of Bihar [(2002) 1 SCC 241)] the Supreme Court while dealing with the penal provision contained in section 420 IPC held as under in paragraph 21 thereof:- “21……In order to constitute an offence of cheating, the intention to deceive should be in existence at the time when the inducements was made. It is necessary to show that a person had fraudulent or dishonest intention at the time of making the promise, to say that he committed an act of cheating. A mere failure to keep up promise subsequently can not be presumed as an act leading to cheating. In the said case the ingredients constituting the offence of criminal breach of trust was explained as under in paragraph 9. “9. The ingredients in order to constitute a criminal breach of trust are (i) entrusting a person with property or with any dominion over property, (ii) that person entrusted (a) dishonestly misappropriating or converting that property to his own use; or (b) dishonestly 9 Patna High Court Cr.Misc. No.1052 of 2013 (6) dt.07-05-2013 9 / 17 using or disposing of that property or wilfully suffering any other person so to do in violation (i) of any direction of law prescribing the mode in which such trust is to be discharged, (ii) of any legal contract made, touching the discharge of such trust. Mr. Narain, in course of submissions, drew attention of the court to illustration(g) appended to section 415 IPC which also spells out that such culpability can be assigned to such business transaction if from the materials on record it can be deduced that intention to cheat was from the very inception. It has strenuously been argued that even giving the face value to the allegations contained in the complaint, it would appear that there was an agreement between the L&T and the complainant company to supply certain articles/materials to be used in the construction/installation of the railway wheel factory. The complainant supplied articles/materials against which payments were made at regular intervals. The complainant found that articles/construction materials to the tune of more than two corers was/were supplied by him to the L&T out of which payments excepting the amount stated in the complaint were made to him. The construction work of the railway wheel factory has not been completed as yet. The withholdment of the amount, as stated in he 10 Patna High Court Cr.Misc. No.1052 of 2013 (6) dt.07-05-2013 10 / 17 complaint is said to be the act of cheating. It has been argued that even if those facts are uncontroverted and undisputed it would not constitute an offence either under section 420 or 406 IPC as dishonest intention on the part of the petitioner from very inception cannot be inferred therefrom. It cannot also be inferred that the petitioner(s) dishonestly converted these articles/materials to his/their own use. The scope of inherent jurisdiction conferred on this Court fell for consideration in diverse judgments of the Apex Court. In the State of Haryana vs. Bhajan Lal (1992 Supp (1) SCC 335, on which reliance has been placed by the petitioners, the Apex Court after evaluation of diverse judgments on the said issue enumerated, by way of illustration, categories of cases in which such jurisdiction under section 482 of the Code can be invoked to prevent abuse of the process of the court and/or to secure the ends of justice. It has been forcefully argued by Shri Narain that the case at hand would be covered by illustrations 1 and 3. Drawing attention to the complaint (Annexure-1), it has been submitted that relevant facts in order to show the culpability of the Chairman of L&T have been stated in para 4 and 5 thereof. The complainant has alleged that before placing the work/purchase order(s), the Chairman along with others officers, visited the 11 Patna High Court Cr.Misc. No.1052 of 2013 (6) dt.07-05-2013 11 / 17 industrial premises of the complainant. In another paragraph it has been alleged that payment of a sum of Rs. 87,90,944,03 was withheld by the employees of the L&T under the direction of the Chairman. He argued that the Chairman of the L&T is not involved in day-to-day affairs of the L&T more so with regard to any payment and/or part withholding part thereof to a party in connection with the business transaction. Only major policy decision are brought before him for consideration. Those allegations are, therefore, inherently improbable and no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against him relying on those embellishments made in the complaint for oblique reasons i.e. to put undue pressure. Considering the recent trend involving commercial transactions between the parties and, therefore, commercial dispute between them, the Apex Court in the case of Mohammed Ibrahim vs. State of Bihar & Anr. [(2009 8 SCC 751)] held as under in paragraph 8 of the said report:- “8. This Court has time and again drawn attention to the growing tendency of the complainants attempting to give the cloak of a criminal offence to matters which are essentially and purely civil in nature, obviously 12 Patna High Court Cr.Misc. No.1052 of 2013 (6) dt.07-05-2013 12 / 17 either to apply pressure on the accused, or out of enmity towards the accused, or to subject the accused to harassment. Criminal courts should ensure that proceedings before it are not used for settling scores or to pressurize parties to settle civil disputes. But at the same time, it should be noted that several disputes of a civil nature may also contain the ingredients of criminal offences and if so, will have to be tried as criminal offences, even if they also amount to civil disputes.” Before proceeding further, this Court would notice the facts brought on record by supplementary affidavit. It has been stated that even after filing of the complaint the L & T has paid a sum of Rs.88,55,931.80 p. towards different bills submitted by the complainant-company. In course of arguments, it has been crystallized that the project undertaken by the L&T for setting up railway wheel factory at Bela Chapra is likely to be completed by the middle of 2013. In somewhat identical facts situation noticed hereinabove, this Court in Sutapa Chakravorty vs. State of Bihar (2012 (3) ) PLJR 817) noticing the facts that on account of non refund of the security deposit to start the business the prosecution launched u/ss 420 & 406 IPC held that the same was an abuse of the process of the Court. This Court after noticing the 13 Patna High Court Cr.Misc. No.1052 of 2013 (6) dt.07-05-2013 13 / 17 relevant penal provision(s) in the light of the ratio laid down by the Supreme Court in diverse judgments held that it was a commercial transaction between the parties in which dispute of settlement of accounts had arisen between them which was essentially and purely a dispute of civil nature. Adverting to the facts of the present case, it is luminescent from the complaint that in execution of work of setting up railway wheel factory the L&T required supplies of diverse articles/materials. The company of the complainant agreed to supply articles/building materials against the purchase orders/work order(s) for use by the L&T in the construction of the said factory. Between the period ranging more than two years such materials/articles were supplied against different purchase order/work order(s) placed by the L&T. The complainant is said to have completed his accounting of supplies made to L&T and raised a claim to the tune of Rs. 2,44,93,061.56 p. against L & T (Railway Business Unit). It is the complainant‟s case that payments of those outstanding dues were made except Rs. 87,90,944.03. It further appears that the business transaction between the parties continued and against the supply of further materials the L&T has made payments to the complainant to the tune of Rs. 88,55,931.80 p. It is further seen that the project assigned to L & T is not over. In other words, the business 14 Patna High Court Cr.Misc. No.1052 of 2013 (6) dt.07-05-2013 14 / 17 transaction between the parties still subsists. For constituting an offence under section 420 IPC dishonest intention from the very inception is sine qua non. In the particular facts of the case, such dishonest intention is not inferable even accepting the case of the complainant. The final accounting of L&T would naturally be made upon completion of the project. It is not the allegation that project assigned to L&T is over and even thereafter the said amount against the supply has been withheld. This Court, therefore, has no hesitation in concluding that the parties to the complaint were engaged in business transaction in which payments at intervals against the supply of articles/materials have been made by L & T. Naturally, the L & T is obliged to settle the accounts and clear the dues once final accounting is made upon completion of the project assigned to L & T. If that be the case,