Vijay Kumar Singh & Ors. v. The State of Bihar & Ors.

Patna High Court CR. WJC No.502 of 2012 (10) 3 Machhan for an agreement amount of Rs. 121.33 lakhs (ii) Package No. BR-37R-061 Merch Hawa Bridge to Samerwari for an agreement amount of Rs.232.535 lakhs (iii) Package No. BR- 37R-062 Chilbania to Rupahi for an agreement amount of Rs.

242.520 lakhs (iv) Package No. BR-37R-063 Charagawan to Modadih for an agreement amount of Rs.145.636 lakhs (v) Package No. BR-37R-064 Dhuniapatti to Morahdih for an agreement amount of Rs. 125.934 lakhs (vi) Package No. BR- 37R-065 Laxmipur to Jignahi for an agreement amount of Rs.47.653 lakhs and (vii ) Package No. BR-37R-066 Kheratola Navgawah bridge to Sewarbadi for an agreement of Rs.855.375 lakhs. Against the aforesaid road packages the contractor had received Rs.44.20 lakhs, 87.97 lakhs, 41.18 lakhs, 63.18 lakhs,

61.404 lakhs, 5.00 lakhs and 328.62 lakhs respectively. As per agreement, the contractor had to complete the works by 7.6.2011 but only soil and G.S.B. works were done and that too were sub- standard. Thus, it is alleged that under the aforesaid schemes the total agreement amount was Rs. 2634.535 lakhs against which the contractor had received Rs. 842.854 lakhs but works were not carried out in time and as per specification. It is also alleged that the contractor had committed several financial irregularities and defalcated the government money. Patna High Court CR. WJC No.502 of 2012 (10) 4 Mr. Rana Pratap Singh, learned senior counsel appearing on behalf of the petitioners submitted that the dispute and differences between the parties is alleged only in relation to project no. BR-37R-067, that is, in relation to laying down road from Malahitola to Bhudarwa. According to him, there is no dispute in relation to other projects. Learned Senior counsel further submitted that the allegations in the F.I.R. are two folds. The first allegation is that the work was not completed within time and the second allegation is that the work done was not as per specification. Learned senior counsel further submitted that none of the ingredients of the provision of the Indian Penal Code and/or any other law is made out from the contents of the FIR. It is also contended that for constituting an offence under Sections 420 and 406 of the Indian Penal Code, there must be dishonest intention right from the beginning on the part of the petitioners and then only any criminal liability can be fastened upon them. However, from a bare reading of the FIR in the present case it is clear that there was an agreement between the parties and the dispute arose out of that. Learned Senior counsel further submitted that the terms and conditions of the agreement provides sufficient Patna High Court CR. WJC No.502 of 2012 (10) 5 measure in case of default by either of the parties, but in stead of taking recourse to the remedies provided in the agreement, in hot haste the present prosecution has maliciously been launched. It is submitted that the allegations made in the FIR, even if given face value and taken to be correct in their entirety, do not constitute offences under Sections 406 and 420 of the Indian Penal Code. According to him, the first information report refers to the agreement between the parties. The agreement contains the mode and manner in which the terms of contract were to be implemented. The allegations have been made against the petitioners in relation to the execution of contract. It is submitted that no case of criminal misconduct on their part has been made out. The liability, if any, would be a civil liability. It is also contended that since the FIR itself refers to the agreement, terms of agreement can be looked into. In this regard, learned senior counsel places his reliance on the decision of the Apex Court in Sharon Michael and Others. v. State of Tamil Nadu and others since reported in (2009) 3 SCC 375 which reads as under: “18. The liability of the Company is, therefore, a civil liability. It is also not a case where although a prima facie case had been made out disclosing commission of an Patna High Court CR. WJC No.502 of 2012 (10) 6 offence, the court is called upon to consider the defence of the accused. The information report itself refers documents. They can, therefore, be taken into consideration for the purpose of ascertaining as to whether the allegations made in the complaint petition read as a whole, even if taken to be correct in its entirety, discloses commission of any cognizable offence or not. As admittedly respondent no.2 was supplier of garments which were found to be defective in nature, we are of the opinion that the dispute between the parties is civil in nature.” The petitioners have brought on record the standard form of agreement. A reference has been made to several clauses of terms of agreement. It has been contended that clause 24 of the agreement deals with the Dispute Redressal System which reads as under: “24. Dispute Redressal System If any dispute or difference of any kind whatsoever shall arises in connection with or arising out of this Contract or the execution of Works or maintenance of the works thereunder, whether before commencement or during the progress of work or after the termination, abandonment or breach of the Contract, it shall be referred Patna High Court CR. WJC No.502 of 2012 (10) 7 to Empowered Standing Committee which will consist of : I. One official member, Chairman of the Standing Empowered Committee, not below the rank of Additional Secretary or the State Government; II. One official member not below the rank of Chief Engineer; and III. One non- official member who will be technical expert of Chief Engineer‟s level selected by the Contractor from a panel of three persons given to him by Employer. Such decision in respect of every matter, so referred shall, subject review as hereinafter provided, be final and binding upon the Contractor. In case, the works is already in progress, the contractor shall proceed with the execution of the works, including maintenance thereof, pending receipts of the decision of the competent authority as aforesaid with all the diligence.” Learned senior counsel submitted that if there was any grievance, the informant ought to have referred the dispute to the Empowered Standing Committee in terms of clause 24 of the agreement. He then refers to clause 30 of the terms of agreement which provides for „Identifying Defects‟ which are to be pointed Patna High Court CR. WJC No.502 of 2012 (10) 8 out by the Engineer and to be notified to the contractor. Likewise, the correction of defect noticed during defect liability period is to be carried out in terms of clause 32.2.4 which provides that the Engineer may issue notice to the contractor to carry out maintenance of defect, if any noticed in his inspection, or brought to his notice and the contractor shall remove the defect within the period specified in the notice and submit to the Engineer a compliance report. Thus, learned senior counsel submitted apparently there was no criminal case of misconduct. The dispute between the parties could have been resolved in terms of the agreement as the dispute between the parties was a dispute resulting from the breach of contract and the same would not constitute either the offence of criminal breach of trust or the offence to cheating. On the other hand, Mr.Manoj Kumar Ambastha appearing on behalf of the State submitted that the allegations made in the F.I.R. do constitute cognizable offence and as such the same ought not be quashed. According to him, the case is under investigation and in course of investigation, the investigation agency has collected several incriminating materials against the petitioners. Patna High Court CR. WJC No.502 of 2012 (10) 9 Learned counsel for the State further submitted that in course of investigation it has transpired that the Engineers concerned connived with the contractor. They made payment even without making any physical verification of the works carried out by the contractor. The Quality Control Register Part II which ought to have been in possession of the Assistant Engineer on site and measurement book were seized from the office of the contractor situated at Gorakhpur. In course of investigation, the Engineers including the informant of the case were made accused. Learned counsel for the State has also produced copy of the case diary to show that the investigation agency in course of investigation found incriminating materials not only against the contractor but also against the Engineers concerned. Learned counsel further submitted that enough materials have been collected to show criminal conspiracy and connivance of the petitioners with the concerned Engineers of Rural Works Division. According to him, it is not a case of criminal breach of trust and cheating simplicitor but it is a case of embezzlement of government money by the petitioners in conspiracy with public servants. Mr. Ambastha submitted that merely because an act has civil profile, the criminal prosecution cannot be quashed. Patna High Court CR. WJC No.502 of 2012 (10) 10 In support of his argument he places his reliance on the judgment of the Apex Court in Trisuns Chemical Industry v. Rajesh Agarwal and Others since reported in (1999) 8 SCC 686. In the said case a complaint was filed by Trisuns Chemical Industry before the Judicial Magistrate of the First Class alleging that the Directors of another company offered to supply “toasted soyabean extractions” for a price higher than the market price. The complainant had to pay price in advance. The same was paid through cheques. But the accused sent the commodity which was of inferior and sub-standard quality. The complainant alleged that as a result of supply of inferior or sub-standard quality product, he had suffered a loss of rupees seventeen lakhs. According to the complainant, he was induced to pay the price on the representation that the best quality commodity would be supplied and the price was paid on such representation. But by supplying inferior quality the accused had deceived the complainant. The Magistrate forwarded the complaint under section 156(3) Cr.P.C. for investigation. The accused persons, who were Directors of another company, moved an application under section 482 Cr.P.C. for quashing the complaint. For the purpose of quashing the FIR two contentions were raised. The first was that the dispute was purely of a civil nature and hence no prosecution should have been Patna High Court CR. WJC No.502 of 2012 (10) 11 permitted and the second was that the Judicial Magistrate of the First Class had no jurisdiction to entertain the complaint. On the first count the High Court held that there was specific clause in the memorandum of understanding arrived at between the parties that the dispute, if any, arises between them in respect of any transaction could be resolved through arbitration and, as such, the dispute raised by the complainant out to have been adjudicated by the civil court and cannot be the subject matter of criminal prosecution. The High Court had also accepted the alternative contention regarding want of jurisdiction of the Magistrate and quashed the complaint as also the order passed by the Magistrate thereon. The complainant went in appeal before the Apex Court. A two judges Bench of the Apex Court while allowing the appeal held in paragraph 9 as under: “We are unable to appreciate reasoning that the provision incorporated the agreement referring disputes to arbitration is an effective substitute for a criminal prosecution when the disputed act is an offence. Arbitration is a remedy for affording reliefs to the party affected by breach of the agreement but the arbitrator cannot conduct a trial of any act which amounted to an offence albeit the same Patna High Court CR. WJC No.502 of 2012 (10) 12 act may be connected with the discharge of any function under the agreement. Hence, those are not good reasons for the High Court to axe down the complaint at the threshold itself. The investigating agency should have had the freedom to the whole gamut of allegations and to reach a conclusion of own. Pre-emption investigation would be justified only in very extreme cases as indicated in State of Haryana v. Bhajan Lal (1992) Supp. (1) SCC 335”. Learned counsel for the State further submitted that it is not necessary that the allegations made in the FIR should verbatim reproduce all the ingredients of the offence. According to him, investigation is at advance stage. Several incriminating materials have been collected in course of investigation and, thus, it would not be proper to entertain the writ petition at this stage. Having heard the parties and perused the records, I find force in the submissions made on behalf of the State. In R.Kalyani v. Janak C. Mehta and others since reported in (2009) 1 SCC 516 in paragraph 15, the Apex Court has held as under: Patna High Court CR. WJC No.502 of 2012 (10) 13 “15. Proposition of law which emerges from the said decisions are: (1) The High Court ordinarily would not exercise its inherent jurisdiction to quash a criminal proceeding and, in particular, a first information report unless allegations contained therein, even if given face value and taken to be correct in their entirety, disclosed no cognizable offence. (2) For the said purpose the Court, save and except in very exceptional circumstances, would not look to any document relied upon by the defence. (3) Such a power should be exercised very sparingly. If the allegations made in the FIR disclose commission of an offence, the Court shall not go beyond the same and pass an order in favour of the accused to hold absence of any mens rea or actus reus. (4) If the allegation discloses a civil dispute, the same by itself may not be a ground to hold that the criminal proceedings should not be allowed to continue.” In State of Haryana and Others v. Bhajan Lal and Others since reported in (1992) Supp. (1) SCC 335 in paragraph Patna High Court CR. WJC No.502 of 2012 (10) 14 103 the Apex Court has made following observations: “103. We also give a note of caution to the effect that the power of quashing a criminal proceeding should be exercised very sparingly and with circumspection and that too in the rarest of rare cases; that the court will not be justified in embarking upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the FIR or the complaint and that the extraordinary or inherent powers do not confer an arbitrary jurisdiction on the court to act according to its whim or caprice.” The Apex Court has reminded time and again in several judgments that quashing of FIR should be limited to very extreme exception. Merely because an act has a civil profile is not sufficient to denude it of its criminal outfit. Thus, in my view, simply because clause 24 of the agreement in question contains dispute redressal system, prosecution of the petitioners for their criminal acts cannot be quashed. So far as contention of the petitioners that the allegations made in the FIR do not constitute cognizable offence is concerned, I find from the FIR that there is specific allegation in the FIR that the petitioners have committed financial irregularities Patna High Court CR. WJC No.502 of 2012 (10) 15 and defalcated government money. If that is so, it clearly makes out a cognizable offence. It is well settled that principal object of the FIR from point of view of the informant is to set the criminal law in motion and from point of view of the investigating authorities is to obtain information about the alleged criminal activity so as to be able to take suitable steps to trace and bring to book the guilty. It is not necessary that the FIR should contain all known facts and circumstances about the incident. The FIR may give a hazy picture in respect of the offence. The FIR is not an encyclopedia, which must disclose all facts and details relating to the offence reported. The question whether the report is true, whether it discloses full details, whether there is sufficient evidence to support the allegations, are all matters which can be answered after thorough investigation of the case. In the present case the informant and several other Engineers are suspected to have connived with the petitioners in committing the offence. There are materials against them in the case diary. The case is at an advance stage of investigation. Hence, it would not be proper for this court to axe down the FIR at the threshold. Accordingly, the writ petition is dismissed. However, it is made clear that as and when the police would Patna High Court CR. WJC No.502 of 2012 (10) 16 conclude the investigation and submit their report, the Magistrate concerned would deal with the matter in accordance with law without being influenced in any manner by any observation made by this court in the present writ petition. Md.S./- (Ashwani Kumar Singh, J)